Daniel HonanFounder, Profitable Painter CPA PLLC · I help painting contractors increase profits & cash flow while reducing taxes♦ Bookkeeping ♦ Tax

Painting Business Owners: Did you know the other way to qualify under the ERC?

Name: Painting Business Owners: Did you know the other way to qualify under the ERC?
Uploaded: 2023-12-20T18:19:28+00:00
Duration: 49 s
Channel: Daniel Honan
Description: In this segment, the presenter explains an alternative pathway for small painting businesses to qualify for the Employee Retention Credit (ERC) based on…

20 Dec 2023 · 1 min

Watch on YouTube

0:49

In this segment, the presenter explains an alternative pathway for small painting businesses to qualify for the Employee Retention Credit (ERC) based on revenue declines rather than a government shutdown. For the three quarters spanning April to December 2020, a business must demonstrate a 50% or greater drop in gross revenue compared to the same quarter in 2019. For the quarters from January through September 2021, the threshold is less strict—a 20% decline versus the corresponding 2019 quarter. Qualification is assessed quarter‑by‑quarter, and businesses should only claim the credit for quarters that meet the decline criteria (or experienced a shutdown), ensuring they retain proper documentation. The speaker warns that many businesses are pressured to claim the credit for all six quarters, which can backfire if the required decline isn’t substantiated.

Chapters

So if you don't have a government shutdown but you have that decline in revenue, that could also work if the decline in revenue is sufficient enough. The 3 quarters in 2020 where this was available, so April through December of 2020, you need to show a 50% or greater decline in gross revenue from the same quarter in 2019. If you can show that, you could qualify for ERC. In 2021, January through the end of September, it was actually less strict, 20% decline. But again, it's quarter by quarter. So if you qualify for one quarter, you may qualify for the other quarter. You only want to apply for those quarters in which you did have the decline or the government shutdown, making sure you have the right documentation to prove that. Kind of a common problem we've been seeing that people maybe qualify for 1 or 2 quarters, pressured into applying for all 6. That could be something that turns around to kind of bite them in the end.