As a business owner, anything to do with taxes can be incredibly intimidating. We get that. Filing for a tax credit like the Employee Retention Credit ERC) is on a completely different level, and a lot is at stake. What if the Internal Revenue Service (IRS) decides to do an audit and determines you need to return the funds you received? That could cost your business extra legal and tax specialist fees on top of the mandated return of funds. What a headache!
If you don’t file for the ERC, though, your business could be missing out on up to $26,000 per qualifying employee. That’s a lot of money you can pour back into your business as you see fit. Here are six top mistakes you should avoid to confidently take advantage of the ERC:
Estimating Your Potential Credit Amount
When you hear an estimate of $26,000 per qualifying employee, it’s tempting to simply multiply the number of employees you have by that figure and assume you’ll be receiving a hefty check. However, as with most things associated with the IRS, determining how much credit your business could be eligible for is much more nuanced than a simple multiplication problem.
We highly recommend consulting a tenured team of tax specialists, like the one you’ll find at StenTam, to clear up any confusion. Our specialists can guide you through the qualification process while maximizing your credit with minimal risk.
Disqualifying Your Business Before Consulting a Tax Specialist
Since it was first introduced, the ERC has been modified several times to expand the program to more businesses. Consequentially, business owners have been left confused about how their business can qualify. Before even talking to a tax specialist, many assume they don’t qualify for the ERC.
Your business could be eligible for this tax credit – even if it didn’t begin operations until after the beginning of 2020. Don’t walk away from money that you can pour back into your business. Reach out to one of our tenured tax specialists today to see how we can help guide you through the ERC qualification process.
Lacking Awareness of Your Local Government’s Pandemic Orders
A key component of the ERC is determining the impact that the COVID-19 pandemic had on your business’s operations. In order to do so, you must have extensive knowledge of your local government’s ever-changing orders and mandates during that time. Thankfully StenTam has a solution to help alleviate that seemingly impossible task; we have an extensive library of local emergency orders readily accessible to our tax specialists so they can help guide you through the qualification process.
Failing to Properly Document
At StenTam, compliance is a really big deal to us. That’s because there are major consequences if the IRS catches you you not following their standards. Therefore, properly documenting your tax information is crucial. We offer readily accessible documentation for you in case the IRS decides to conduct a review of your filing.
Claiming Wages that Aren’t Qualified
As we mentioned previously in this blog, the ERC program has been modified several times since it was first introduced. One notable change that expanded the credit to many more businesses occured when the Taxpayer Certainty and Disaster Tax Relief Act of 2020 was enacted. This Act allowed businesses who took out a Paycheck Protection Program (PPP) loan to also qualify for the ERC. However, wages used to obtain PPP loan forgiveness cannot also be used to file for the ERC. Although it can be intimidating to determine which wages are qualified, our proprietary technology is designed to help you through the process.
Working with a Filing Firm that Doesn’t Prioritize Compliance
Navigating relief programs can be confusing and daunting and will often leave you with more questions than answers. It is important to file with a knowledgeable firm to ensure that your business is in good hands.
At StenTam, our specialists have extensive knowledge of taxes and finance and assist businesses of all sizes. We are here to make the filing process as quick and painless as possible to ensure your day-to-day business operations aren’t interrupted. Reach out to our specialists today to learn more.