Let’s discuss how essential businesses can qualify for the Employee Retention Credit (ERC). Despite their status, there are general criteria and the types of disruptions that could make an essential business eligible.

Even essential businesses were subject to state-mandated stay-at-home orders, which often resulted in full or partial shutdowns. These shutdowns allowed businesses to operate but under severe restrictions, such as limited opening times and restricted use of public transport. Additionally, there were limits on the number of workers allowed at the operational site, directly impacting productivity and operational capacity.

Essential businesses also faced significant challenges due to disruptions in the supply chain. For instance, delays in procuring necessary materials directly impacted project timelines and costs. These disruptions, beyond the control of the businesses, led to inefficiencies in carrying out contracts on time. Projects were often put on hold, contributing to partial suspensions.

Furthermore, essential businesses had to implement rigorous safety protocols and modify workplace layouts to ensure social distancing. For example, construction companies, which typically have various trades working simultaneously, had to limit the work to one trade at a time. These changes were necessary to comply with health guidelines but resulted in increased operational costs and reduced efficiency, as jobs took longer to complete.

The pandemic also led to manpower shortages and health concerns among employers. Compliance with quarantine protocols and stringent safety measures further affected the ability of businesses to maintain their operational capacity. Despite being essential and allowed to operate, these businesses faced considerable disruptions that could justify an ERC claim. Factors such as partial shutdowns due to government orders, significant supply chain issues, safety investments, and workforce challenges all contributed to their operational difficulties.

In short, essential businesses faced numerous challenges that impacted their ability to conduct business as usual and maintain their operational and financial stability as measured in 2019. These disruptions make them eligible for the Employee Retention Credit.

If you have any questions or think you may be eligible, click here to schedule your assessment.