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July 30, 2023

Should A Business Use A CPA To File For Employee Retention Credit?

Navigating the complexities of tax laws, specifically when dealing with the Employee Retention Credit (ERC), can be a daunting task. You might be wondering, should you hire a Certified Public Accountant (CPA) to handle this for your business?

This question isn’t as straightforward as it seems. It hinges on several factors like who can file the ERC, if CPA’s are allowed to charge a percentage fee of ERC credit, and how you could potentially apply for the ERC independently. Furthermore, understanding how much ERC companies charge compared to accountants is another vital consideration in this decision-making process.

In this article, we’ll delve into these intricacies and provide an informed perspective on whether employing a CPA for filing your business’s Employee Retention Credit is truly advantageous or not.

Who files the employee retention credit?

It’s actually up to you, the business owner, who files for the employee retention credit – it could be your trusty accountant, a proficient CPA, or even a specialized ERC company. The choice lies in your hands and depends on several factors such as your familiarity with tax laws, comfort level with paperwork, and budget constraints.

Filing for the Employee Retention Credit (ERC) requires an understanding of complex tax regulations and eligibility criteria set by the Internal Revenue Service (IRS). If you’re adept at interpreting these intricate laws and have time to spare from managing your business operations, you may choose to file it yourself. However, remember that any errors in filing can lead to penalties or loss of this vital financial relief.

Perhaps you’re considering engaging your regular accountant in this task. They would certainly be more familiar with your business finances than a stranger would be. Still, keep in mind that unless they specialize in tax law or have specific experience with the ERC process, they might not fully grasp all its intricacies.

A Certified Public Accountant (CPA), on the other hand, has rigorous training and certification under their belt which equips them better for handling such complex tasks. They possess comprehensive knowledge about tax laws and are updated about any changes made by IRS.

Alternatively, hiring an ERC company is another viable option. These companies specialize solely in helping businesses apply for this credit. Their expertise can significantly increase chances of approval while ensuring compliance with IRS rules.

Choosing who files for employee retention credit is paramount to maximizing benefits while minimizing potential risks associated with improper filing. Consider each option carefully before making your decision.

Can CPA’s charge a percentage of ERC Credit?

You might be wondering if your CPA can charge you a percentage of your ERC Credit, but let me clear that up for you right away. The answer isn’t as straightforward as it may seem.

While it’s not uncommon for CPAs to consider contingent fee billing arrangements, especially when helping clients obtain the Employee Retention Credit (ERC), professional standards actually prohibit this practice.

  1. Contingent fees prohibited: According to both Treasury Circular 230 and the AICPA Code of Conduct, CPAs are not allowed to charge contingent fees for preparing original or amended returns. This includes payroll tax and income tax returns related to obtaining the ERC.
  2. Misinterpretation of exceptions: Some CPAs mistakenly believe they can accept contingent fees under one of these professional codes’ exceptions. However, these exceptions do not apply in the case of amending tax returns for ERC purposes.
  3. Potential consequences: If a CPA charges a contingent fee in violation of these rules, they could face disciplinary action from their governing body.

It’s crucial to note that while many CPAs are knowledgeable about tax laws and diligent in their work, misunderstandings around specific guidelines can occur – like thinking it’s permissible to charge a percentage fee based on your ERC credit.

So before engaging a CPA to assist with filing for your Employee Retention Credit, discuss their fee structure upfront and ensure any agreed-upon fees adhere strictly to industry regulations. This will help you avoid potential complications down the line and ensure you’re working with professionals who uphold ethical standards at all times. Remember, accurate knowledge is power when dealing with complex matters like taxes.

How does a business apply for Employee retention credit on its own?

Navigating the application process for the ERC on your own can certainly be a challenging task, but armed with the right documentation and understanding of IRS procedures, it’s indeed achievable.

The first step is to have all your necessary documents in order. These include payroll reports, gross receipts showing revenue collected by quarter for 2020 and 2021, government order information detailing its impact on your business, documentation for other grants or credits received or PPP loans if applicable, as well as quarterly payroll tax filings.

Once you’ve gathered these documents, you’ll need to calculate your credit amount. This involves determining which quarters you qualify for based on reductions in gross receipts or government orders affecting operations. You must then calculate the qualified wages paid during those quarters.

Having done that, the next crucial step is completing an amended payroll tax return for each qualifying quarter using IRS form 941-X. This form allows employers to correct errors on a previously filed Form 941 series returns. Ensure you fill out this form accurately to avoid potential disputes with IRS later down the line.

It’s important not to overlook any detail while applying for the ERC independently. Remember that mistakes might lead not only to delays but also possible fines or penalties from the IRS due to inaccuracies in filing.

While applying for ERC without professional help could be daunting given tax law complexities and detailed paperwork involved, however, with careful preparation and thoroughness in handling all required documentation, it’s something businesses can manage successfully.

How much do ERC companies charge vs accountants?

Ever wondered about the financial implications of hiring an ERC company versus an accountant to handle your tax amendments?

There’s a significant difference in the fees charged by these two entities, and it’s crucial to understand this disparity before making your decision.

ERC companies typically charge a fee ranging from 15% to 25% of your refund. You’ll appreciate that in most scenarios, you won’t have to pay these fees upfront or out-of-pocket. Instead, you can opt for the fees to be deducted from your refund once it’s processed. This arrangement often provides peace of mind as the payment only comes through after successful filing and approval.

On the other hand, accountants usually charge between 10-20% of your Employee Retention Credit (ERC). However, there’s a catch here – according to IRS guidelines, accountants should not be charging contingent fees or percentages. Instead, they should levy a fixed fee for amending your tax returns. Unfortunately, many accountants are not well-informed about ERC and might end up charging you on a percentage basis.

Weighing up these factors reveals that it could be cheaper overall to file with an accountant rather than an ERC company. But remember: cost isn’t everything. Many businesses prefer engaging specialized ERC companies due to their deep understanding of ERC claims despite the higher fee involved.

So when deciding between hiring an accountant or an ERC company for filing your tax amendments related to employee retention credit, consider both cost implications and expertise level in equal measure.


In conclusion, it’s your decision whether to use a CPA for filing Employee Retention Credit. They’re experts in the field and can potentially save you time and money.

However, remember they might charge a percentage of your credit. You can also apply on your own if you’re comfortable with tax laws.

Always weigh the cost of hiring an ERC company or accountant against potential savings before making a choice.

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