Friday, June 24, 2022

The Employee Retention Credit has played a crucial role in helping business owners. During the pandemic, several businesses were shut down due to restrictions. However, many business owners kept their employees on the payroll, preventing them from becoming unemployed. Such efforts were rewarded with ERC credits.

You can click on the added link to Get help filing for ERC. While applying for the credits, many business owners might get confused in the calculation process. The employer might need to calculate if their business is a large or small scale before applying for ERC. This article can help you clarify whether an employer is a large or small scale for ERC.

Terminologies used for deciding the scale of business:

The business size for claiming ERC is decided based on the number of employees and the year the company kept them on the payroll. The business size is different for each year of the pandemic. For instance, the size of a business and its employees for 2020 and 2021 will be entirely different.

Business size for ERC for the year 2020

If you have applied for ERC credits for the year 2020, you can quickly evaluate if your business is the large or small scale by the employee count. If your company had employed 100 or fewer full-time employees, your business would be defined as small scale. Otherwise, your business will likely be termed as large-scale for the ERC credits.

Business size for ERC for the year 2021

If the employer decided to apply for ERC for the year 2021 and employed 500 or fewer employees working full-time, then the business or the employer would be termed as a small employer. If your company kept more than 500 employees on the payroll, you should calculate your business as a large-scale business for ERC credits.

Will ERC credits remain limited to full-time employees only?

The employer might get confused about the role of an employee in ERC. Many business owners were confused if the credits were only limited to full-time employees. However, you should know that it is not qualified for full-time employees.

An employer can include wages of both; part-time and full-time employees. The employer can calculate ERC based on part-time and full-time employees without worrying about the credit being limited to a specific employee. You must know that the employer can only calculate ERC on the foremost $10,000 of wages and health insurance costs paid to employees during the period.

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