What is the employee retention credit for sole proprietorships, and can sole proprietors claim the tax credit?
In today’s challenging economic climate, small to medium-sized business owners always seek ways to maximize their financial resources and maintain a competitive edge. One such opportunity is the Employee Retention Credit (ERC), a valuable tax incentive to support businesses during the COVID-19 pandemic.
While sole proprietors may not be eligible for this credit themselves, they can still benefit from it when paying wages to other W-2 individuals on payroll. Sole Proprietors can still claim the employee retention credit retroactively in 2023, 2024, and 2025.
Key ERC Credit Takeaways You Will Learn:
- Eligibility Requirements: Check if your business qualifies for the tax credit to improve your financial situation.
- Qualifying for the Credit: Understand the criteria and steps needed to ensure your business meets the requirements.
- Employee Eligibility: Find out which employees are eligible for the credit and how to maximize its benefits.
- Meeting Specific Requirements: Familiarize yourself with the requirements your business must meet to claim the credit successfully.
- Maximize Your Refund: Leverage the credit to claim up to $26,000 per employee and boost your business’s potential.
See Important 2024 Employee Retention Tax Credit Deadline Information at the Bottom of This Article.
Breaking News Update to Employee Retention Credit for Sole Proprietors and Sole Proprietorships: The IRS temporarily paused processing ERC Claims for the remainder of 2023 due to companies charging fees based on a percentage of the refund amount of their Employee Retention Credit claimed, plus a list of other reasons.
We at Disaster Loan Advisors (DLA) predicted this over one year ago when we made this ERC video warning business owners. See the ten-minute mark of the video for details.
Even though IRS processing has temporarily paused, you will still want to file now (if you qualify) because the IRS will resume processing tax credit claims in the order they are received.
Business owners that have not filed for the ERC Credit yet? DLA will provide a Free ERC Consultation where we’ll do a deep-dive analysis to determine if you even qualify for tax credit. Everything we do is by-the-book per IRS rules and guidelines.
Understanding The Employee Retention Credit (ERC) for Sole Proprietors and Sole Proprietorships
The Employee Retention Credit (ERC) is a refundable tax credit against certain employment taxes equal to 50% of qualified wages for eligible businesses.
Can Self Employed Get ERC?
To qualify for the Employee Retention Credit (ERC), employers must meet certain criteria established by the IRS. Eligible employers include businesses, tax-exempt organizations, and even sole proprietors who pay wages to other individuals.
Government entities are not eligible for the credit.
For example, if your small to medium-sized business experienced a 50% decline in revenue compared to the same quarter in 2019 due to pandemic-related disruptions, you may be qualified for ERC.
Additionally, it’s essential that your business did not receive Paycheck Protection Program (PPP) loans since receipt of PPP funds disqualifies an employer’s share from claiming ERC benefits.
Changes In Eligibility For Sole Proprietors
Recognizing the unique challenges faced by sole proprietors during the COVID-19 pandemic, Congress changed the Employee Retention Credit (ERC) eligibility requirements.
Although sole proprietors are not eligible for the credit, they can claim tax credits if they pay wages to other employees within their business.
For example, a graphic design business operated as a sole proprietorship could be eligible for ERC if it pays wages to an administrative assistant or additional designers on its team.
How The ERC Supports Small Businesses During COVID-19
The Employee Retention Credit (ERC) has been a lifeline for small to medium-sized businesses struggling to stay afloat during the COVID-19 pandemic. By providing eligible employers with financial relief through a refundable tax credit, this incentive allows small business owners to retain employees and maintain payroll without risking insolvency.
With many other relief provisions in response to COVID-19, including Paycheck Protection Program loans or PPPs, sole proprietors must understand which funding sources best suit their unique circumstances.
One clear example of how the ERC has positively impacted small businesses is its adaptability over time – recent changes made through the American Rescue Plan Act have extended eligibility parameters and increased potential credit amounts until December 31st, 2022.
This ongoing evolution demonstrates commitment towards ensuring that fiscal supports remain accessible and impactful as we collectively navigate these uncertain times together.
How To Calculate The Employee Retention Credit
To calculate the Employee Retention Credit, businesses need to identify their qualified wages and expenses during eligible periods, determine their maximum credit amount based on employee count and other factors, and calculate the daily value of the credit for each qualifying quarter.
Maximum Refundable Tax Credit Amounts
The maximum credit amount for the Employee Retention Credit is 50% of qualified wages and expenses paid to eligible employees between March 13th, 2020, and December 31st, 2022.
For a business eligible for quarters in 2021, the credit can be up to $28,000 per employee. During these challenging times, small businesses can receive significant financial support through the ERC.
To maximize this credit, businesses must ensure they meet all eligibility requirements and have documentation supporting their claim. It’s important to work with a qualified tax professional who can guide you through the process and help you take advantage of this valuable opportunity for financial relief.
Qualifying Wages And Expenses
To qualify for the Employee Retention Credit, eligible businesses must have paid qualified wages to their employees. Qualified wages include cash compensation and certain health care costs, such as premiums.
For example, if an eligible business paid an employee $20 per hour in qualified wages for 10 hours, they could receive a credit of $100 per day ($20 x 0.5 x 10).
Expenses that are not considered qualified wages include sick or family leaves required under the Families First Coronavirus Response Act (FFCRA) and any amounts are taken into account for the Work Opportunity Tax Credit or employer-provided educational assistance programs.
By understanding what qualifies as a qualified wage and expense, businesses can accurately calculate their potential refundable tax credit with certainty.
How To Calculate The Daily Value Of The Credit
To calculate the daily value of the Employee Retention Credit (ERC) for your business as a sole proprietor, follow these steps:
1. Determine the maximum credit amount: The ERC equals 50% of qualified wages paid to eligible employees up to a maximum credit of $7,000 per quarter in 2021. This means that the maximum credit for each eligible employee is $28,000 for the year.
2. Identify your qualified wages and expenses: Qualified wages include wages and compensation paid to eligible employees. Eligible expenses include qualified health plan expenses and certain employer-provided retirement plan contributions.
3. Calculate your average number of full-time employees: This calculation determines the maximum amount of qualified wages you can claim for each quarter based on the number of full-time employees you have.
4. Multiply your qualified wages by the percentage of time during which operations were suspended or gross receipts declined: If you experienced a partial suspension or significant decline in gross receipts due to COVID-19, you are eligible to claim a portion of your qualified wages depending on how long these conditions lasted.
5. Divide your total qualified wages by 365: This calculation will give you the daily value of your credit for each day an employee was paid during the qualifying period.
By following these steps, you can calculate the daily value of the ERC for your sole proprietorship business and determine how much financial support it can provide during these challenging times. Remember that documentation is key when claiming tax credits, so maintain accurate records for all calculations and qualifications related to ERC eligibility.
How To Claim And Apply For The Employee Retention Credit For A Sole Proprietorship
To claim and apply for the Employee Retention Credit as a sole proprietorship, businesses must file Form 7200 to request an advance credit or claim the credit on their employment tax returns using Form 941 for eligible quarters, along with documentation to support their eligibility.
Filing Requirements
To claim the Employee Retention Credit as a sole proprietorship, you must file Form 941, Employer’s Quarterly Federal Tax Return. This form reports employee wages and certain employment taxes withheld during each quarter.
You can claim the credit on this form for eligible quarters of the tax year beginning in March 2020 through December 31st, 2022.
It is important to note that you cannot use both programs for the same wages if you received a PPP loan forgiveness. However, if you are eligible and did not receive forgiveness for all of your PPP loan proceeds, you may still be able to claim the ERC on qualified wages that were not used toward PPP forgiveness.
Documentation
To claim the Employee Retention Credit for a sole proprietorship, it is essential to have proper documentation. Here are some tips on what documents you should have:
1. Proof of Eligibility: You need to provide documents that show how your business was affected by COVID-19, such as a statement of operations or financial statements.
2. Wages and Hours Worked: Keep track of the wages paid to each employee and the hours worked during the eligible periods.
3. Employment Tax Forms: Keep copies of all employment tax forms filed with the IRS, including Form 941, for the quarters you claim the credit.
4. Payroll Records: Maintain accurate payroll records that include employees’ names, social security numbers, wages paid, and taxes withheld.
5. Invoices and Receipts: Keep invoices and receipts documenting any expenses directly tied to keeping your business open during COVID-19.
6. IRS Form 7200: If you want to receive advance payments of the credit before filing your tax return, you’ll need to file Form 7200.
Documentation is key when claiming tax credits like ERC for sole proprietors. By maintaining accurate records and following the guidelines provided by the IRS, small to medium-sized businesses can maximize their eligibility for these critical financial benefits.
Form 7200
Form 7200 is a form eligible employers can use to request an advance payment of the Employee Retention Credit. If your business qualifies for the employee retention tax credit and needs financial assistance immediately, you can apply for an advance using this form.
For example, if your business has experienced a significant decline in revenue due to COVID-19 and needs financial support quickly, you may get an advance on the ERC by completing Form 7200.
You can access funds to help cover payroll expenses such as wages and health insurance premiums.
Common Mistakes To Avoid When Claiming The Credit
It is important to avoid common mistakes when claiming the Employee Retention Credit to ensure your sole proprietorship receives full benefit from the program. Here are some of the most common mistakes you should avoid:
1. Failing to understand eligibility: Before claiming the credit, ensure you understand who is eligible for ERC and how much credit you can claim.
2. Not properly documenting expenses: Keep accurate records of qualified wages and expenses, as documentation will be necessary when filing for the credit.
3. Miscalculating qualified wages: Make sure to calculate your qualified wages accurately to avoid any discrepancies in your credit amount.
4. Not coordinating with payroll providers: Determine how your payroll provider will report ERC on Form 941 and coordinate with them accordingly.
5. Failing to claim the credit on all eligible quarters: Remember that you can claim the credit on all eligible quarters even if you didn’t initially claim it.
By avoiding these common mistakes, you can ensure that your sole proprietorship maximizes its benefits under ERC and accurately files for the tax credits it deserves.
COVID-19 Related Provisions For Employee Retention Credit
Learn about the eligibility requirements for businesses affected by COVID-19, how to claim the credit for COVID-19 related reasons, and other tax credits and relief provisions available for small businesses during this challenging time.
Eligibility Requirements For Businesses Affected By COVID-19
The Employee Retention Credit is available to eligible businesses impacted by the COVID-19 pandemic. To be eligible, businesses must have experienced either a full or partial suspension of their operations due to government orders related to COVID-19, or they must have seen a significant decline in gross receipts.
For those experiencing a suspension of operations, this means that government orders fully or partially restricted their ability to conduct business during any quarter of 2020 or the first two quarters of 2021.
It’s important for businesses seeking to claim this credit to keep detailed records and documentation supporting their eligibility. This could include financial statements such as income and expense reports and payroll records showing which employees were retained during reduced activity or shutdowns due to COVID-19 restrictions.
How To Claim The Credit For COVID-19 Related Reasons
The Employee Retention Credit (ERC) is available to eligible businesses that have experienced a significant decline in gross receipts or have fully or partially suspended operations due to government orders relating to COVID-19. Here are the steps on how to claim credit for COVID-19 related reasons:
1. Determine eligibility: Businesses need to meet the eligibility requirements set by the IRS for the credit, including experiencing a significant decline in gross receipts or being fully or partially suspended operations due to government orders relating to COVID-19.
2. Identify qualified wages: Qualified wages are paid after March 12th, 2020, and before January 1st, 2022, and include certain health benefits and retirement plan contributions. Identify which wages qualify for the ERC by reviewing your payroll records.
3. Calculate the credit: The credit amount equals 50% of qualifying wages paid up to $10,000 per quarter, making it possible for businesses to claim up to $7,000 per employee per quarter in credit for 2021.
4. Claim the credit on Form 941: To claim the ERC, eligible businesses must complete Form 941 for each eligible quarter with all required information and calculate the ERC amount they can claim.
5. Apply for advance payment: Eligible businesses may apply for an advance payment of their estimated ERC for a current quarter using Form 7200.
6. Keep documentation: Businesses must keep accurate and complete records of their eligibility and documents supporting their calculation of qualifying wages.
7. Work with a tax professional: It’s recommended that businesses consult with a qualified tax professional who can help them navigate ERC requirements and ensure they are claiming all available credits and deductions.
By following these steps, small and medium-sized business owners can take advantage of the Employee Retention Credit as part of their tax planning strategies amidst COVID-19 related challenges.
Other Tax Credits And Relief Provisions For Businesses Affected By COVID-19
In addition to the Employee Retention Credit, other tax credits and relief provisions are available for businesses affected by COVID-19. Here are some examples:
1. Paycheck Protection Program (PPP) Loans: The PPP provides loans to help businesses keep their workforce employed during the pandemic. The loan may be forgiven if used for eligible expenses, such as payroll costs and rent.
2. Sick and Family Leave Credits: Employers who provide paid sick or family leaves related to COVID-19 may be eligible for tax credits to offset the cost.
3. Economic Injury Disaster Loans (EIDL): Small businesses experiencing a temporary loss of revenue due to COVID-19 may apply for an EIDL from the Small Business Administration (SBA).
4. Work Opportunity Tax Credit: Employers who hire individuals from certain target groups, such as veterans or those receiving government assistance, may qualify for a tax credit.
5. Employee Retention Credit for State and Local Governments: State and local governments may also be eligible for the Employee Retention Credit if they meet certain criteria.
Businesses must research and understand all available relief options to maximize financial support during this challenging time.
Benefits Of The Employee Retention Credit For Sole Proprietorship
The Employee Retention Credit can provide sole proprietors significant savings and financial support during the COVID-19 pandemic. In this section, we’ll outline tips for maximizing the credit and combining it with other tax credits to help your business succeed.
Potential Savings And Financial Support
The Employee Retention Credit offers small to medium-sized businesses the potential for significant savings and financial support during these challenging times. The credit can be up to $28,000 per employee for 2021, making a substantial difference in a business’s bottom line.
Furthermore, by maximizing this credit, businesses may also take advantage of other tax credits and relief provisions available for COVID-19 impacted companies.
This includes PPP loans and various tax breaks to incentivize businesses to recover from losses incurred due to the pandemic.
Tips For Maximizing The Credit
To make the most of the Employee Retention Credit, here are some tips for Small to Medium-Sized Business Owners:
1. Understand your eligibility: Review the IRS guidelines for eligibility and ensure that you meet all requirements before claiming the credit.
2. Keep accurate records: Maintain precise documentation of qualified wages and expenses and revenue declines or partially suspended operations due to COVID-19.
3. Claim the credit on time: File Form 941 for each eligible quarter to claim the credit promptly and avoid unnecessary penalties.
4. Utilize tax professionals: Work with a qualified tax professional who can help you navigate ERC requirements, maximize your tax benefits, and identify other relief provisions to combine with the ERC.
5. Combine with other credits: To minimize employment taxes owed, consider combining the ERC with other available tax credits, such as Paid Family Leave or Sick Leave Credits.
6. Plan: Strategize how to structure employee wages and expenses to qualify for higher maximum credit amounts.
7. Monitor changing regulations: Stay informed about changes in ERC eligibility criteria or calculating methods that may affect your business’s qualification status.
By implementing these tips, Small to Medium-Sized Business Owners can ensure they maximize their potential benefits from the Employee Retention Credit program.
How To Combine The Credit With Other Tax Credits
As a small to medium-sized business owner, you may wonder how to maximize the benefits of the Employee Retention Credit (ERC) by combining it with other tax credits. Here are some strategies to consider:
1. Work Opportunity Tax Credit (WOTC): The WOTC is a federal tax credit that rewards employers for hiring individuals from targeted groups who have consistently faced significant barriers to employment. The ERC and the WOTC can be claimed on the same qualified wages, allowing businesses to save even more on their payroll taxes.
2. Research and Development Tax Credit: The R&D tax credit provides a dollar-for-dollar reduction in federal income tax liability for businesses engaged in qualified research activities. Businesses can claim both the ERC and R&D tax credits on the same expenses, enabling them to reduce their effective tax rate significantly.
3. Health Coverage Tax Credit: Employers eligible for the Health Coverage Tax Credit (HCTC) can claim both the HCTC and the ERC on their qualified wages paid during eligible periods.
4. Paycheck Protection Program (PPP) Loans: If your business received a PPP loan, you are not eligible for ERC on those wages paid with PPP loan proceeds. However, if you have additional expenses or wages not covered by PPP loans, you may still qualify for ERC.
By taking advantage of these strategies, small businesses can significantly reduce their federal income tax liability while benefiting from financial relief through different federal programs designed to support businesses affected by COVID-19 pandemic-related challenges.
Tax Planning Strategies For Sole Proprietors
Learn valuable advice on maximizing tax benefits through the ERC and tips for planning and organizing documentation. Discover how to work with a qualified tax professional to navigate ERC requirements and gain insights into other relief provisions available for sole proprietors.
Advice On Maximizing Tax Benefits Through The ERC
As a small to a medium-sized business owner, maximizing tax benefits through the Employee Retention Credit (ERC) can be crucial for your company’s financial health. Here are some tips to help you get the most out of the ERC:
1. Know your eligibility: Before claiming the ERC, ensure that your business qualifies and meets all requirements for eligibility.
2. Keep detailed documentation: Ensure proper documentation of all qualified wages paid and other expenses related to the ERC claim. This will help expedite the process of claiming the credit and save you time and money in case of an audit.
3. Plan: Remember that you must have experienced a decline in gross receipts or had to suspend operations fully or partially due to COVID-19-related government orders to qualify for the ERC. Planning can help you meet these criteria and maximize your potential credit amount.
4. Claim retroactively: If you didn’t claim an ERC in prior years, consider amending previous tax returns or filing Form 941-X within three years of filing your original return to claim it retroactively.
5. Combine with other credits: The ERC can be combined with other tax credits such as Paid Sick Leave Credit, Family Leave Credit, and others, which can further boost your savings.
By following these tips, you can maximize the benefits of taking advantage of the Employee Retention Credit for Sole Proprietorship and optimize your business’s financial situation during difficult times like those presented by COVID-19.
Tips For Planning And Organizing Documentation
Proper documentation is crucial when claiming the Employee Retention Credit as a sole proprietorship. Here are some tips on how to plan and organize your documentation:
1. Keep records of all payroll reports, including gross wages paid to each employee, federal and state taxes withheld, and healthcare benefits provided.
2. Keep records of qualified expenses used to calculate the credit, such as health plan expenses or employer-provided group life insurance premiums.
3. Make sure you have documentation showing that your business has been impacted by COVID-19, whether through a significant decline in gross receipts or partial/full suspension of operations due to government orders.
4. Organize your documents according to the date they were incurred, making it easier to locate specific information when needed.
5. Use reliable software or tools to manage and keep your records secure.
Following these tips ensures you have all the necessary documentation when claiming the Employee Retention Credit as a sole proprietorship. Remember that proper record-keeping helps with claiming credits and supports your business’s financial planning and tax compliance requirements.
How To Work With A Qualified Tax Professional To Navigate ERC Requirements
Navigating the requirements of the Employee Retention Credit (ERC) requirements can be complicated, especially for small business owners already juggling multiple responsibilities.
A tax professional can assist you in evaluating your eligibility for the ERC, calculating your potential credit amounts accurately, filing IRS Form 7200 to receive an advance credit payment, and preparing all necessary documentation required by law.
Moreover, a qualified tax professional may provide additional recommendations regarding other available relief provisions or possible tax planning strategies that could further maximize your financial benefits.
Other Relief Provisions For Sole Proprietors
Along with the Employee Retention Credit, other relief provisions are available for sole proprietors, including Paycheck Protection Program loans, Economic Injury Disaster Loans, and tax breaks related to sick and family leave.
Overview Of Other Relief Provisions Available For Sole Proprietors
In addition to the Employee Retention Credit, other relief provisions are available for sole proprietors impacted by COVID-19. For example, the Coronavirus Aid, Relief, and Economic Security (CARES) Act provides a temporary waiver of required minimum distributions from retirement accounts in 2020.
Additionally, the CARES Act expanded eligibility for unemployment benefits to include self-employed individuals and independent contractors.
Small business owners must explore all available relief options and work with a qualified tax professional or financial advisor to navigate complex requirements and maximize their benefits.
How To Combine Them For Maximum Financial Benefits
Combining relief provisions can help sole proprietors maximize their financial benefits during these challenging times. Here are some tips to consider:
1. Combine the Employee Retention Credit (ERC) with other tax credits, such as the Paid Sick and Family Leave Credits, to increase your overall credit amount.
2. If you received a Paycheck Protection Program (PPP) loan, you may still be eligible for the ERC for wages not covered by the PPP loan.
3. Consider how reductions in gross receipts may impact your eligibility for the ERC and other tax provisions, such as Net Operating Losses or Business Interest Expense Limitations.
4. Document all expenses related to claiming tax credits and relief provisions and keep accurate records of any loans received.
5. Work with a qualified tax professional who can advise you on maximizing your benefits while navigating the complex requirements of these programs.
By combining relief provisions, sole proprietors can potentially save thousands of dollars in taxes and receive much-needed financial support during these uncertain times.
FAQs About The ERC For Sole Proprietors
This section will answer frequently asked questions about the Employee Retention Credit for sole proprietors, including eligibility requirements, documentation needed to claim the credit, and how it can be combined with other relief provisions.
Frequently Asked Questions About Eligibility And Requirements
Here are some common questions about the Employee Retention Credit (ERC) for sole proprietors:
1. Who is eligible to claim the ERC as a sole proprietor?
Self-employed individuals who have employees may be eligible for the ERC based on wages paid to their employees.
2. Can sole proprietors claim the ERC if they received a PPP loan?
No, if a business received a Paycheck Protection Program (PPP) loan, they are not eligible to claim the ERC.
3. What types of wages qualify for the ERC?
The credit applies to qualified wages and health plan expenses paid to eligible employees during specific periods.
4. How much can a business receive through the ERC?
Eligible businesses can claim up to 50% of qualified wages paid fewer employees, with a maximum credit of $28,000 per employee for 2021.
5. Is there a deadline for claiming the ERC?
Businesses must file employment tax returns or request an advance credit payment by December 31st, 2022.
6. Can businesses claim the ERC and other tax credits for COVID-19 relief?
Yes, businesses can claim multiple tax credits and provisions for financial support during COVID-19.
7. What documentation is required to claim the ERC?
Businesses need to keep records supporting eligibility and accurately calculate qualified wages and expenses.
8. How can a business navigate ERC requirements with a tax professional?
A qualified tax professional can help businesses understand eligibility requirements, calculate potential savings, and organize the documentation necessary for claiming credits accurately.
9. Why is it important for small businesses to take advantage of this credit?
The Employee Retention Credit provides financial support during challenging times that help lessen financial strain while maintaining employee retention levels in your organization.
10. What should I do if I believe I qualify but am unsure how to file my return?
It’s best to consult with a tax professional with expertise in the ERC program who can evaluate your unique tax situation to determine your eligibility.
Answers To Common Concerns
Here are some common concerns about the Employee Retention Credit (ERC) for Sole Proprietorship and their corresponding answers:
1. Can Sole Proprietors claim the ERC?
While sole proprietors are not eligible for the ERC, self-employed individuals may qualify for wages paid to others.
2. How much credit can businesses claim?
The credit can be up to $28,000 per employee for 2021 for small businesses that have experienced revenue declines.
3. What is the period for eligible wages?
The credit is available to eligible employers who paid qualified wages between March 13th, 2020, and December 31st, 2022.
4. How do businesses claim credit?
The credit can be claimed on employment tax returns, Form 941, for eligible quarters. Documentation should be provided to support eligibility.
5. Are PPP loan recipients eligible for the ERC?
The credit is unavailable to employers who received a Paycheck Protection Program loan.
6. Do businesses need fully suspended operations to claim the credit?
The credit can be claimed by eligible businesses regardless of whether they have fully or partially suspended operations due to government orders relating to COVID-19.
7. Can businesses claim a credit if they experience a decline in gross receipts?
The credit can be claimed by eligible businesses that have experienced a significant decline in gross receipts.
Remember that the IRS provides resources and FAQs on the Employee Retention Credit for businesses to determine their eligibility and claim the credit.
Conclusion And Summary for the Employee Retention Credit For Sole Proprietors and Sole Proprietorships
The Employee Retention Credit can provide significant financial relief for sole proprietors and small to medium-sized businesses during these challenging times. By understanding the eligibility requirements, calculating the credit, and properly documenting expenses, sole proprietors can maximize their tax benefits through this program.
The Importance Of The ERC For Small Businesses
The Employee Retention Credit (ERC) is a vital lifeline for small to medium-sized businesses looking to navigate the ongoing challenges of COVID-19. The credit offers financial support to eligible employers, helping them retain employees during this difficult period while incentivizing businesses to rehire workers who may have been laid off or furloughed.
With a potential credit of up to $28,000 per employee in 2021, the ERC can provide substantial savings and help cover payroll costs for qualified wages for paid employees between March 13th, 2020, and December 31st, 2022.
Additionally, the credit is refundable and can be claimed on employment tax returns without impacting other relief provisions such as Paycheck Protection Program loans or other tax credits available.
How To Take Advantage Of The Credit As A Sole Proprietor
If you are a sole proprietor, you may wonder how to use the Employee Retention Credit. While sole proprietors cannot qualify for the credit based on their wages, they can qualify for wages paid to other employees.
To maximize the credit, consider hiring or retaining employees during difficult times and pay them qualified wages accordingly. Remember that qualified wages must meet specific criteria, so it’s important to ensure your documentation is in order and that you have met all eligibility requirements outlined by the IRS.
Additionally, working with a qualified tax professional can help guide you through navigating ERC requirements and potentially save you more money in tax benefits.
Good news. There is still time to file! The employee retention tax credit can still be claimed retroactively and there is still time to file, even in 2023, 2024, and 2025 for the past tax years.
Employee Retention Tax Credit (ERC / ERTC) Help: Claim Up To a $26,000 Refund Per Employee for Your Business
Disaster Loan Advisors™ can assist your business with the complex and confusing Employee Retention Credit (ERC) and Employee Retention Tax Credit (ERTC) program, without you having to pay an excessive percentage of your hard earned ERC refund.
DLA doesn’t charge a percent like many companies do. Our flat fee structure is fair and reasonable based on the amount of work involved. Keep More of Your Refund™
Depending on eligibility, business owners can receive up to $26,000 to $33,000 per employee based on the number of W2 employees you had on the payroll in 2020 and 2021.
The ERC / ERTC Program is a valuable IRS tax credit you can claim. This is money you have already paid to the IRS in payroll taxes for your W2 employees.
Schedule Your Free Employee Retention Credit Consultation to see what amount $ of employee retention tax credit your company qualifies for.
ERC Deadline Urgency in 2024
April 15, 2024 Deadline for the 2020 ERC Tax Year
The deadline is coming up for the final opportunity to retroactively claim your business Employee Retention Credit for the past 2020 tax year. With the April 15, 2024 deadline fast approaching, we urge you; don’t let this final chance pass!
While not all businesses will qualify, as it depends on multiple factors per IRS Rules and Guidelines, you might be leaving significant financial relief on the table from prior COVID impact to your business during the past 2020 and 2021 business operation years.
Last year, in September 2023, the IRS temporarily paused processing ERC Claims for the remainder of last year. We at Disaster Loan Advisors (DLA) predicted this over one year ago when we made this ERC video warning business owners. See the ten-minute mark of the video for details.
TAKE ACTION NOW IN 2024
Even though the IRS has temporarily paused processing, you will still want to check eligibility and file now (if you qualify) because once the IRS will resume processing, ERC tax credit claims are processed in the order they are received.
If you haven’t previously filed for the ERC Credit, it is worth scheduling a phone call to at least explore your possible eligibility from both the past 2020 and 2021 business tax years. Contact us today for a deep-dive analysis to determine if your business qualifies one or more quarters from the 2020 and / or 2021 tax years.
As a leading dedicated member of the Tax and Accounting Team at Disaster Loan Advisors™, Mark focuses on unlocking the ERC Tax Credit's potential for eligible firms that qualify, providing strategic advice, and detailed guidance to ensure substantial financial recovery and growth. His methodical approach to client engagement includes comprehensive deep-dive analysis, customized consultation and guidance, and a commitment to achieving tangible results for each business served.
Disaster Loan Advisors™ (DLA) offers a comprehensive suite of services designed to navigate the complexities of the Employee Retention Tax Credit (ERC) program, ensuring that qualified businesses leverage the maximum possible benefit with minimum hassle. Unlike some firms that charge exorbitant contingency or percentage-based fees (often between 10% to 30% of your ERC refund), DLA operates on a fair and reasonable, transparent flat-fee structure that aligns with the IRS's guidelines.
If you are looking for an ERC Company that believes in providing professional ERC Services and value for small business owners, in exchange for a fair, reasonable, and ethical fee for the amount of work required, Disaster Loan Advisors™ is a good fit for you. STAY SAFE. STAY COMPLIANT. KEEP MORE OF YOUR REFUND.™
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