Employee Retention Credit for Small Businesses

The federal government created the Employee Retention Credit (ERC) in response to the detrimental effects of the COVID-19 pandemic on small businesses. As part of the CARES Act, the ERC offers tax credits to encourage more businesses to retain employees during the pandemic.

Below you will find more information about the tax credit and its eligibility requirements. 

Eligibility Criteria

You qualify for ERC if:​

• Your business faced a shutdown or a drop in gross receipts during certain time periods in the pandemic​

• Your business paid wages and health insurance premiums to your employees​

• Your business received PPP assistance.

  • However, the same wages cannot be used both to qualify for forgiveness of a PPP loan and as ERC Qualified Wages.​

Timeline

ERC tax credits apply to wages and health plan expenses paid out to (and on behalf of) employees within these time frames:

2020

• Q2 2020: March 13, 2020 – June 30, 2020

• Q3 2020: July 1, 2020 – September 30, 2020

• Q4 2020: October 1, 2020 – December 31, 2020

2021

• Q1 2021: Jan 1, 2021 – March 31, 2021

• Q2 2021: April 1, 2021 – June 30, 2021

• Q3 2021: July 1, 2021 – September 30, 2021

• Q4 2021: October 1, 2021 – December 31, 2021

Calculating ERC for your small business

Gusto has developed a unique tool to help you calculate your ERC for qualified wages in 2020 and 2021.