Are you a business owner with employees who persevered through the challenges of COVID-19 and retained your employees during that time? If the answer is YES, then your business might be eligible to receive money through a tax credit that was permitted through the CARES Act.

The CARES Act actively encouraged entrepreneurs to retain their employees and keep them on payroll even if they had to close their physical locations during COVID-19. The CARES Act tried to do this in two different ways: with the Paycheck Protection Program loans (PPP) and the Employee Retention Credit (ERC) (“Congress Passes $2 Trillion Economic Stimulus Package”, Worldwide ERC, 27 Mar 2021, Most entrepreneurs know about the Paycheck Protection Program loan that was authorized around that time, but many business owners never learned about the tax credit known as the Employee Retention Credit (ERC). This is mostly because the Employee Retention Credit appeared very complicated.

The following information is what every employer needs to know about ERC and how it can provide a boost to business for retaining employees during COVID-19.

What is ERC?

ERC is a tax credit that many businesses are qualifying for based on wages the employer paid to W2 employees that remained on payroll between March 2020 and December 2021. This tax credit was afforded by the CARES act to offset extra expenses that many businesses incurred due to lost business during COVID-19. (ERC Today,, Accessed 27 September 2022)

What Businesses Are Qualifying?

Businesses Have to Meet Two Requirements to Qualify:

The first requirement is that the business must have had at least one W2 employee on payroll during COVID-19, the only rule being that the W2 employee must be someone else other than the owner of the business. Even if the business qualified for the PPP loan and the loan was given to the business to keep the employees on payroll the business can still qualify for this retention credit. Ultimately, the federal government is rewarding businesses for keeping their staff during a very challenging time for businesses and the local communities. (ERC Today,, Accessed 27 September 2022)

The second requirement is that the business must have been negatively affected by COVID-19 in some way to qualify for the tax credit. The effects of COVID-19 were so extensive on businesses and the communities that they serve that it does not just include businesses that had to close their physical locations during Covid-19. It's hard to imagine any business that wasn't affected in some negative way during the multiple shutdowns that occurred during COVID-19 and extra precautions that businesses had to put in place to keep their business running. Essentially, if the business had to completely or partly close for any period of time during COVID or saw a drop in gross profits from 2019 or experienced issues in supply chains, then they probably qualify for this tax credit.

What Wages Count Towards ERC?

According to ERC today (ERC Today,, Accessed 27 September 2022), the wages and benefits that were paid to regular W2 employees from the time that the pandemic started in March 2020 to the end of that year qualify for this tax credit. In 2021 the whole calendar year that was paid to employees is countable for the ERC credit. Countable wages don't just mean money that was paid to the employee but also the benefits that you paid to keep the employee on payroll. Some of these things include FICA, Medicare, health benefits and payroll taxes. If you're a business owner you know that it costs a lot of money to have employees up and above what is paid to them directly. The Employee Retention Credit can help in recovering some of these costs. (“IRS provides guidance for employers claiming the Employee Retention Credit for 2020, including eligibility rules for PPP borrowers,” IRS, 1 March 2021,

What Could the ERC Payment Possibly Look Like?

Most employers are receiving on average about $26,000 in tax credit per employee that they had on payroll during COVID-19. Of course, this varies depending on the company size and the length of time that the employee was on payroll during these eligible times (ERC Today,, Accessed 27 September 2022).

Considering the possibility of getting a substantial amount of money back for each employee that you had on payroll during a very challenging time for your business, it would only be a benefit to see if your business qualifies.

Let's just do the math so that you can get an idea of what it could look like for your company. If we're working with a company that had five employees during the whole pandemic time between March 2020 and December 2021.

5 employees X $26,000 = $130,000

Rubi’s Positive Empowerment has assisted many small businesses and the Colorado Springs area, and the nation recovered some of the money that was lost during COVID-19 in the multiple shutdowns. We can help your business too. It does not cost anything to see if you qualify and the application process is very quick and easy, and only takes about 10 minutes.