Accounting & Finance

What is the Employee Retention Credit?

The Employee Retention Credit (ERC) is a refundable tax credit for businesses that kept employees on their payroll during the COVID-19 pandemic. The credit is equal to 50% of qualified wages paid to eligible employees, up to $26,000 per employee. To be eligible for the credit, businesses must have experienced a decrease in gross receipts of at least 50% compared to the same quarter in the prior year. The Employee Retention Credit is available for wages paid from March 13, 2020, through December 31, 2020.

What Is The Employee Retention Credit? 

The Employee Retention Credit is a retroactive credit that compensates U.S. businesses that weathered COVID-19 and kept at least 2 employees on the payroll. Adesso's CPA team are tax experts who will ensure your claim is compliant with the latest IRS guidance. Learn more about maximizing your refund.

The Employee Retention Credit is not a loan – it does not need to be repaid. It's a tax credit, so funds won’t run out. But there is a filing deadline to access the funds that your business may be eligible for. We are partnering with Addesso Capital to help your business easily obtain the tax credit if qualified. Let their team see if your business qualifies in minutes, at no cost or obligation. 

What Are The Requirements For Eligibility?

The ERC eligibility requirements changed in 2021, so businesses need to meet one of the following: 

  • Businesses whose operations were suspended or curtailed by government order
  • In 2020: Any business with a 50% drop in Gross Receipts in any quarter of 2020, compared to the same quarter in 2019.
  • In 2021: Any business with a 20% drop in Gross Receipts in Q1, Q2, and/or Q3 of 2021, compared to the same quarter in 2019 or 2020, as elected by the business.
  • The Business is a “Recovery Startup Business”. Launched operations after Feb 15, 2020, & gross revenue does not exceed $1M in 2020. Recovery Startup Businesses may qualify for an ERC in Q3/21 and Q4/21.

For more information on the Employee Retention Credit, Adesso's CPA team of tax experts can help you get started to see if your business qualifies for free.

How Can My Business Benefit From The Employee Retention Credit Program?

Your business can benefit from the Employee Retention Credit program by getting a tax credit if your business meets the eligibility requirements. The ERC amount depends on the period over which a business qualifies and the number of employees.

For 2020: Up to $5,000 per employee per year in 2020.
Specifically, 50% of the first $10,000 in wages paid to qualified employees during impacted periods (Q2-Q4/2020).

For 2021: Up to $7,000 per employee per quarter (Q1-Q3).
Specifically, 70% of the first $10,000 in wages per quarter during impacted periods (Q1-Q3/2021). Up to $26,000 per employee is available for businesses and organization qualifying throughout Q2/2020 thru Q3/2021.

However, wages previously paid for by a forgiven PPP loan or other federal COVID relief programs (e.g. Work Opportunity Tax Credits, EFMLA, and EPSLA) must be backed out from ERC calculations.

How Does The Application Process Work For The Employee Retention Credit Program?

If your business is eligible for the Employee Retention Credit program, you will want to file an amended 941X form during the quarters your company is eligible. However, with Addesso Capital, their team will handle the entire process for you until you receive your funds, so don't let the intimidation of tax forms turn you away from applying for this program! 

With Addesso Capital, a dedicated ERC professional will help guide you through every stage. They will monitor your filings on the IRS portal and provide periodic progress updates, so you can keep focusing on your business growth. There are also no out-of-pocket costs. Adesso offers the option to deduct our fees from your ERC Cash Refund. 

How Do I Know If My Business Is Eligible For The Employee Retention Credit?

Get in touch with Addesso Capital today to see if your business is eligible. At Adesso, their CPA’s are ERC Experts. They will handle the entire process, from determining your business’ eligibility to filing the exact forms for the proper quarters.