Something I Learned Every Business Owner In the United States Should Know
At a fundraiser I attended recently, a few business owners I know were talking about this thing called ERC credit or Employee Retention Tax Credit. I noticed slowly a crowd growing around these individuals so I went and listened in.
Since I don’t have a bunch of employees myself at first it wasn’t a conversation I thought I needed to hear.
But what kept drawing me back in was the level of excitement coming from these business owners as they shared their stories of the big and unexpected wins they were experiencing. So I paid close attention and actually found it fascinating.
One thing I caught on to quickly and made a mental note of was how many people said, “I didn’t know about this”. It was a lot of business owners.
There were also a handful that said something along the line of “We probably won’t qualify so we didn’t apply.” Those people were immediately and very enthusiastically bombarded by those who went through it already clarifying all the myths surrounding ERC because they originally had the same doubts as well.
As I listened and learned more, immediately I thought about all the different business owners I know who would benefit from this ERC credit and so I wanted to write out what I learned so I can share with them and anyone else interested. Of course I’m not a financial or tax professional of any kind. I’m just sharing my personal thoughts on the subject. Please do your own due diligence but I think you’ll find this a useful starting point.
Some of the ERC details
- The ERC was first introduced in the 2.1 trillion dollar cares act back in march of 2020.
- The ERC credit allocated up to $26,000 per employee for business owners who kept employees hired during the pandemic and is a fully refundable tax credit against the employer portion of social security payroll taxes or the Medicare tax depending on the period you’re filing for.
- It’s paid to you directly via a check.
- It’s not a loan and you don’t have to ask for forgiveness.
- You never have to pay it back.
- These funds are not earmarked. You don’t need to use them for anything specific like payroll or operating expenses.
- The ERC can be utilized at the discretion of the business owner.
- To claim the ERC you file an amended 941x quarterly payroll tax return claiming your credits on lines 18 and 26.
ERC Misconceptions
As I mentioned, at the event several people believed the following as well as many other business owners I’ve spoken to since.
We won’t qualify because…
- we did not have a revenue decline.
- our revenue increased during the pandemic
- we didn’t experience any shutdowns
- we received PPP loans and those loans were forgiven
While these are factors in the process they certainly do not disqualify your business from receiving the ERC funds.
I’m learning that a fairly high percentage of businesses who had employees during the pandemic that are actually taking advantage of ERC credit are getting qualified.
Just do the potential math:
| Employees | 10 | 50 | 100 | 250 | 500 |
|---|---|---|---|---|---|
| Potential Credit | $260,000 | $1,300,000 | $2,600,000 | $6,500,000 | $13,000,000 |
For many businesses, this is a huge infusion of cash that is needed to recover from the pandemic or continue to grow even more. Not to mention it just helps offset the effects of the current inflation.
How Do I Apply for ERC?
You have a few different options but I’ve learned you must choose wisely.
- File Myself
- Just have my CPA file for me.
- Find a specialist and let them do the heavy lifting.
File ERC Myself
This seems like a logical option for maybe the smaller businesses but as Michael Gerber points out in The E-myth book, you should just do what you do well and leave everything else to those that do other things well. If you start down the rabbit hole of trying to figure out each and every nuance of the ERC Credit program on the IRS Website, either you’ll never get around to finishing it or you’ll get some returns but much less than a professional would. That’s why I haven’t done my own taxes or bookkeeping for 2 1/2 decades now.
Have my CPA file my ERC
Obviously this option makes sense because, that’s their job to deal with tax issues and maximize revenue. But what I’ve discovered in quite a few conversations is that a lot of CPA’s don’t even want to mess around with ERC. Not because they cant, but because they’re busy with their day to day activities and learning an entirely new set of rules and regulations for a one off event is incredibly daunting.
If you go to the IRS Website and see what’s involved and all the constantly changing information, you’ll understand why.
In fact, in my conversations with several CPA’s, I’ve learned that they themselves refer the ERC project out to specialists. One individual I spoke to said, “Anthony, I’m a damn good CPA and I could figure it out. But it’s like asking a really good and experienced doctor to do brain surgery. Could she figure it out? Yeah eventually but she’s probably going to make mistakes in the beginning that could affect lives and I can’t afford to make mistakes.”
This totally made sense to me because I operate the same way. Of course I asked each of them who they’re referring to and a common thread started to emerge. I’ll discuss that later.
Find a Specialist
I’ve always believed that hiring that one person who is a super focused expert in that one thing you need to get done has paid for itself multiple times over, even if it involved a higher price tag.
I myself operate in a very saturated field of generalists of which most of them are broke. But I work in a specialty that even the generalists refer their clients to me and I don’t have to worry about haggling over fees. But, the results I get these clients are far and above what any of those generalists would ever achieve. Why? They just don’t know the secret yet simple nuances that make all the difference and comes with years of experience.
So as I asked around and did a little of my own research. I found that there’s a few different types of services that claim they are specialists.
- The individual CPA who geeks out on tax code.
They initially muddled their way through the ERC program guidelines and figured some things out. The challenge here is, as I’m told, is like I mentioned previously, they are oftentimes busy with their regular daily activities and are unable to keep up with the constant changes to allow you to maximize your return. - The hybrid division.
This is that firm that decides there’s opportunity here so they allocate a couple of people to call themselves specialists in ERC. The problem is that as they’re trying to ramp things up they still likely require those individuals to participate in daily operations of the main business so they aren’t able to 100% focus on learning ERC to it’s maximum potential.
I haven’t done this myself but I know of a gentleman who took the time to call numerous companies and one question asked was, “What is your average credit per employee?” The typical response from these individuals was $10,000. That’s a far cry from the maximum potential. - The brain surgeon.
If I’m having brain surgery, I don’t want anyone digging around in my skull unless it’s what they do every day, all day. The same thing goes for getting ERC credits. I want someone who eats, breaths and sleeps ERC. If I or any of my business owner friends are going to take advantage of this gift, I want it to be for the highest amount possible without mistakes right out of the gates. The bad news is that there doesn’t seem to be many companies that only do ERC. The good news is that there are a handful that truly specialize only in ERC and after looking into a few I’ve come to the conclusion that Jorns and Associates is probably the best option for now. You can find them at WorkWithJorns.com. In my opinion, they are the top brain surgeons in the Employee Retention Credit industry right now. But that could change in the future.
Why Jorns and Associates? WorkWithJorns.com
- First and foremost, its ALL they do. ERC for breakfast, lunch and dinner.
- Their qualifying process is extremely thorough. They’ll go after every single dollar possible.
- They get deep. Day to day operations, supply chain and how the pandemic affected your business throughout 2020 and 2021.
- Seamlessly work with your CPA, bookkeeper or payroll team to acquire necessary documents.
- Simplified process. Complete a basic client questionnaire, supply PPP loan information and your 941 returns. They’ll do the rest.
- No hyped up guarantees. They’ll give you accurate numbers after they’ve run the calculations.
- They use customized software to perform calculations to eliminate errors.
- They do guarantee that their calculations are accurate and filings with the IRS are compliant.
- Provide long term audit support and carry a one million dollar E&O policy per client.
- Dedicated onboarding specialist to assist throughout the entire process all the way to the end.
- Their track record shows a much higher return per employee than other companies.
- You only pay their contingency fee once you’ve received the check from the IRS.
- They do have a small engagement fee that is 100% refundable if you don’t qualify.
- Zero risk to the business owner. No recovery, no fee.
So as I see it, these guys really have it figured out and are poised to get the maximum result for their clients.
Who does ERC work for?
Not to sound vague but as far as I know, pretty much any business with employees during 2020 or 2021. I know Jorns tries to keep it at 10 employees or more for a variety of reasons but of course because they have a huge staff, the more employees the better.
The bottom line is there’s over a trillion dollars earmarked right now for businesses just like yours and right now that trillion plus dollars is sitting in the United States Treasuries account when it should be in your account instead.
If your company has 10 or more employees, visit WorkWithJorns.com right now and just fill out a simple form and they’ll get back to you pretty darn quick.
