Practice Management: Three Ways to Qualify for the Employee Retention Credit

Three Ways to Qualify for the Employee Retention Credit Clearing Up the Myths and Misconceptions

By: Simon Walder

If you have been curious if your office qualifies for the Employee Retention Credit (ERC) or have been told you didn’t qualify, this article is for you! The ERC is a CARES Act stimulus package worth up to $26k per employee that most businesses have missed out on. When it was first introduced, there were many restrictions. For example, initially, companies couldn’t claim Employee Retention Credit if they had received PPP funding. However, the rules have been amdended, and now that is no longer the case. The ERC is not an income tax credit but is instead a payroll incentive that comes in the form of a refund check from the Treasury Department. Many businesses do not know about the credit or have been incorrectly told they do not qualify. The credit is based on your 941s and payroll, two areas the typical accountant does not handle. Small businesses qualify by having only ONE of the following: - full or partial suspension of operation - decreased revenue

- supply chain disruption

CHECK IF YOUR OFFICE QUALIFIES Full or Partial Shutdown of Operations

The first option to qualify involves your business having experienced a partial or full shutdown. This qualification is based on a “suspension test” to demonstrate that your operations were partially or fully suspended due to a COVID-19 governmental order. For this option, it’s essential to know that a government restriction might have directly impacted your operations, even if that shutdown order wasn’t given to you directly. The cumulative effect of the full or partial suspensions needs to have had a more than nominal impact, meaning more than a 10% impact, on your business’s bottom line when considering the gross receipts of that portion of your business in 2020. This does not mean

that your revenue must have decreased to use this qualification.

Revenue Reduction

The first way to substantiate your qualification is through the reduction of revenue. Out of the three qualifiers, loss of revenue is the one with which most business owners are familiar. For 2020, your firm must have experienced a 50% reduction of gross sales in at least one quarter for quarters two, three, and four of the year, as the COVID-19 pandemic began in the second quarter of 2020. When and if the revenue reduction in 2020 returns to 80% of the 2019 level, the qualification ends. Regarding 2021, you could qualify if you had a 20% reduction of gross sales for each quarter one, two, and three compared to the same quarter in 2019. Supply Chain Disruption Supply chain disruptions are another way your business can qualify. Businesses that rely on third-party sources, such as vendors and suppliers, for their companies to function can take this route to qualify. The qualification must have resulted from a government suspension order that impacted your suppliers, resulting in the third party not being able to deliver crucial goods or components. An example of this would be restaurants that could not obtain certain products, such as meats, produce, or even paper plates, during the pandemic. Another qualifying instance would be construction firms that could not receive windows due to closures and delays at ports. These impacts qualify a

company, regardless of revenue gain or loss.

Claiming the ERC for Your Practice Our company has helped nearly 1,000 dentists claim the ERC and, in total, has helped small businesses claim over 5 billion dollars in refunds from the Employee Retention Credit. Our team of experts, including CPAs, lawyers, and certified payroll providers, has simplified the process, enabling business owners to claim the typically confusing and challenging credit. To quickly check if your office qualifies, visit the link below or schedule a call with one of our team members!

ABOUT THE AUTHOR:

Simon Walder spent nine years in the dental industry with Henry Schein and Benco. During that time, he helped over 100 dentists open their first dental practice. Simon now serves as an Advisory Board member at ERC Specialists. He has helped oversee the relationships with many dental associations and has helped over 500 dentists claim the Employee Retention Credit. Simon is an integral part of a team that has helped small business owners claim over $5 billion in refunds from the Employee Retention Credit.

The ERC, allows small businesses negatively affectedby COVID-19 to claim up to $26K per employee as a fully forgiven tax credit. But it’s vastly underutilized because many businesses — like dental practices — don’t realize they qualify. Start the process and check if you qualify by emailing, simon@ercspecialists.com or visiting okda.org/ rewards-program/erc.