NEWITY sat down with ERC expert Dane Colvin who recently hosted NEWITY’s How To Apply For ERC webinar. He has been spearheading the ERC program from inception and successfully led hundreds of Members through the application process from start to finish. After his vast experience guiding clients through the ERC journey, he took a few minutes to outline some of the most common questions regarding the Employee Retention Credit application process.
Why is ERC such a good opportunity for small businesses?
Unlike PPP, there’s no spending requirements for ERC – business owners can use the cash for any purpose.
As an example, I was speaking with a NEWITY member who was using his retirement funds to pay employees during COVID. He was thrilled to hear that he could use the ERC funds to refill his retirement account or for whatever is needed to make the business whole again.
Another benefit is that business owners don’t need to generate new information. They should already have all the necessary documents. When a business is working with NEWITY on their ERC application, they don’t need to bend over backwards – they just to provide the documents and let us do the work for them.
What’s the biggest misconception about ERC among small business owners?
I think a big misconception is that it’s going to be a ton of work, or that they’ll need to prove out all the payroll or their spending. Instead, ERC is about the eligibility parameters and the calculation is specific to the wages that were paid during that time. NEWITY has made this into a very streamlined, simple to follow process.
What are the biggest pitfalls small businesses can avoid with ERC?
It is a very streamlined process with NEWITY, but there are a few pitfalls about ERC generally. The first is not applying because you don’t think you’re eligible. Some businesses believe the only way that they can qualify is if their revenue or gross receipts had significant decline. We’ve had businesses with no revenue decline receive the credit because they were impacted by local shutdowns. Our shutdown review team, staffed with legal professionals, provides a detailed memo supporting the shutdown periods in state and local areas.
Second, business owners need to be responsive. Once they have provided the necessary documents, they still need to check correspondence from our team. We might need answers to a few follow-up questions in order to submit for the tax credit. Some business owners stop responding when they’re so close to the finish line, and that’s a shame because they qualify for the money and it’s just waiting for them to claim.
Additionally, be sure to double-check that all spelling on addresses and names is correct. When we file with the IRS, it has to be an exact match.
Another pitfall is not having any knowledge of what your accountant or bookkeeper has done for your business when you need to gather these documents. Also, if you have changed bookkeepers or accountants, you will need to have access to your data in order to claim the tax credit.
Finally, we have seen some sad stories of small business owners getting scammed by ERC farms who claim to help businesses get the maximum credit but end up filing with inaccuracies or for ineligible quarters, which the business could get audited for later. It’s important to only work with legitimate financial service providers like NEWITY who use secure data transfer links and have the professional personnel on staff to ensure your calculation is done accurately.
How does NEWITY’s approach to ERC differ from other providers?
We are very thorough and help our members get their tax credit while also preparing them for possible investigations in the future.
Sometimes a business owner will say “Another company didn’t ask for these documents – why does NEWITY need them?” This is a red flag. Our process is more complete in case the business owner is ever audited.
Why should small businesses work with NEWITY for their ERC application?
First, peace of mind. Our approach is more thorough than other providers and we have the expertise to guide business owners through this process. Working with NEWITY ensures nothing slips through the cracks, that you receive the maximum ERC you qualify for, and get to keep that money.
Another reason to work with NEWITY is our expertise on the Paycheck Protection Program, or PPP. The ERC calculation needs to factor in PPP loan forgiveness in order to avoid “double-dipping” on wages that were paid using PPP funding. We have worked with over 115,000 borrowers through forgiveness and origination of PPP Loans and are confident that we are factoring these loans correctly into the calculation. Other companies might not be experts in PPP like NEWITY.
Finally, I think the personal touch we offer is hard to find elsewhere. Members working with us on ERC know they can pick up the phone and call their representative or calculation specialist with any questions. NEWITY’s co-CEO Luke LaHaie has even made himself available to members throughout this process. I don’t think that level of personal service is happening anywhere else.
Do you have any information on ERC timelines and what to expect when submitting?
The typical timeline we see is that qualifying businesses will receive their check nine to twelve months after submission. However, we’ve had members receive their money in less time. It really depends on the IRS and their workload. For that reason, it would make sense to try and get your application submitted as soon possible.
Get started on your ERC application in the Member Portal.