The Employee Retention Credit (ERC) has been a critical relief measure for small businesses during the COVID-19 pandemic, providing financial support for maintaining their workforce and promoting economic resilience. However, small businesses must carefully evaluate the available benefits of the ERC and optimize their use to ensure compliance and maximize their benefits. This article will discuss best practices for small business owners to maximize the benefits of the ERC.
Understand Eligibility Criteria: Small businesses must understand the ERC eligibility criteria to ensure compliance and optimize their benefits. Eligibility requirements include experiencing a significant decline in gross receipts or a full or partial suspension of operations due to government orders. Small businesses should evaluate their eligibility and maintain proper documentation to support eligibility claims.
Review and Calculate Qualified Wages: Small businesses must carefully review and calculate qualified wages to maximize their benefits. Qualified wages may include salary, tips, and health benefits, among other expenses. Small businesses should evaluate their qualified wages and maximize eligible expenses to maximize their benefits.
Claim Refunds for Prior Quarters: Small businesses may claim ERC refunds for prior quarters, providing financial support for maintaining their workforce during the COVID-19 pandemic. Small businesses should evaluate their eligible expenses for prior quarters and claim ERC refunds to optimize their benefits.
Consult with a Qualified CPA Firm: Small businesses should consult with a qualified CPA firm to navigate the complexities of the ERC and ensure compliance with tax regulations. A qualified CPA firm can help small businesses evaluate their eligibility, review, and calculate qualified wages, claim refunds for prior quarters, and optimize their use of the ERC.
Keep Detailed Records: Keeping detailed records is critical in optimizing the use of the ERC and ensuring compliance with tax regulations. Small businesses must maintain accurate records of eligible wages and qualified health plan expenses, along with any documentation required by the IRS. Records should be kept for at least four years and be readily accessible for review.
Stay Up to Date with IRS Guidance: Small businesses must stay updated with the latest IRS guidance related to the ERC. The IRS may issue updates or revisions to ERC guidance, and it is essential to stay informed and make necessary adjustments to ensure compliance. Small businesses should regularly check the IRS website and consult with a qualified CPA firm to stay updated with ERC guidance.
The Employee Retention Credit has been a vital relief measure for small businesses during the COVID-19 pandemic, providing financial support for maintaining their workforce and promoting economic resilience. However, small businesses must carefully evaluate the available benefits of the ERC and optimize their use to ensure compliance and maximize their benefits. By understanding eligibility criteria, reviewing, and calculating qualified wages, claiming refunds for prior quarters, consulting with a qualified CPA firm, keeping detailed records, and staying up to date with IRS guidance, small businesses can optimize their use of the ERC and promote long-term economic resilience. Small businesses should consult with a qualified CPA firm to navigate the complexities of the ERC and ensure compliance with tax regulations.
The team at Talley has dedicated an extensive amount of time to meticulously study the laws, regulations, and FAQs that have evolved overtime regarding the ERC and PPP. We are more than prepared to support you throughout this process. Whether you require a swift answer to a brief query or need comprehensive assistance with the application or refund procedure, we are here for you. Don't hesitate to contact us today.