ERC or Employee Retention Credit is a tax credit provided for employers who have retained their employees on payroll during COVID times. This program comes under the CARES Act and is put forward to encourage employers to retain their employees on payroll during government-imposed COVID restrictions.
To qualify for ERC tax benefits, a business should meet certain eligibility criteria. Their operations should have been partially or completely dismissed due to government-imposed COVID restrictions. In fact, supply chain disruption was one of the main problems due to COVID that affected the operations of several businesses.
Let us see how this problem affected different industries.
- Manufacturing industry
Supply chain disruptions during COVID times were a major threat to the manufacturing industry. Many businesses had to retrench their employees due to serious disruptions in the supply chain. As a result, the manufacturing industry lost a lot of jobs during this period. The establishment of the CARES Act is aimed at retaining these employees. Through this program, employers can receive tax benefits and other perks that will help them to retain their employees throughout the duration of COVID days.
- Construction industry
Construction industry was another business that suffered from supply chain disruptions during COVID days. The small companies among them were the worst affected by this problem. As a result of supply chain disruptions, a large number of jobs had to be cut down in the construction industry, resulting in a huge loss of employment. In order for businesses to survive during COVID times and have an adequate workforce, ERC has been put forward by the government.
- Retail businesses
Retail businesses also suffered a loss of employment on a large scale as they were one of the main target markets of the COVID restrictions. The actions taken by them to steer clear of supply chain disruptions had serious effects on them. There was a reduction in employment due to this problem and several retail businesses had to be shut down during COVID days. In order for businesses to survive these days, the ERC program has been put forward by the government.
- Hospitals and medical providers
Hospitals and medical providers also suffered from supply chain disruptions that affected their operations. As a result, hospitals had to downsize their staff as many jobs were cut down due to this problem. In order for hospitals to survive these days, the ERC program put forward by the government can be of great help.