ERC Refund Credit: How to Earn $26,000 Per Employee

By Cara Olson, Special FBA Contributor

When a business owner hears about the ERC refund credit, they want to learn more. After all, it is worth up to $26,000 per employee, so of course, looking into it is worth it.  So, what is it, do you qualify, and what are the next steps are questions that make sense.

What Is ERC

Employee Retention Credit (ERC) is a government stimulus aid program that is designed to help those businesses that were able to retain their employees during the Covid-19 pandemic.  It was established by the CARES Act in 2020 and since then has had multiple adaptations to it. You can find more details about it on the IRS site.

Do you Qualify?

Being in the fitness business, if you had employees during the pandemic years of 2020 and 2021, then you most likely will qualify. Ninety-nine percent of gyms and fitness facilities will qualify. Some ERC qualifications for retail fitness include: extra cleaning requirements, reduction in hours, social distancing requirements, fewer classes, online workouts, and online trainings. Any business that had to close even for a short period of time and retained its employees qualifies.

How to File Your ERC

There are a few different ways to file for your ERC credit. You can do it yourself, pay a tax preparer or CPA upfront, or you can work with an ERC specialty company that has experienced CPAs on staff and will complete your filing on a contingency basis.  Let’s go over each option.

Do It Yourself

One option would be to do the filing yourself. About one percent of business owners are qualified to do this. Those types of business owners are more likely to own a tax practice and or law firm.

Since you most likely do not have time to also run a tax practice or law firm this is probably not your best option. Even if you knew how, it would take away too much time from managing your facility, and most of all, misdirect your efforts of helping your clients.

There are a few different ways to file for your ERC credit. You can do it yourself, pay a tax preparer or CPA upfront, or you can work with an ERC specialty company that has experienced CPAs on staff and will complete your filing on a contingency basis.
 

Tax Preparer or CPA

Another option might be a tax preparer or CPA.  And while that person understands the tax regulations, how many successful ERC filings have they done?

The best way to look at this is the ERC is a payroll credit that requires special knowledge and understanding to file correctly. Most tax professionals are not current on the many changes in the CARES Act that have occurred since 2020.

The main one being a business does not have to have lost money during the pandemic years to qualify. There are other ways to qualify. Another change is it does not matter whether you received PPP money you can still get ERC money. Also, businesses that had to close are also able to get ERC funds.

There are many false narratives out in the tax world. There are numerous stories of business owners being told they do not qualify for this credit, but they actually do. If they did not check with a specialty company for ERC filing, they would have lost thousands of dollars that were just waiting for them. Unlike the PPP loans, this money is more like a grant and it does not run out after a certain number of businesses get it. It has been set aside for ALL businesses that qualify. However, if you get the wrong advice (from a tax professional, or anyone for that matter), you will never know how much money you could be leaving on the table.

Also, a tax preparer or CPA might require an upfront payment for their time, regardless if your ERC filing gets funded. It is extremely unlikely that any tax preparer will go through the many hours it takes to prepare a file for submission to the IRS without some sort of upfront payment.

An ERC Specialty Company

A popular option is an ERC specialty company. When you work with an ERC specialist who has done thousands of these filings, you can be confident that they are up to date on current regulations and the filing will be done correctly. As stated earlier, since 2020, there have been multiple changes to the CARES ACT which is law that established the ERC credit, so you want someone that understands all of the changes and knows how to apply them effectively.

A qualified ERC filing company has CPAs on staff that submit ERC filings. Their focus is solely ERC and they walk, talk, and breathe it. A reliable company is also confident in its filings and will not require upfront compensation. This is great news as many fitness business owners have been through the wringer and do not have another dime to give up at this time.

Conclusion

After reviewing your options above, it is likely you have realized that an ERC specialty company is the smartest way to go. You certainly do not want to do it yourself and you now know why a professional tax preparer is not the best fit either.

If you want a final comparison between an ERC specialty filing company and your tax professional, think of it in fitness terms. Compare the difference between a sports and conditioning coach/trainer and a wellness coach/trainer. Both are great coaches/trainers, with neither of them being better than the other, just different. They may even train each other in one another’s specialties.

In conclusion, an ERC specialty company that actually focuses on ERC filings is going to be your best option to assure you get all the money that you qualify for and has already been set aside for your business. Not having to pay upfront for the service is the cherry on top.

Cara Olson is a business consultant with over 25 years of experience. She has owned businesses of her own in different industries including financial, medical, and health. Her expertise is in operation and sales. She has teamed up with the best ERC companies to help educate small and medium sized businesses about the ERC refund credit.