Employee Retention Credit: Navigating the 2023 Landscape
Understanding ERC Advance Payments and Funding
Are you looking for a way to keep your employees on payroll and boost your cash flow? If so, you might be eligible for the Employee Retention Credit (ERC), a powerful tax incentive that can help your business survive and thrive in uncertain times.
The ERC is a refundable tax credit that allows eligible employers to claim up to $26,000 per employee for wages paid in 2021 and 2022. The ERC was created by the CARES Act in 2020 and has been extended and expanded by subsequent legislation.
But what if you need the money now, not later? That’s where ERC advance payments and funding come in. These options allow you to access a portion of your expected ERC refund in advance, providing immediate financial relief and flexibility.
At Swift SBF, we specialize in guiding businesses through the complexities of the ERC funding process. We have the expertise and experience to help you maximize your ERC refund and get it as fast as possible. Here’s how we do it.
The Process of ERC Funding
Our approach simplifies the ERC funding process. It begins with the collection of ERC claim documents, followed by a detailed analysis to maximize your potential refund. We understand the urgency of these funds for businesses, and our streamlined process ensures that you receive fast ERC refunds with minimal hassle.
Step 1: Collect ERC Claim Documents
The first step is to gather the necessary documents to support your ERC claim. These include:
Form 941, Employer’s Quarterly Federal Tax Return, for each quarter you are claiming the ERC
Form 7200, Advance Payment of Employer Credits Due to COVID-19, if you have filed or plan to file one
Payroll reports showing the wages and health plan expenses paid to each employee for each quarter
Documentation showing how your business meets the eligibility criteria for the ERC
Step 2: Analyze and Optimize Your ERC Refund
The next step is to analyze your ERC claim documents and optimize your ERC refund. We use our proprietary software and algorithms to calculate your ERC refund based on the latest IRS guidance and regulations. We also look for opportunities to increase your refund by:
Identifying eligible employees and wages that you might have overlooked
Applying the aggregation rules to determine if you are part of a controlled group or affiliated service group
Adjusting your payroll tax deposits and credits to avoid penalties and interest
Coordinating your ERC claim with other tax credits and relief programs, such as the Paycheck Protection Program (PPP) and the Shuttered Venue Operators Grant (SVOG)
Step 3: Receive Your ERC Refund
The final step is to receive your ERC refund. Depending on your preference and situation, you can choose from two options:
ERC Loan Advance: This option allows you to receive up to 90% of your expected ERC refund in advance, within 72 hours of submitting your ERC claim documents. The loan advance is repaid when you receive your ERC refund from the IRS, with no interest or fees.
ERC Refund: This option allows you to receive your full ERC refund from the IRS, without any loan advance. The refund is typically issued months after filing your Form 941, delays are probable depending on the IRS workload.
Maximizing Your Employee Retention Credit Refund
The Employee Retention Credit refund is a pivotal aspect of the federal employment tax return for many businesses. This refund can significantly impact your company’s financial health, providing an immediate cash infusion when it’s needed most.
But how can you make sure you get the most out of your ERC refund? Here are some tips to help you maximize your ERC refund:
Claim the ERC for both 2020 and 2021: The ERC was originally available only for 2020, but it was retroactively extended to 2021 by the Consolidated Appropriations Act of 2021. If you haven’t claimed the ERC for 2020, you can still do so by filing an amended Form 941 for each quarter of 2020. You can also claim the ERC for 2021 by filing Form 941 for each quarter of 2021. The ERC is more generous and easier to qualify for in 2021 than in 2020, so don’t miss this opportunity to claim it for both years.
Claim the ERC for all eligible employees: The ERC is available for wages paid to all eligible employees, regardless of whether they worked or not. Eligible employees are those who:
Were employed by you during any calendar quarter in 2020 or 2021
Did not exceed the compensation limit of $10,000 per quarter in 2020 or $10,000 per half-year in 2021
Were not related to you or owned more than 50% of your business
Claim the ERC for all eligible wages: The ERC is available for wages paid to eligible employees, as well as qualified health plan expenses allocated to those wages. Eligible wages are those that:
Were paid or incurred during a calendar quarter in 2020 or 2021
Were not excluded from gross income under section 3121(a) of the Internal Revenue Code
Were not taken into account for other tax credits, such as the Work Opportunity Tax Credit (WOTC) or the Family and Medical Leave Act (FMLA) credit
Claim the ERC for the maximum amount: The ERC is equal to a percentage of the eligible wages paid to each employee, up to a certain limit. The percentage and the limit vary depending on the year and the quarter. For 2020, the ERC is equal to 50% of the eligible wages paid to each employee, up to a limit of $5,000 per employee for the entire year. For 2021, the ERC is equal to 70% of the eligible wages paid to each employee, up to a limit of $7,000 per employee for each half-year. This means that you can claim up to $26,000 per employee for 2021, if you meet the eligibility criteria for both halves of the year.
Navigating Tax Credits and Loans
Navigating the landscape of ERC tax credit and related loans can be complex. Swift SBF is here to demystify these processes. Whether you’re filing a Form 7200 or seeking an ERC loan advance, our expertise ensures that your business leverages these opportunities effectively for maximum financial support.
Form 7200: Advance Payment of Employer Credits Due to COVID-19
Form 7200 is a form that allows eligible employers to request an advance payment of certain employment tax credits, including the ERC. Form 7200 can be filed at any time before the end of the month following the quarter in which you paid the eligible wages. You can file Form 7200 multiple times during a quarter, but not more than once a day.
The advantage of filing Form 7200 is that it can help you reduce your payroll tax deposits and receive your ERC refund sooner. The disadvantage is that it can increase the complexity and risk of your employment tax filing, as you need to reconcile the advance payments with the actual credits claimed on Form 941. If you receive more advance payments than the credits you are entitled to, you may have to repay the excess amount with interest and penalties.
ERC Loan Advance: A Faster and Easier Alternative to Form 7200
ERC loan advance is a service offered by Swift SBF that allows you to receive a portion of your expected ERC refund in advance, without filing Form 7200. ERC loan advance is not a tax credit, but a loan that is repaid when you receive your ERC refund from the IRS.
The advantage of ERC loan advance is that it is faster and easier than filing Form 7200. You can receive up to 90% of your expected ERC refund in advance, within 72 hours of submitting your ERC claim documents. You don’t need to file Form 7200 or adjust your payroll tax deposits. You simply repay the loan advance when you receive your ERC refund from the IRS, with no interest or fees.
Application Process for ERC
Applying for ERC involves specific documentation and understanding the nuances of the federal tax system. Our team assists in preparing and submitting all necessary ERC claim documents, ensuring your application is comprehensive and compliant.
The application process for ERC consists of the following steps:
Complete our ERC eligibility checklist to determine if your business qualifies for the ERC
Provide us with your ERC claim documents, including Form 941, Form 7200, payroll reports, and supporting documentation
Review and approve our ERC refund calculation and optimization report
Choose your preferred ERC funding option: ERC loan advance or ERC refund
Receive your ERC refund or loan advance within the specified timeframe
Repay your loan advance, if applicable, when you receive your ERC refund from the IRS
Swift SBF: Your Trusted Partner for ERC Funding
Swift SBF is committed to helping businesses navigate the complexities of ERC advance payments, funding processes, and tax credit loans. We have the knowledge, experience, and technology to help you claim the maximum ERC refund and get it as fast as possible.
We offer a free consultation and a no-risk guarantee. If you don’t qualify for the ERC or don’t receive a refund, you don’t pay us anything. It’s that simple.
Contact us today to explore how we can support your business’s financial needs. We look forward to hearing from you.
