ERC: Is It Too Good To Be True?
Let’s talk a little ERC factor fiction. ERC stands for Employee Retention Credit. These started back in the covid days to give credit to keep employees on the payroll. Now, there’s a lot of confusion in the media recently because a lot of companies have come out to consult with business owners and are telling them that they can receive a lot of money from the IRS and they can help them.
Now, many of these companies are one shot deals who are just coming out of the woodwork to talk to you about ERC. We’ve already done some previous information about ERC scams, whether they’re for real, whether it can happen. But let’s revisit visit why you get the ERC. It’s not as simple as most of the advertising these days is saying it’s not just based on your business. You have to have suffered some losses during covid.
Why You Get the ERC
So a couple of the rules here, you had to be, your gross receipts for 2020 had to be down more than 50% from the prior period at that same time, or if it was 2021, you had to be down more than 20%. So you do have to meet qualifications to get the employee retention credit.
Many of the, ads that are out there now, and many of the emails you may be receiving telling you that you could get this money from the IRS, don’t specify anything about this. Your indicator light should come on, that something might be wrong if somebody is telling you that you qualify for free money from the government with no strings attached. You must meet qualifications to get this money.
Next up, if you did not have that revenue decline, can you still qualify? Maybe, your business had to be closed based on a government order. That’s kind of the other area where the ERC can step in even if you didn’t have a revenue decline.
So many restaurants come into play here, or maybe they were forced to close their interior dining rooms, but they still had a lot of sales going on through, delivery services. There is a possibility they may still qualify for the ERC.
We Helped our Clients Take Advantage of the Program
However, the main thing I wanna make sure that you understand is that when you receive advertisements about ERC, first off, many people have asked me and my clients, hey, can I do this? Can I really get this money? We’ve already applied and you’ve already got the money for the ERC.
If you were my client, we did that right as that program was coming out, not two years later, after the fact. You needed it in 2020 and 2021, and that’s when we helped our clients take advantage of that program.
If your accountant did not assist you with that, yes, you may qualify, but make sure that somebody is walking you through the test of what your revenue was and showing and proving that you had those declines before telling you you qualify for this money.
I have also run across several cases where people said, my accountant never even mentioned anything about it, and I even asked about it now, and they still don’t know. Well, maybe you still do qualify.
What You Should Do
However, your first move should be to look around for a new accountant. That’s what your accountant should be helping you do. Navigate tax laws, navigate government programs like this that relate to your taxes and helping you qualify. So you may win on two fronts. You may have ERC money and you may win by, uh, looking at a new accounting relationship.
So I hope this helps you navigate the waters. I will also post a document that links directly to what the qualifications are and helps you navigate the ERC fact or fiction characteristics.
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Donna Bordeaux, CPA with PYOPAccounting.com
Creativity and CPAs don’t generally go together. Most people think of CPAs as nerdy accountants who can’t talk with people. Well, it’s time to break that stereotype. Lively, friendly, and knowledgeable can be a part of your relationship with your CPA, as demonstrated by Donna and Chad Bordeaux. They have over 50 years of combined experience as entrepreneurial CPAs. They’ve owned businesses and helped business owners exceed their wildest dreams. They have been able to help businesses earn many times more profit than the average business in the same industry and are passionate about helping industries that help families build great memories.