The Employee Retention Credit (ERC) is a refundable credit worth $7K per employee per quarter for each 2021 quarter.
(Note: “refundable” means you get a check for the credit amount from the IRS. Yes, cold, hard cash!)
To qualify, there needs to be a 20% reduction of “Gross Receipts” in a 2021 calendar quarter compared to the corresponding 2019 quarter. If you qualify for one quarter, though, you automatically qualify for the next quarter.
The knee-jerk reaction for many pre-revenue startups is they do not qualify because they do not have revenue, BUT “Gross Receipts” include a lot more than just revenue. Examples are interest income, rewards, pitch competition awards, grants, etc. Also, there is no minimum dollar amount of Gross Receipts required.
Here’s a real-life example:
We are finding tons of startups that qualify. There are no strings attached to the funds that you receive for this credit.
Taking the credit is also amazingly easy! You just check a box in Gusto (or applicable payroll provider), and the IRS sends you a check. It is that simple!
Check out our other blog posts on the Employee Retention Credit:
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