If your business has W-2 employees, then it typically must fall into one of the two following categories in order to be eligible for ERC:

• Your business(es) experienced decreased revenue during quarters 1-4 in 2020 and 1-3 in 2021, compared to 2019
• Your business(es) suffered from any number of government-mandated restrictions

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Government mandates may include a wide range of possibilities. Some examples might include things like partial or full shutdowns, increased sanitation procedures, spacing limitations, storefront closures while continuing online sales or business, or reduced occupancy, among many others. 

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Many of these businesses may have also received the Paycheck Protection Program (PPP) loans in 2020 or 2021, and business owners wonder how that affects their eligibility for ERC. Regardless of whether your business received PPP 1 and/or 2, you may still be eligible for ERC.

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Consult with an experienced CPA about your business and its experiences to get a better understanding of your eligibility. 

With cosmetology being such a large industry, business owners may wonder if their business qualifies for the Employee Retention Credit. If your cosmetology business was affected by a government-issued COVID mandate or falls into the decreased revenue terms listed above, then you may qualify. Some examples of cosmetology businesses may include:

• Nail salons
• Hair salons and barbershops
• Spas and massage businesses
• Esthetics businesses
• Beauty and cosmetology schools 

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Talking with a tax professional or CPA can help you to understand better if your business may qualify.

Business owners who have filed for ERC may be wondering when they can expect to receive the tax credit. With so many businesses being affected by the pandemic, the IRS has a high volume of applications to process. Every case is unique and will have a different timeline. Your refund may be processed in about 8 months, although it could take longer. 

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If you wish to check the status of your refund, you may use the “Where’s My Refund?” feature on the IRS website, or you can call the IRS.

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For many spas, salons, and cosmetology or beauty schools, ERC can be a great financial relief, but it is important to make sure you and your tax planners are diligent and thorough when examining your eligibility. It is critical to note that the IRS will carefully examine your claim for this credit. Submitting false ERC claims can lead to compliance risks such as ERC audits in the future, setting up a potential disaster.

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Strategic Tax Planning’s experienced tax professionals and CPAs will work closely with you and your business, ensuring all of your ERC qualifications and facts are accurate and in order. We are here to help you receive your deserved relief for persevering during difficult financial times.