Do you Qualify As a Recovery Start Up Business?
webmanager • May 17th, 2023
If you started a brand new business during the global pandemic, you’ve most likely scoured every government stimulus program there is.
And unfortunately, you’ve probably been disappointed every time.
Do you qualify for PPP? No.
Do you qualify for EIDL? No.
Do you qualify for ERC? No… well, maybe!
While you may not have previously qualified for any stimulus funding from the government (i.e. The Paycheck Protection Program or Economic Injury Disaster Loans), there is one credit that you do qualify for now.
It’s called the Employee Retention Credit. And it could see you get up to $100,000 in the form of a tax refund from the IRS this year.
Sound good? Keep reading!
In this post, we’re going to cover everything you need to know about Recovery Start Up Businesses and if qualified, you could earn up to $100,000 through the Employee Retention Credit (ERC) for your business.
Let’s dive in!
The first thing we need to talk about is the Employee Retention Credit and what it is.
Similar to the Paycheck Protection Program (PPP) that you are likely familiar with, The Employee Retention Credit is another government-funded stimulus program for small businesses in the aftermath of COVID-19.
It came out of the same CARES Act in 2020 as The Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL), and we dare to say that it’s even better than both programs.
Why? Because, unlike PPP and EIDL, you don’t have to pay the Employee Retention Credit (ERC) back or spend it in any particular way!
And for businesses who started on or after February 15, 2020… you finally qualify!
How Does The Employee Retention Credit Work?
The Employee Retention Credit is a refundable tax credit from the IRS against certain payroll taxes in 2020 and 2021.
Essentially, if you paid 1 or more employees through COVID-19 at a time when your business saw reduced revenue levels, the government will reimburse you for a certain percentage of those employee wages.
Pretty great, huh?
It’s essentially more money in your pocket that you never have to pay back.
The process of applying for and calculating the Employee Retention Credit is quite complicated, and not one we recommend approaching alone.
You want to work with an experienced CPA to help you retroactively amend previous payroll taxes and calculate the accurate amount.
You can use our quick Employee Retention Credit Calculator to see if your business qualifies for the Employee Retention Credit right away here:
Up until March 2021, brand new businesses that opened after February 15, 2020, did not qualify for any funding from the Employee Retention Credit (ERC).
However, thanks to the American Rescue Plan Act, that all changed.
Now, new businesses that opened during the pandemic are now eligible to receive stimulus funding through the Employee Retention Credit as a Recovery Startup Business.
A Recovery Startup Business for the purposes of the Employee Retention Credit is defined as a business that:
If this sounds like your business, keep reading. You could be eligible to receive up to $100,000 in tax refunds from the IRS later this year.
The good news is that it couldn’t be easier to qualify for the Employee Retention Credit as a Recovery Start Up Business.
In fact, it’s even easier than taking the traditional route to the Employee Retention Credit!
As a Recovery Startup Business, here is what you need to qualify for the ERC:
If it sounds straightforward, that’s because it is.
There are essentially zero stipulations to qualify for the ERC under these new rules for new businesses, as long as you opened doors on or after 02/15/2020 and make less than $1M in revenue.
So, what should you do next?
Next Step for Recovery Start Up Businesses
The very first thing you’ll want to do is get in touch with an experienced accountant.
While the ability to secure funds as a recovery start up business is quite straight forward, the process to get there isn’t.
You want to work with an experienced CPA who can make accurate calculations for you, and apply for the Employee Retention Credit (ERC) on your behalf.
Here at Basta & Company, you can book a free 15-minute consultation with one of our accountants to see if your business qualifies.
That’s right – the first call is completely free!
We want to help as many businesses as we can secure the Employee Retention Credit funding as it’s a great way to help your business bounce back after the pandemic.
To book your first free consultation, you can use our calendar booking here.
Until next time!
Samy Basta brings you more than 20 years experience in tax, financial, and business consulting to his role as founder of Basta & Company. His focus is primarily strategic business planning, empowering clients to set priorities, focus energy and resources, and strengthen operations. In addition, Samy and his firm provide strategic counsel, and technical insight, on a wide range of needs, including tax saving strategies, tax return compliance, as well as choice of entity.
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