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Business Insights

ERC Calculation & Refund Example: Coffee Shop Owner

Allison Skiba
4 minutes to read

Business Outline

Sue is the owner of a coffee shop in Michigan. Her business was founded in 2018 and she maintained 24 employees throughout 2020, 22 employees throughout 2021, and pays each employee $12/hour. She had two PPP loans: round one equaling $45,000 and round two equaling $51,200. 

This case study is based on a real NEWITY Member and is intended to detail NEWITY’s ERC application process, including what to expect and an accurate ERC refund calculation for this business. Note, some details have been changed for privacy.  

Sue is one of the countless small business owners who struggled during 2020 and 2021. From supply chain issues, government lockdowns, and varied business flow, running the business proved more tumultuous than usual. 

Sue learned about ERC from a radio advertisement and asked her accountant if she qualified. Her accountant told her she would not meet eligibility requirements. Three weeks later, Sue was reading an article that mentioned NEWITY’s ERC assistance. Since NEWITY provides no-cost eligibility review, Sue decided to confirm her accountant’s determination.

Step 1: Applying for ERC

Sue visited NEWITY’s website to apply for ERC. She created an account, followed the ERC Application Guide, and gathered all necessary documents . Since Sue collected the necessary supporting files, she completed NEWITY’s ERC application in 12 minutes after closing the shop for the day. Sue submitted her ERC application to the NEWITY team. 

Step 2: Uploading Documents and Confirming COVID-19 Impacts

The following day, Sue received an email from a NEWITY Member Service Representative requesting clarification on some of the uploaded documents. Sue confirmed her business’ payroll details with the representative, which allowed NEWITY’s Calculation Specialists to begin their initial assessment of her business’ eligibility. 

After 3 days, Sue was notified that her coffee shop qualifies for five quarters of revenue decline. Since ERC allows for seven quarters, Sue was contacted by a member from NEWITY’s Legal Shutdown team to discuss the remaining two quarters of potential ERC eligibility. After speaking with the Legal Shutdown Specialist, providing details on government lockdowns and supply chain issues, Sue learned that she qualified for an additional 2 quarters of ERC based on the timing of her shutdown. After sending her remaining documents, Sue’s Calculation Specialist completed their computations with Sue’s full business details. 

Step 3: Sign the Documents

The next day, Sue received an email from NEWITY reviewing the results of her ERC application – she is eligible for $166,500 cash back through the Employee Retention Credit! Alongside Sue’s eligibility amount, NEWITY provided the e-sign instructions to complete documentation required for NEWITY to file for the credit on Sue’s behalf. 

Step 4: NEWITY Sends the Tax Form

With Sue’s signature of all necessary documents, NEWITY filed her business’ amended tax form with the IRS on her behalf. Sue received a tracking number for her tax documents, so she could monitor their delivery to the IRS. Within 6-12 months, Sue will receive a check in the mail for the amount of her ERC.

Sue spent:
– 1 evening preparing documents
– 12 minutes submitting the application
– 30 minutes writing two clarifying emails
– 30 minutes on the phone with NEWITY’s Legal Shutdown team
– 5 minutes to e-sign all finalized tax documents from home

Sue earned:
$166,500 from the Employee Retention Tax Credit

With the money Sue received through the Employee Retention Tax Credit, Sue was able to upgrade her kitchen, give staff raises, pay off business debts, and move the remaining money into her own checking and savings accounts.

Update: June 2024 — We are no longer accepting ERC applications. However, we would be happy to help you access affordable funding through an SBA 7(a) loan.

To qualify for an SBA 7(a) small business loan, your business must be:

  1. U.S.-based and operated
  2. Owner supported / owner funded
  3. Eligible per the SBA’s requirements

Your loan amount will determined by the business’ average annual revenue, FICO score, and years in business