As a business owner, you may have heard about the Employee Retention Credit and want to take advantage of it. There is a lot of complicated language listed in the Employee Retention Credit rules and requirements for this tax credit. The Employee Retention Credit has been generating many positive results for businesses and recouping payroll expenses paid during the pandemic. It’s always good to get more information about something that might affect your business, for this reason let’s take a detailed look at one of the qualifying requirements.

Let’s take a moment to go into detail about what it means to have to fully or partially suspend operations. This is a very complicated way of saying you couldn’t do business as normal because of the multiple mandatory shutdowns or the mask orders or in some areas where they had mandatory vaccinations your business may not have been able to serve the customers as the business would normally. There are a lot of ways to look at this aspect from a business standpoint. It is hard to find a business that was not affected in some way from COVID-19 and the changes/complications it created for businesses.

One of the must-haves to qualify for the Employee Retention Credit is that your business had to fully or partially suspend operations because of a government order or see a substantial decrease in gross business profits compared to 2019 (ERC Today,, Accessed 28 September 2022).

Fully Suspended Operations:

First let’s look at what it means to fully suspend operations. This is a complete full stop of daily operations. If you had to shut down/pause your business operations completely: close the business doors, lock them, tell your employees to go home and not be able to perform any part of your business during the shutdown, then you definitely meet this requirement. If this sounds like what happened to your business, then you fully suspended operations. Even if you had to do this for only one day, your business probably still meets this requirement. Businesses are being able to count the days that they were fully shut down under this category of fully suspended operations. If you had to shut the business down at all during the timeframe when the mandatory government shutdown was going on, then there is no question that you meet this requirement (ERC Today,, Accessed 28 September 2022).

Most non-essential businesses fell into this category. Some examples of non-essential business are salons, spas, shopping malls and stores that do not have groceries, sporting venues, and gyms. (Jiang, Irene, “Here's the difference between an 'essential' business and a 'nonessential' business as more than 30 states have imposed restrictions” Business Insider, 31 March 2020,

Partially Suspended Operations:

Second let’s look at the category that’s a little bit trickier, partially suspended operations. This could mean a lot of things and for this reason I would like to share lots of examples.

Temporary Closure of Physical Location:

If your business has multiple physical locations but one of them had to temporarily close, then your business meets this requirement. This is because you had to shut down your physical location where you would usually see your customers. It’s a partial suspension because you didn't have to close all your locations but many businesses had to go down to just having one location open because of staffing issues caused by the government orders. A good example of this is when restaurants had to close their dining rooms and only provide curbside pickup. Many of the restaurants did not get as much business as they typically would pre-COVID. (ERC Today,, Accessed 28 September 2022).

Lack of Normal Supplies:

Did you have to change or modify some of the typical supplies that you use in your business? If so, this would qualify under the partial category, if you were not able to get your normal supplies that you would typically use for your customers. This might have caused a delay in your services or products, or maybe the service or product was not the same and could not be provided at all. A good example of this is when some restaurants had to change their recipes or not offer certain dishes because they were not able to get the ingredients that they would typically use for dishes, causing the restaurant to only be able to offer limited menus. In these cases this restaurant would meet that requirement. (Worldwide ERC,, Accessed 28 September 2022)

Decreased Operation Hours:

Did your business have to shorten operation hours or only be open during hours that were less than your normal business hours (Worldwide ERC,, Accessed 28 September 2022)? If so, this meets the requirement for partial suspension of operation. Many businesses had to move to limited operation hours to accommodate their employees or customers or to comply with new sanitizing rules. Employees with children not able to be in school because of the shutdown were not able to work their typical hours. Many businesses had to close operations early to sanitize their work environment.

According to an article on Eisner Amper (2021) some other possible scenarios that might qualify for partial suspension of operations (“ERC -- Full or Partial Suspension of Trade or Business Operation”, Eisner Amper, 09 April 2021, erc-suspension- business-tx-blog-0421/):

*If a business had to move to remote services and was only able to provide admin related services to their business but not perform all the services of their business. 

*If a non-essential classified store had to close their storefront but was still able to provide call in orders or pick up orders.

If you're not sure what category you fall into it's good to talk with your ERC specialist to help you identify if your business had to fully or partially suspend operations.