ERC Credits for Gyms and Fitness Centers
Gyms and fitness centers are where we all go to work on our bodies, our overall fitness, and for many, a haven for mental health. It’s a place we go to sweat, so it shouldn’t be the owners of gyms and fitness centers who are sweating trying to figure out how to retain employees during the pandemic or even keep their doors open. The Employee Retention Credit (ERC) is an important tool for owners to recoup lost revenue and receive benefits for investing in their people. ERC Specialists has helped many gyms receive valuable ERC funds, including Legends Boxing and Fit Body Bootcamp.
What is the state of the industry?
In many parts of the country, gyms and fitness centers are returning to normalcy, albeit with more frequent sanitation measures in place. However, for gyms in many large cities like New York, mask mandates and limits on indoor gatherings have many gyms still struggling to meet pre-pandemic revenues. Increased employee cost and business costs to incorporate pandemic-required changes have created additional difficulties for gym owners.
What is the ERC?
The ERC, also known as the Employee Retention Credit, is a federal program passed by Congress as part of the CARES Act. It’s designed to reward employers hit hardest by the effects of the pandemic for retaining part or all of their workforce despite a loss in revenue or ability to function as a business. The ERC started in 2020, and wages through September 30, 2021, qualify for the credit. Companies can claim these credits until April 15, 2025, using ERC providers such as ERC Specialists.
What are the benefits?
The ERC represents a sizeable benefit for employers, totaling up to $26,000 per W-2 employee. In addition, employers can receive the credit even if they also received a PPP loan. Please see the IRS documentation on the ERC application process for specific benefits amounts available to you in particular quarters. ERC Specialists is also happy to provide a consultation and set up your organization’s application for ERC on your behalf.
Changes Since Launching
The COVID-19 pandemic and our understanding of its effects on the economy and small businesses has changed dramatically since March 2020. As such, the ERC eligibility has changed from 2020 to 2021, offering more businesses the chance to benefit. In addition to an increase from $5,000 to $7,000 per employee per quarter, more ways to qualify have been added. The amount of revenue reduction necessary to receive benefits under that type of qualification was changed from 50% to 20%.
The three ways to qualify for the ERC are the same for all businesses but may take on a different outward appearance depending on the industry. A company is eligible if they were forced to suspend or significantly reduce operations because of a government mandate affecting its area of operation or a reduction in revenue compared to 2019. The revenue reduction type of qualification is not based on gross profit but revenue, so increases in business expense costs are not factored in. Some ways that fitness companies have qualified include social distancing requirements that forced them to reduce the number of customers served and shutdown-caused supply chain disruptions that made them unable to receive needed equipment on time. The best way to find out if your business is eligible is to speak with an ERC Specialist.
How to Apply and Qualify
To apply through ERC Specialists, you must submit a form after gathering all the required data points to prove eligibility. This includes a list of all full-time employees and their wages for 2020 and 2021, any PPP loan documentation you may have, and your quarterly 941 tax returns.
The ERC is an excellent benefit for gym and fitness centers to begin returning to normalcy after the pandemic, is relatively painless to apply for, and greatly benefits the recovery process. We at ERC Specialists are ready to help you apply for and receive all you’re entitled to from this refundable tax credit. Contact us today to begin applying and get your ERC funding process rolling.