We understand that as a construction company, you may have questions about your eligibility for the Employee Retention Credit (ERC). Many companies in the industry are unaware of the opportunities that this credit gives them, and they miss out on serious potential savings.

We want to provide you with a comprehensive guide to the ERC, and explain what construction companies often get wrong about their eligibility. We’ll cover the basics of the credit, highlight some of the common misconceptions, and provide practical advice on how to maximize your eligibility and claim the ERC credit.

What is the Employee Retention Credit (ERC)?

The Employee Retention Credit is a tax credit that was introduced as part of the CARES Act in March 2020, to provide financial relief to businesses affected by the COVID-19 pandemic. The credit is designed to encourage employers to keep their employees on payroll, even if they are not able to work due to the pandemic.

The ERC is a refundable tax credit of up to $7,000 per employee per quarter in 2021, and can be claimed against employment taxes paid by the employer. This credit is available to all eligible employers who have experienced a significant decline in gross receipts, or who have been forced to suspend operations due to government orders.

Common Misconceptions About ERC Eligibility for Construction Companies

Construction companies may assume that they are not eligible for the ERC because they have not experienced a significant decline in gross receipts, or because they are considered essential businesses and have not been forced to suspend operations. However, these assumptions are not always accurate.

Misconception #1: Construction companies are not eligible because they have not experienced a significant decline in gross receipts.

While it is true that many construction companies have been fortunate enough to avoid a significant decline in gross receipts, there are circumstances where they may still be eligible for the ERC. For example, if a construction project was delayed or canceled due to the pandemic, this could result in a decline in gross receipts and make the company eligible for the credit.

Misconception #2: Construction companies are not eligible because they are considered essential businesses and have not been forced to suspend operations.

Being an essential business does not automatically disqualify a company from the ERC. If a construction company has experienced a significant decline in gross receipts due to the pandemic, or has had to partially suspend their operations due to government orders, they may still be eligible for the credit.

How Construction Companies Can Maximize Their ERC Eligibility

To maximize your eligibility for the ERC, it is important to understand the rules and regulations surrounding the credit. Here are some practical tips for construction companies looking to claim the ERC:

Tip #1: Keep detailed records of your gross receipts and employee wages.

To claim the ERC, you will need to provide evidence of a significant decline in gross receipts, or that your business was partially or fully suspended due to government orders. Keep detailed records of your gross receipts and employee wages, and be prepared to provide documentation to support your claim.

Tip #2: Understand the rules surrounding qualified wages.

Not all wages are eligible for the ERC. Make sure you understand the rules surrounding qualified wages, and ensure that you are only claiming the credit for eligible wages.

Tip #3: Consider the impact of PPP loans on your ERC eligibility.

If you have received a PPP loan, this may impact your eligibility for the ERC. Make sure you understand the rules surrounding PPP loans and the ERC, and seek professional advice if necessary.

Tip #4: Consider Getting Assistance with a tax attorney who Specializes in ERC.

We’re the only ERC company who gives you access to the expertise of Former IRS Agents. They have processed 100s of ERC filings while working within the IRS and they know the process better than anyone. 

The Employee Retention Credit can provide substantial financial relief to construction companies affected by the COVID-19 pandemic. While there are some common misconceptions surrounding eligibility, it is important to understand the rules and regulations surrounding the credit, and to keep detailed records of your gross receipts and employee wages.

By following the tips outlined in this article, you’re well on your way adding a substantial cash infusion for your business with the ERC.