WHAT IS THE ERC AND HOW CAN IT HELP YOU
What is the ERC?
The Employee Retention Credit (ERC) is a tax credit designed to help small businesses recover from the impacts of Covid-19 on their business. The ERC is NOT a loan, it is a tax credit, meaning that it does not have to be repaid, you do not have to track expenses, and it will come pre-taxed (you will not have to pay taxes for it).
How much can I claim?
The Employee Retention Credit pays out 50% of an employee’s income, up to $5,000. So say you have made $8,000 this year: You can claim $4,000 for the ERC. If you made $16,000, you can claim $5,000, because that is the highest it will pay out, even though it’s less than half of your income. The ERC is paid out per employee, so it is possible to count a spouse, or children, as an employee, and receive a higher payout. This will be explained more below
How can I claim it?
The first thing you need to do is set up an LLC. The ERC is designed for small business owners, so by setting up your own LLC, you now run your own business. You can then count all of your 1099 earnings (Driving, Doordash, or any other side gig) as earnings towards your business. Once you set up your own LLC, the process is easy. COS Accounting has a team that walks you through the qualification process, will file your forms for you, and can give you an estimate on the phone of how much money you can claim. COS knows the ERC inside and out, and will make sure to help you claim as much as you can.
How do I know if I qualify?
The IRS will be looking for key factors to make sure you qualify for the ERC, these can include:
-
Was your job impacted by covid? This can include local governmental restrictions, earning less this year than last year, or disrupted operations (keeping 6 feet from clients)
-
How many weeks worth of unemployment you took. Taking unemployment does not automatically disqualify you from receiving the tax credit, but it can impact it.
-
Did you receive the PPP loan? Unless you have already set up an LLC, this won’t be anything to worry about. If you did set up an LLC, and received PPP funds, you are disqualified from the ERC credit as well.
-
How much have you made this year? Despite what you might think, the more you have made, the better. As stated above, this credit will pay out up to $5,000 if you have made $10,000 or more. So try to keep track of all the 1099 income you have made this year.
When will the money come?
The wait for the check to come is the worst part about the ERC. COS Accounting customers have received their tax credit around 14 weeks after applying, and with the rush of people applying before the credit expires, it could take even longer. So if you would like to recieve your money sooner, you need to apply as soon as possible.
How much does COS Accounting Charge?
COS will charge anywhere from 10-20% of the earned funds, depending on each situation. If you are a single driver, who has made $10,000 or more, and the process is fairly simple, our rate would be $500 from the $5,000 you earn. You will also need to pay the cost of the LLC set up (varies by state) and your Q4 taxes ($55).
The credit will come pre taxed, so the check you will receive will be for about $3,500 (aka, $3,000 of free money!)
The Employee Retention Credit is set to expire December 31st, so if you are interested in claiming these free funds, fill out our qualifier form here, and a member of our team will contact you within 48 hours.
