Essential services were excluded from most of the COVID restrictions. The services excluded from COVID restrictions included providers of healthcare, the postal service, and wireless services. So, businesses dealing with the essential services mostly were excluded from the government-imposed restrictions. So, can essential businesses claim ERC?
Employee Retention Credit is basically put forward by the government to help businesses affected by COVID and restrictions imposed by the government thereafter. It is actually a reward to employers who have retained their employees on the payroll during the outbreak of COVID. You can Click here to learn more about ERC.
And then coming to essential businesses, even though these businesses haven’t been subject to COVID restrictions, these businesses still might have been affected by COVID one way or another. So, essential businesses as a whole can’t be disqualified for ERC.
For better clarity, here are certain questions essential businesses can ask themselves to check whether they are eligible for ERC.
1. Did you have to reduce services or goods?
The outbreak of COVID has reduced the demand for all kinds of goods and services across the globe. So, many essential businesses have been under pressure to reduce their services or put out of business even if they weren’t subject to government restrictions. And that qualifies these businesses for claiming ERC.
2. Did you stop performing certain work as employees transitioned to remote working?
The recession and the outbreak of COVID have forced many employers to let many employees work from home. Employers are trying to save costs from transportation and other expenses by letting their employees work from home. So, some essential businesses were unable to fulfill certain parts of their work or services as employees were working away from their usual workspaces.
3. Did you have to suspend operations even temporarily to clean or implement safety protocols?
The outbreak of COVID has led many essential businesses to temporarily put their operations on hold or shut down for safety reasons. This might cause them to lose sales. So, essential businesses that didn’t shut down operations but had to suspend it for a period of time because of safety reasons would still qualify for ERC.
4. Did you struggle to source materials or services from suppliers impacted by COVID?
Even if essential businesses weren’t subject to government restrictions, they still might have had problems with suppliers regarding the supply of materials and services. This is because many suppliers are under their own set of restrictions. So, essential businesses dealing with these problems can also claim ERC.