Do you have a relatively new business with less than $1 million in annual gross revenues? You may be eligible for as much as $100,000 in tax credits.
Under the American Recovery Rescue Plan, a company founded or incorporated after February 15, 2020 may be classified as a “Recovery Startup Business.” These recent startups (provided they have less than $1 million in annual gross revenues) are eligible for up to $50,000 in refundable Employee Retention Credits (ERC) per quarter for the third and fourth quarters of 2021.
Even better news: Since the deadline for applying for the ERC is a full three years from the original filing date of the third or fourth quarter Form 941, you can go back to recover any credits for which you are eligible.
For a business to be classified as a Recovery Startup Business for ERC purposes, following criteria must be met:
- Began operations on or after February 15, 2020;
- Maintains average annual gross receipts that do not exceed $1 million;
- Employs one or more employees (other than 51% or more owners); and
- Does not otherwise qualify for the Employee Retention Credit (i.e., its business operations were not fully or partially suspended due to government orders, nor did they experience a decline in gross receipts).
The process and paperwork required to apply for the ERC can be complex. But the prospect of a refundable tax credit of up to $100,000 is certainly worth the time and effort. Gray, Gray & Gray can help you confirm your company’s eligibility, then help prepare the documentation and application for the ERC. Please contact us at (781) 407-0300.