As the end of the year approaches, Wealth Zone University wants to help clients be fully prepared for the year ahead – including taxes. The Employee Retention Credit (ERC) is a tax tool that businesses can use to help their bottom line. Sadly, many businesses do not realize that the ERC is real. In fact, the federal government has authorized incentives for businesses that paid wages on W-2s who retained their employees from March 2020 through December 2021.
The federal government established the Employee Retention Credit (ERC) to provide a refundable employment tax credit to help businesses with the cost of keeping staff employed. Eligible businesses that experienced a decline in gross receipts or were closed due to government order and didn’t claim the credit when they filed their original return can take advantage by filing adjusted employment tax returns.
Consequently, many businesses have been receiving “invitations” from outside companies, claiming to provide ERC refunds of up to $26 k per employee if hired. Business owners should exercise caution with these offers, and WZU strongly recommends against using these services. Instead, companies should contact their pay roll processing company or payroll processors if they have questions or concerns about their Employee Retention Credit. If a business does its own payroll, they should consult with their accountant about the ins and outs of the ERC.
Businesses should be aware that those whose use PEO’s aren’t able to receive the ERC credit because those employees belong to the PEO, and not the company. Additionally, sole proprietors and PTE owners are also usually not eligible to take advantage of the ERC for their wages or the wages of family members. Finally, if a business does receive an ERC refund, it will be applied to reduce the wages listed on the employment and income tax returns. The company will not receive it directly. This could result in amended employed or income tax returns, additional taxes and possibly fees for additional services. Businesses can take advantage of this tax benefit but should weigh the potential costs before deciding what is ultimately best for them.
About Wealth Zone University:
Don Moragne, the Founder and CFO of Wealth Zone University is a functional CFO with expertise and extensive experience in the management of financial and wealth strategies. Wealth Zone University is a component of The Success Zone, Inc., a Financial Management Firm that provides Chief Financial Officer services to small and medium-sized businesses. WZU operates under the belief that success in business is possible for anyone who begins an entrepreneurial journey, so long as they are armed with the proper mindset, the appropriate business model, and experienced advisors.
Company Name: Wealth Zone University
Contact Person: Don Moragne
Address:4061 Powder Mill Road Suite 700
Country: United States