By Cara Olson, Special FBA Contributor
The buzz word among businesses today is ERC, yet there are many misconceptions surrounding it. You probably have heard of it but the reason you have not applied for it is either you do not think your business will qualify or you think it is too complicated to get even if you do.
ERC is the acronym for Employee Retention Credit which is a government stimulus aid program provided under the CARES Act and is designed to help businesses that were able to retain their employees during the Covid-19 pandemic.
Practically all fitness businesses will qualify, here are a few common costly misconceptions that limit owners from proceeding.
- You were not deemed an “Essential business”
- You were profitable during 2020 and 2021
- You already received PPP
- You had to close your business permanently
- You missed the filing deadline
- You did not have to close your doors at all
- You did not have enough employees
- You are a non-profit
- The ERC funds have run out
Let’s answer each of these common ERC misunderstandings in more detail.
Essential Business
Why the government has deemed certain businesses essential and others not is a debate for another day. With that being said, it does not matter whether a business was considered essential to be qualified for ERC.
Profitable Business
This is probably the most misconstrued rumor about ERC qualification. When ERC was first implemented, this was true, but it is not any longer. Businesses that were profitable from year to year and quarter to quarter were the only ones that qualified. However, the CARES Act which lays out the qualifications for ERC has since been adapted to include the following qualifier:
‘a full or partial suspension of business operations due to government orders enacted in response to the COVID-19 pandemic (the “Government Orders Test”)’
All gyms and other fitness businesses that had a brick-and mortar location with employees will most likely qualify.
Already Received PPP
Similar to the profitable business qualifier, there was a time where a business had to choose between filing for PPP or ERC and most chose PPP as it was easier and well known. That is not true any longer, because in 2021 the CARES Act was amended to allow any business regardless of whether you received PPP or not, to qualify and receive ERC. That's great news! There are more funds available for your business after all.
Permanent Closure
Unfortunately, some fitness businesses have had to close the doors permanently as it has been a rough road for them to try to meet all the government requirements to stay open. It was hard to keep going for some and you might have made a decision to go back to more coaching and one on one opportunities. The good news is that even if you were not able to keep your doors open, as long as you kept your employees for at least one quarter in 2020 or 2021, you can qualify.
Filing Deadline
More good news is that although the filing deadline has technically passed, you are allowed to amend your 941 payroll tax forms and still receive the ERC funds. To qualify for 2020, you have until April 2024 and for 2021 you have until April 2025 for these amendments. Do not wait to get your money as even though you have until those dates, why let the government have your funds longer than necessary.
Doors Stayed Open
If you were able to keep your doors open throughout the entire pandemic for whatever reason, congratulations, that is commendable. Although this would be very few fitness businesses that would be true for, if any, it would not disqualify you for ERC. The fact the govt required social distancing within your gyms is probably enough. The extra cleaning requirements would be another qualifier.
Not Enough Employees
As long as you were able to maintain at least one W2 employee that was not you or a family member, you would be able to qualify. We can also help you those that have under five employees. After all small businesses are just as important as the larger ones and sometimes have even less resources.
Non-Profit
Although this also probably pertains to a small percentage of fitness businesses, the truth is non-profits also can qualify as long as they had W2 employees. There are some extra details on this, but without getting too deep into those individual requirements here, you owe it to yourself and your organization to reach out and talk to someone to get your specific situation answered.
No More Money Available
Unlike the PPP, there is plenty of money for the ERC refund program. The IRS has established enough funds for every business that qualifies. There is plenty of money and it will not run out. If you do not file for what has been designated for you personally, then that money will just be kept by the government. Who would want that?
In conclusion
As you can see there has been a lot of fake news about the Employee Retention Credit (refund) and it has stopped many businesses from getting their refund that has been specifically earmarked for them. Now that you know, that almost every fitness business that was able to keep their employees at all during the pandemic should qualify, isn’t it time to apply for it? After all, it is your money.
Cara Olson is a business consultant with over 25 years of experience. She has owned businesses of her own in different industries including financial, medical, and health. Her expertise is in operation and sales. She has teamed up with the best ERC companies to help educate small and medium sized businesses about the ERC refund credit.
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