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The construction industry experienced varying degrees of impact from the COVID-19 pandemic, with many jobs forced to either fully or partially shut down during Michigan’s shelter-in-place orders last spring. Companies that were able to retain their workers on payroll during the shutdown qualify to apply for Paycheck Protection Program (PPP) funds through the CARES Act (2020), as well as additional funds via the Consolidated Appropriations Act (2021).

As part of the second piece of legislation, Employee Retention Credits (ERC) are also available for construction companies who have experienced reduced revenue or have payroll expenditures during the pandemic. Excess payroll-related expenditures over PPP funds received can be allocated to calculate ERC eligibility. Revenue eligibility is calculated if a company had greater than 50% drop in gross revenue during any quarter in 2020 as compared to 2019.

The Impact of Employee Retention Credits – In Numbers

In spring of 2020, a local construction company shut down its Michigan jobs for six weeks during the shelter-in-place order. The company maintained payroll by paying its employees during the shutdown period using PPP funds.

With over 100 employees on the payroll, the company had a significant excess of payroll expenditures on its PPP forgiveness application. Utilizing this payroll expense excess, the company’s accounting advisors at Maner Costerisan advised allocating these wages and qualifying health expenditures to an ERC. This resulted in over $50,000 of payroll tax credits claimed for the six-week period, giving this company a significant financial boost to start 2021.

A Michigan plumbing company suspended its operations for seven weeks during the shelter-in-place order last spring. Like the construction company mentioned above, the plumbing company employs more than 100 individuals and also utilized PPP funds to maintain its employees on the payroll during the shutdown.

The company’s advisors calculated an excess of payroll expenditures on the PPP forgiveness application. With assistance from Maner Costerisan, the plumbing company was able to receive over $200,000 in payroll tax credits for the seven-week period, providing them with a strong financial base in the new year.

As these examples highlight, Employee Retention Credits provide another critical mechanism for additional funds.

Making ERC Credits Work for You

Does your construction company qualify for the ERC and if so, do you know the steps to take to ensure you’re getting what credits are available to you?

Maner Costerisan is here to help! Our team of construction experts is dedicated to understanding the industry and the “unique” accounting that comes with it. We can help you make the most PPP funding, ERC, and other tax credits.