The Recovery Startup Credit means that if you started a business after Feb 15, 2020 you could qualify for up to $100k from the IRS. It is not a loan and does not have to be repaid. Don’t leave money on the table!
We’ll help you find out if you qualify, maximize your credit, and complete the forms to get you a check in the mail from the IRS as quickly as possible.
If you started a business just prior to, or during, the pandemic… we’re sorry?
But in all seriousness, congratulations on achieving a big milestone during sucha tumultuous time. And we may have some encouraging news for you.
While you may not have previously qualified for any stimulus funding from the government (i.e. The Paycheck Protection Program or Economic Injury Disaster Loans), there is one credit that you do qualify for now.
It’s called the Employee Retention Credit. And it could see you earn up to $100,000 in the form of a tax refund from the IRS this year.
Sound good? Keep reading!
In this post, we’re going to walk you through what the Employee Retention Credit is, what’s changed, and why your business certainly qualifies even if you started operations after, February 15, 2020.
Let’s dive in!
In short, it’s funding from the government to help small business owners, with one or more employees, navigate the consequences of COVID-19.
It came out of the same CARES Act in 2020 as The Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL), and we dare to say that it’s even better than both programs.
Why? Because, unlike PPP and EIDL, you don’t have to pay the Employee Retention Credit (ERC) back or spend it in any particular way!
And for businesses who started operations after February 15, 2020… you finally qualify!
If you’ve been reading our articles for a while, you’re aware of just how many times the Employee Retention Credit rules have changed.
In a bid to stimulate the economy and get more businesses up and running post-apocalyptic-2020, the government has been loosening its grip on the criteria for months now: increasing the amount of credit you can claim per employee, extending the length of the program, and allowing businesses to combine multiple stimulus programs at once.
Now, thanks to the American Rescue Plan Act of March 2021 (which you can read more about here), they’ve changed who can apply for the Employee Retention as well.
New businesses are now eligible to receive funds as a Recovery Startup Business. That means you!
Written into law with the American Rescue Plan Act, new businesses that opened during the pandemic are now eligible to receive stimulus funding as a Recovery Startup Business.
A Recovery Startup Business for the purposes of the Employee Retention Credit is defined as a business that:
If this sounds like your business, keep reading. You could be eligible to earn up to $100,000 in tax refunds from the IRS later this year.
If we thought it was easy for small businesses to qualify for the Employee Retention Credit (and it is!), it’s even easier for brand new businesses.
As a Recovery Startup Business, here is what you need to qualify for the ERC:
If it sounds straightforward, that’s because it is.
There are essentially zero stipulations to qualify for the ERC under these new rules for new businesses, as long as you opened doors on or after 02/15/2020 and make less than $1M in revenue.
Now let’s dive into a few more nitty-gritty details.
As a brand new business, there are a few things you can’t do when it comes to 
the Employee Retention Credit.
Unfortunately, you can’t claim the recovery start up credit for any of 2020, nor can you claim Q1 or Q2 of 2021. However, per updated guidance, recovery start up business may claim the credit for these prior periods if they meet the revenue reduction or government restriction criteria.
But the good news is, regardless of the above recovery start up businesses do qualify for up to $50,000 in credits for each quarter of Q3 and Q4 of this year – 2021. Please note: if your business also qualifies under the restriction or reduction in revenue criteria then the $50,000 cap no longer applies as the business would then be qualifying under the original ERC rules.
Note: In order to qualify for the credits, you must be paying staff taxable wages as employees during applicable quarters.
The best type of entity that will benefit the most from the ERC will be an S or C-Corporation, however, all entity types that meet the above criteria are eligible.
Now for the fun stuff.
While the calculations for the exact amount you get back will depend on a few factors, we’ll help you make a simple calculation now.
As a new business, you are eligible to receive up to $7,000 per employee, per quarter, capped at $50,000, for the final 2 quarters of this year.
Here’s an example.
Let’s say you have 5 employees.
$35,000 (5 employees x $7,000 per employee) in Q3 + $35,000 (5 employees x $7,000 per employee) in Q4 = $70,000
As a new business with 5 employees, you would receive a $70,000 check from the IRS this year.
That’s a lot of money for a new business!
With $70,000, you can buy new equipment, sign up for a nicer lease, or do more marketing – whatever you need to accelerate your business growth this year. You can even just distribute the funds to the owners. There are no stipulations for how these funds must be invested or spent.
There are a few things you can do between now and when you apply to get the most money back from the Employee Retention Credit.
Here are a few things we suggest:
Final guidance from the IRS on the Recovery Startup Business Provision was recently released and can be found here.
And as always, we recommend working with a very experienced accountant to help you maximize the amount of credit for your unique situation. If working with us for your calculations, we will be able to answer any questions you may have once you get started.
In order to capitalize on the Employee Retention Credit (ERC) as a new business, you need to get in touch with us to help you make the calculations.
That’s right – completely free! After you receive the calculations, you are under no obligation to work with us to finalize the process.
We simply want to help as many fitness businesses as we can get back on their feet post-COVID.
If you think you qualify as a Recovery Startup Business, fill out our form at the top of the page to see if your business qualifies.
You will receive an email to fill in a few more documents for us to finalize the calculations. After that, we’ll reach out to you as soon as it’s finalized to let you know how much you can receive back from the IRS.
In the meantime, you may want to check out our Frequently Asked Questions page or watch a few of our videos about the Employee Retention Credit.
