Employee Retention Tax Credit for Recovery Start-Up Businesses

The pandemic has affected all businesses in one way or another, but startups are among the hardest hit. Many startup businesses have struggled to survive due to the pandemic’s impact on the economy. However, the good news is that the Employee Retention Tax Credit (ERTC or ERC) provides a valuable opportunity for recovery start-ups to reduce their tax liabilities and increase their chances of staying afloat. In this blog post, we’ll discuss the ERC and how recovery start-ups can take advantage of this valuable program.

The ERC is a program established as part of the CARES Act to provide a credit of up to $7000 per employee per quarter for businesses that have experienced a significant decline in revenue or have been forced to fully or partially shut down. Recovery start-ups, as new businesses, may not have a comparable revenue period to 2019. However, they can still qualify for the ERC based on the government order test, which states that a business must experience a full or partial suspension of operations due to a government order.

For recovery start-ups, the ERC can provide significant cost savings and support for employees during these upcoming challenging times. By using the credit to offset a portion of the wages paid to employees during the pandemic, start-ups can keep their payroll intact and avoid layoffs during this recession. This can be especially important for start-ups that are currently struggling to maintain their workforce due to decreased revenue.

What is a Recovery Start-up?

So, what is a recovery start-up? In short, it is a business that was started during the pandemic or shortly before. These businesses were often struggling to stay afloat due to the economic impact of the pandemic. However, with the ERC, they can receive much-needed financial support to help them recover and grow.

To qualify for the ERC, a recovery start-up must meet certain eligibility requirements. First and foremost, the business must have been in operation after February 15, 2020. The business must have been fully or partially suspended due to a government order related to COVID-19.

If your recovery start-up meets these eligibility requirements, you may be able to claim the ERC. Here are six benefits you can expect from applying for the ERC:

  1. Financial Relief: One of the most obvious benefits of the ERC is that it provides much-needed financial relief to businesses struggling to stay afloat. With the credit, businesses can offset payroll taxes and other expenses, helping them stay operational during this current recession.
  2. Retain Employees: Another benefit of the ERC is that it helps businesses retain employees. By providing a credit for wages paid, the program helps businesses keep their employees on the payroll and maintain continuity of operations.
  3. Flexible Use: The ERC also provides businesses with flexibility in how they use the credit. Businesses can choose between a couple ways to claim the credit: file a Form 941x for the past quarter(s) or reduce payroll tax deposits by the credit amount determined based on qualified wages.
  4. Maximum Credit Amount: The maximum credit amount that an eligible employer can gain is $7,000 per employee per quarter. The amount of the credit will depend on the number of employees they have and the wages paid.
  5. Tax Benefits: The ERC is a refundable tax credit, which means that even if a business has no tax liability, it can still receive the credit as a refund.
  6. Available to a Wide Range of Businesses: The ERC is available to a wide range of businesses, including recovery start-ups. This means that even if your business is new, you may still be eligible for the credit.

Another benefit of the ERTC for recovery start-ups is that it is available to a wide range of businesses, including those in the retail, hospitality, and service industries that have been particularly affected by the pandemic. Additionally, businesses of all sizes are eligible for the credit, which means that start-ups can take advantage of the program. 


The Employee Retention Tax Credit is a valuable program for recovery start-ups that have been affected by the COVID-19 pandemic. By providing a credit for wages paid, the program helps start-ups keep their employees on the payroll and maintain continuity of operations. The ERC provides significant cost savings, support for employees, and flexibility in use, making it an essential program for recovery start-ups. Recovery start-ups should explore if they qualify for the ERC and take advantage of the benefits it offers. At ERC Opportunities, we can help recovery start-ups navigate the Employee Retention Credit Program benefits for 2023. Contact us to learn more.