The Employee Retention Credit, Startup Credit Refund, and Their Impact on Startup Businesses
Welcome to the ERCZilla blog, where we share our expertise on all things related to the Employee Retention Credit (ERC)! As a company that specializes in ERC filings, we're here to guide you through the process and help you maximize your benefits. Today, we're focusing on the five biggest pitfalls when filing for your ERC claim. Avoiding these mistakes will ensure that you're able to claim the full credit you're entitled to.
1. Misunderstanding Eligibility Requirements
The first pitfall many businesses encounter when filing for an ERC claim is misunderstanding the eligibility requirements. The ERC is available to eligible employers who have experienced a significant decline in gross receipts or have been forced to fully or partially suspend operations due to government orders related to COVID-19. However, there are specific criteria for determining eligibility that many businesses overlook.
Before starting your ERC claim, ensure you thoroughly understand the qualification requirements. If you're unsure about your eligibility, consult with a professional, like the experts at ERCZilla, who can guide you through the process and help you determine if you qualify.
2. Incorrectly Calculating Qualified Wages
Another common mistake is incorrectly calculating qualified wages. The ERC is based on a percentage of qualified wages paid to employees during the applicable period. It's essential to understand what constitutes qualified wages and how to accurately calculate them for your claim.
Some employers inadvertently include non-qualified wages or improperly allocate wages between full-time and part-time employees, leading to errors in their claim. Be meticulous in your calculations, and consider seeking professional assistance to ensure your figures are accurate.
3. Missing or Incomplete Documentation
Proper documentation is crucial when filing an ERC claim. The IRS may request additional information to support your claim, such as payroll records, gross receipts, and proof of government-imposed restrictions. Failure to provide the necessary documentation can delay or even deny your claim.
To avoid this pitfall, maintain organized and thorough records of all relevant documents. Consult with a knowledgeable service provider like ERCZilla to ensure you have everything you need for a successful claim.
4. Filing Late or Missing Deadlines
The ERC is claimed by filing Form 941, Employer's Quarterly Federal Tax Return. Missing the filing deadline for Form 941 can lead to penalties, interest, and delays in receiving your credit. In addition, amendments to prior quarters' filings must be made within a specific time frame.
Stay on top of deadlines by keeping a calendar of all relevant dates and setting reminders. If you're concerned about meeting deadlines, partnering with a professional service like ERCZilla can help ensure your claim is filed on time and accurately.
5. Trying to Navigate the Process Alone
The ERC process can be complex, and attempting to navigate it alone can be overwhelming. This can lead to errors, delays, or even denial of your claim. Partnering with a professional service provider like ERCZilla can alleviate the stress and ensure your claim is handled accurately and efficiently.
Our team of experts will guide you through the entire process, from determining eligibility to filing your claim. By trusting us with your ERC filing, you can focus on running your business while we take care of the details.
Avoiding these five pitfalls when filing your ERC claim is crucial to maximizing your credit and minimizing delays. If you're looking for assistance in navigating the ERC process, ERCZilla is here to help. Our team of professionals is dedicated to ensuring your claim is accurate, timely, and successful. Contact us today to learn more about our services and how we can support you in maximizing your Employee Retention Credit.