Like most business owners, you're probably curious about the maximum amount of ERC funds you could claim. You might be wondering if there are limits that restrict how much you might get.
Well, we have great news!
Ultimately, there is no limit to the total you could claim! However, there is a limit on the amount you can claim per employee, as well as potential limits on which wages qualify.
Per employee limits
If your business meets all of the conditions to qualify for an ERC refund in 2020 and all three of the eligible quarters in 2021, you could potentially claim up to $26,000 per qualified employee!
But where does that number come from?
Well, for both 2020 and 2021, the laws governing the ERC program allow you to claim a percentage of the first $10,000 in wages for each qualified employee.
In 2020, that percentage is 50% of that $10,000 for the whole year, and in 2021 it's 70% of $10,000 for each quarter.
So if you max out the claim amount, you're getting $5,000 per employee in 2020, plus $7,000 per employee times three quarters.
The equation for that calculation would look like this: $5,000 + ($7,000 x 3 quarters).
If we use math's order of operations, that formula simplifies down to $5,000 + $21,000, which ultimately equals that magic number of $26,000 per employee.
Are there limits on which employee wages qualify?
The answer to this question is both yes and no.
That's because it depends on whether your business is classified as a large or small business under the ERC rules.
If you're a large employer—which for 2020 means your business had over 100 full-time W2 employees in 2019 or over 500 for 2021—then you can only count employee wages that were paid for not providing services.
However, if you meet the ERC's classification for a small business because your number of full-time employees in 2019 was either 100 or less for 2020 or 500 or less for 2021, then you are able to claim the first $10,000 in wages for every single one of your full- and part-time employees.
So if you're a large business, you're only limited on which employee wages qualify. And if you're a small business, your only limit is how many qualified employees you have.
Basically, that means if you have 200 employees who qualify for the full $26,000 each, then you could be looking at a total check of $5.2 million! And if you have 50 employees whose wages qualify? Well, that's still a cool $1.3 million.
And as you can see, your total amount simply changes depending on how many qualified employee wages you have.
Not every business is the same
It's important to note that not every employer will qualify for the max amount for every employee. The specific details for the calculation have a lot of nuance and include a lot of factors.
So if you really want to see how much you can qualify for, then give us a call today! Our initial estimate is free and only takes a few minutes of your time.