The ERC program is an incredible benefit for businesses that qualify. By being able to claim funds without conditions or limitations, you can help your business bounce back from the economic slowdown we experienced during the pandemic.

But how do you know if your business qualifies?

Well, for starters, the requirements for 2020 and 2021 are slightly different, so qualifying in one year doesn't automatically qualify you for the next year. However, it is still possible, so let's take a look at what conditions you need to meet for each year in order to claim your ERC refund.

Qualification requirements for ERC in 2020

If you want to claim an ERC refund in 2020, your business must have experienced ONE of the following during that year:

• At least a 50% decline of your gross receipts in any quarter of 2020, as compared to the same quarter in 2019
• A full or partial suspension of your business operations due to government mandates
• Supply chain issues cause by government mandates or shutdowns of your vendors or suppliers that affected your business operations

Your refund could also be affected by the 2020 eligibility period.

If you're qualifying based on the gross receipts requirement, for example, then you need to know how the qualifying period works.

Basically, it begins with the first calendar quarter where your gross receipts were 50% or less when compared to 2019, and it ends with either the 4th quarter of 2020 or in the quarter after your gross receipts return to 80% (as compared to the same quarter in 2019).

Because of how this qualifying period works, it's possible that your business may not qualify for all quarters in 2020, which could potentially reduce the per employee refund amount you can claim.

However, since you can only count the first $10,000 of wages per employee in 2020, if you paid $10,000+ in total in your qualifying quarters, then the amount you can claim shouldn't be affected.

Qualification requirements for ERC in 2021

For 2021, the requirements to claim an ERC refund are quite similar. In fact, two out of the three options are exactly the same. But the third requirement—the one for gross receipts—is slightly different.

If you want to claim an ERC refund in 2021, your business will need to have experienced ONE of the following:

• A 20% decline of your gross receipts in Q1, Q2, and/or Q3 as compared to the same quarter in 2019
• A full or partial suspension of your business operations due to government mandates
• Supply chain issues cause by government mandates or shutdowns of your vendors or suppliers that affected your business operations

Another difference between 2020 and 2021 is their qualifying periods.

For most businesses, the only periods you can claim ERC refunds for in 2021 are the first three quarters. Because they're claimed per quarter, it's possible for your business to qualify for all three quarters of the eligibility period, or for just one or two.

And the amount you can claim also increased from 2020 to 2021. Instead of 50% of the first $10,000 for the whole 2020 eligibility period, you can claim up to 70% of the first $10,000 of each qualified employee per quarter in 2021.

So while the max amount you can receive is $5,000 per employee in 2020, in 2021 you could receive up to $7,000 per employee for each of the three quarters. That's a total of $21,000 per employee in 2021!

Other rules for claiming an ERC refund

In addition to the qualification rules for 2020 and 2021, the ERC program also has some added stipulations:

• You can't claim an ERC refund on wages used to qualify for PPP loan forgiveness
• However, if you list wages on the PPP forgiveness application that go beyond the minimum needed, you can claim those "extra" wages for the ERC program

So, while these extra considerations won't necessarily disqualify you from the program, they could affect how much you can claim for your refund.

Because of this complicated interplay between the PPP and ERC programs, you will need to have a plan that helps you maximize both benefits.

If you want to receive full forgiveness of your PPP loan and get the largest ERC refund check possible, you'll need the help of an expert who truly knows the ins and outs of the laws that govern these programs.

What if my business didn't exist in 2019?

If your business wasn't in operation in 2019, you might be worried that you simply can't qualify for ERC based on the gross receipts requirement.

While it's true that this requirement says you must compare your business against the same quarter in 2019, the IRS actually put together some alternate rules for businesses who didn't exist in 2019 that could still allow you to qualify.

Basically, they've stated that if your business didn't exist in 2019, you can compare your 2021 gross receipts against the same quarter in 2020.

In addition, these types of businesses could potentially qualify for an ERC refund in Q4 of 2021.

Remember—the 2021 eligibility period for most businesses is limited to just the first three quarters. However, if your business meets all of the following conditions for a "Recovery Startup Business," you can claim ERC funds for the fourth quarter:

• Your business started operations after February 15, 2020
• You have annual gross receipts below $1 million
• You do not qualify for ERC under the main qualification categories (suspension of operations or decline in gross receipts)

Maximize your ERC benefit

Now that you know how the requirements work for claiming an ERC refund in both 2020 and 2021, you can take the first step in claiming your money.

At ERC Go, we can help you claim the maximum amount possible for your business. Don't wait to call—our ERC experts are standing by to help you recover from the economic impacts of COVID-19.