A full-time employee is classified as someone that worked at least 30 hours per week, or 130 hours per month in 2019. Remember, this question is based on the average amount of employees during 2019.

Important: The IRS aggregate rule applies to the ERC credit. If your company has common ownership with other companies, please take into account all associated businesses when calculating this question. To learn more about this rule and if it applies to your business read here: What is an Aggregated Large Employer?

Example: The business owner was the majority owner of ABC Company, which averaged 50 FT employees in 2019. The same business owner was also the majority owner of 123 Company, which averaged 75 FT employees in 2019. According to the aggregate rule, the employee count of both companies must be combined for the ERC program. Although both companies can be entered for the program, they would both be classified as having over 100 employees.

Note: Businesses with over 100, but under 500 FT employees in 2019 do not qualify for ERC funds in 2020. Businesses with over 500 FT employees in 2019 do not qualify for the ERC program, except for actual wages paid to employees that did not work due to a government shutdown.

Part-Time Employees: Part-time employee wages do qualify for the ERC program. This question only requires full-time employee count to determine qualification.

The most straightforward way to qualify for the Employee Retention Credit is from a qualified revenue reduction during the qualification period of the program.

Revenue reduction qualifications

• 2021 - 20% reduction of gross sales for the 2021 quarter as compared to the same quarter in 2019 (or 2020 if you were not in business during the quarter in 2019). The alternative lookback option allows the business to use the previous quarter compared to the same 2019 quarter to qualify.

Supply chain disruption is a common qualification for businesses that rely on vendors and suppliers for their business to function properly. This qualification must have resulted from a government suspension order to your supplier that resulted in the supplier not being able to deliver critical goods, but may continue beyond the original suspension order. The specific requirements for this qualification are listed below.

These impacts qualify a company regardless of revenue gain or loss.

Please reference the IRS notices pertaining to supply chain disruption qualification: Notice 2021-11 & Notice 2021-20.

Supply disruption qualifications

• More than Nominal Impact - The supply chain disruption due to vendor shutdowns must have resulted in a more than 10% impact on your business. This can be directly from the reduction of sales from the inability to procure the supply item, or from the impact not being able to procure the item had on your business. To calculate the more than 10% impact, evaluate the impact of the supply item on your 2019 gross receipts. For example, if you were not able to procure pallets for the shipping of goods, consider how much of your business relied upon pallets in order to operate in 2019. If it was more than 10%, this qualification can apply.
• No Replacement Supplier - Your business must not have been able to find a reasonable replacement supplier for the supply item affected by the government suspension order.

Supply chain disruption is a common qualification for businesses that rely on vendors and suppliers for their business to function properly. This qualification must have resulted from a government suspension order to your supplier that resulted in the supplier not being able to deliver critical goods, but may continue beyond the original suspension order. The specific requirements for this qualification are listed below.

These impacts qualify a company regardless of revenue gain or loss.

Please reference the IRS notices pertaining to supply chain disruption qualification: Notice 2021-11 & Notice 2021-20.

Supply disruption qualifications

• More than Nominal Impact - The supply chain disruption due to vendor shutdowns must have resulted in a more than 10% impact on your business. This can be directly from the reduction of sales from the inability to procure the supply item, or from the impact not being able to procure the item had on your business. To calculate the more than 10% impact, evaluate the impact of the supply item on your 2019 gross receipts. For example, if you were not able to procure pallets for the shipping of goods, consider how much of your business relied upon pallets in order to operate in 2019. If it was more than 10%, this qualification can apply.
• No Replacement Supplier - Your business must not have been able to find a reasonable replacement supplier for the supply item affected by the government suspension order.

The partial or full shutdown qualification is based on a "suspension test" to demonstrate that your operations were partially or fully suspended due to a Covid-19 governmental order. Keep in mind that a government restriction may have had a direct impact on your operations even though that shutdown order wasn't given to you directly.

Important: This qualification only applies during the period of the actual government order. Since there were very few government shutdown orders during 2021, the actual shutdown type of this qualification mainly applies to 2020 quarters. However, if the impact of shutdowns affected your business beyond the actual shutdown period, this qualification may apply.

Please reference the IRS notices pertaining to suspension qualification: Notice 2021-23, Notice 2021-33 & Notice 2021-49.

Full or partial suspension qualification requirements

• More than Nominal Impact - The partial suspension from a government order must have had a more than nominal effect, which means it affected more than 10% of business operations. This impact can come from a reduction in business hours of 10% or more, or a suspension of your business operations that represented 10% or more of gross receipts as compared to 2019. (This does not mean that a 10% reduction in sales is required to qualify, but the order must have suspended at least 10% of your revenue-producing operations.)

  Hourly example: Government orders required a restaurant to close 2 hours early due to curfew requirements. The 2 hours represented 15% of the business working hours. This business qualifies for the period affected by the government order.

  Gross receipts example: Government orders required a radiology clinic to stop elective procedures during Q2 & Q3 of 2020. The business reviewed its gross receipts for Q2 & Q3 of 2019 and determined that the suspended elective procedures represented 18% of its total gross receipts during those quarters. This business qualifies for these two quarters.

• Inability to Convert to Telework - If the business was able to effectively convert to a remote work environment that mitigated the nominal impact on the business, they do not qualify for the suspension qualification.

Based on your answers, you qualify for the following quarters!

Q1 of 2021

Q2 of 2021

Q3 of 2021

Depending on your qualifications, you will see your substantiation statements below. These statements will be retained to substantiate your claim with the IRS.

Supply Chain Disruption Substantiation Statement

Full or Partial Suspension Substantiation Statement

The statement below is for the first suspension only. The statements for additional suspensions will be identical, with the insertion of specific details for each suspension impact.

Based on your answers, you qualify for the ERC program!

This is an estimate based on the responses and employee counts provided and is not a guarantee of your credit amount or qualification. Many factors are evaluated during your ERC analysis. If we determine you qualify, this number could be much higher or lower.