Questions To Ask Before Hiring a CPA or Attorney To File Your ERC Application

The Employee Retention Credit (ERC) — also known as the Employee Retention Tax Credit (ERTC) — is an incentive for small to medium-sized businesses who kept employees on the payroll during the peak of COVID-19.

Originally from the Coronavirus Aid, Relief, and Economic Security (CARES) Act, this payroll tax refund legislation can get hundreds of thousands of dollars flowing back into your business — but you have to apply for it. Claiming your ERC refund can be complicated due to the updates, restrictions, and requirements from Congress. Below, we’ll tackle the questions you should ask before using a certified public accountant (CPA) or attorney to proceed with the ERC application process.

How Much Money Can I Get From the ERC 2020 and ERC 2021?

The Employee Retention Credit refund amount is per employee for qualifying businesses and includes a maximum of $5,000 for the year of 2020, and up to $7,000 for each of the first three quarters of 2021. This is a grand total of up to $26,000 back in your pocket per employee.

However, the ERC claim deadline is fast approaching. It’s crucial that when you file your ERC claim, everything is in order so your claim won’t be returned with correction requests. Should you need to make document corrections for the IRS, you’ll suffer additional delays that could result in a missed deadline for a specific qualifying quarter.

Will My Business Qualify for the ERC?

Most small to mid-sized businesses do qualify!

ERC 2020 Qualifications:

  • 100 or fewer employees on your payroll.
  • Employees were kept on your payroll.
  • You had to partially or fully shut down because of a government order OR
  • Your business’s revenue declined by 50% or more during any quarter when compared to the same quarter in 2019.

ERC 2021 Qualifications:

  • 500 or fewer employees on your payroll.
  • Employees were kept on your payroll.
  • You had to partially or fully shut down because of a government order OR
  • Your revenue declined by at least 20% for any of the first three quarters of 2021 when compared to the same quarter in 2019.

Due to all of the changes and updates to the ERC program, your CPA or attorney may not be aware of the difference in qualification guidelines for 2020 and 2021. We find this to be a common issue, because the ERC program has changed three times since its inception. Your “peeps” may even tell you that you don’t qualify when you actually do — potentially causing you to miss out on reclaiming your money.

Can I Still Apply If I Took Advantage of the PPP?

The Paycheck Protection Program (PPP) was part of the CARES Act and is a separate program from the ERC. The PPP offered loans to qualifying small businesses to help cover payroll expenses. If approved, these loans were eligible for loan forgiveness through the Small Business Administration (SBA).

Not only can you still apply for the ERC if you participated in the PPP, you likely qualify for the ERC. Plus, any wage expenses you didn't cover with your PPP loan can potentially be claimed under the ERC (but you can’t double dip!)

What Documents Will I Need for the ERC Application Process?

The IRS offers guidance on this in the form of a 102-page document. In short, you need:

  • IRS Form 941: Employer’s Quarterly Federal Tax Return
  • Monthly Payroll Ledger
  • Monthly Group Healthcare Statement
  • PP1 & PPP2 Loan Forgiveness Applications
  • Government Order To Shutdown or Suspend Operations

However, some of this paperwork may not be applicable to your business. Checking with an expert can assure you only submit the necessary documents to get your refund.

When Will I See My ERC Refund if I Qualify?

The ERC refund process will vary depending on a number of factors:

  1. How quickly you can fill out and gather the necessary documentation. Having your ducks in a row is needed in order for the IRS to process your refund. If any documents are incomplete, missing, or improperly filled out, you may experience processing delays on top of correcting any mistakes in your paperwork.
  2. Who you use to file your ERC claim. While using an ERC expert could take four to six weeks, that time is well spent determining your eligibility, checking for missing information, verifying the accuracy, calculating the credit amounts, and submitting your claim on your behalf.
  3. The IRS. The IRS is currently taking six to nine months to process ERC claims. This is particularly due to the sheer volume of claims. The time frame could increase the longer you wait to “get in line”.

Can I Complete the ERC Application Process on My Own?

You can! But, you’ll need to amend tax documents you’ve already filed with the IRS. However, working with a professional who specializes in the Employee Retention Credit process — an ERC expert — can help you get your full refund amount with less hassle.

How Is an ERC Expert Different From a CPA?

Because they are specialists, ERC experts are CPAs with years of tax code and accounting experience. Plus, ERC experts will know the ins and outs of the ERC process as well as be aware of all updates and changes, because that is all that they do.

For example, the ERC refund for the last quarter of 2021 was opened and then closed — most businesses are no longer eligible to receive a refund for that quarter. Additionally, the forms you would have filled out in 2020 are no longer used in the current ERC credit application claims process. An ERC expert can help you navigate the technical jargon and policy changes to ensure that you get your payroll tax refund as soon as possible.

Get a Handle on the ERC Application Process

If you’re like thousands of other small business owners, you’re still working every day to counter the negative impact of COVID-19 on your operations. Adding the responsibility of completing the ERC application process on top of everything else is a lot to ask. However, the financial benefits of the ERC refund could be life-changing for you, your employees, and the community that you serve.

Innovation Refunds (IR) understands and respects business owners across the United States. We have worked closely with hundreds of owners to help them not just survive the pandemic, but thrive. After all, it’s what we do.

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