​There are many misconceptions surrounding the Employee Retention Credit (ERC) because of the iterations and legislative changes during the pandemic. Here are several of the most common misconceptions we hear.

We are considered an essential business and do not qualify. False. An essential business can qualify for the ERC because gross receipts declined by 20 percent year-over-year in comparable quarters or because its operations are fully or partially suspended because of a government order.

We used the Paycheck Protection Program and do not qualify. False. The stimulus package passed in December 2020 amended the original legislation and now allows for companies who received PPP funds to also take the ERC.

We didn't experience a year-over-year decline in sales by 20 percent and do not qualify. False. Your company had to see either a 20 percent decline in gross receipts OR suspension in operations, not both. Almost every facility has been impacted in some way by a governmental order.

We have been profitable thrrough the pandemic and do not qualify. False. We have seen many companies that were profitable receive hundreds of thousands to millions of dollars in credits.

We do not pay taxes because we are a nonprofit and do not qualify. False. This tax credit applies to tax-exempt organizations if the business operations have been fully or partially suspended due to governmental orders related to COVID-19.

Our business stayed open the whole time and does not qualify. False. If your business had to change in any way due to governmental orders OR if gross receipts declined by 20 percent when you compare to the same quarter in 2019, you can still qualify.

To discuss your company’s specific situation, contact Nick Cianci, owner of Compass Total Benefit Solutions, at nick@compasstbs.com.