Having proper documentation about payroll is a big part of applying for the Employee Retention Tax Credit – and important to have on hand should you eventually be questioned about your application by the IRS. Having correct information on your full-time equivalent employees and their qualified wages is critical to a successful ERTC application, and there are steps to take to optimize payroll processes for the purposes of integrating the ERTC into your tax dealings as a business owner. 

Optimizing Payroll Processes

In general, it’s not a bad idea as the owner of a business to make sure your payroll processes run smoothly. Having payroll regularly late or too complex, or ending up with a multitude of errors, can cause big issues, especially for small businesses. 

But having your payroll processes optimized is especially important for Employee Retention Credit record-keeping, and there are ways to improve those processes for your business. 

Simply standardizing your payroll system and implementing a clear monthly schedule can instantly improve your payroll processes. It can also make it easier to figure out the exact dates you may need to know for things like the ERC. The credit was first available for wages paid from March 13, 2020, to December 31, 2020, then extended to December 31, 2021. Having a clear payroll schedule can help you narrow down what counts for the ERTC and what doesn’t.

Making sure your payroll cycle is the same for all employees across the board is important, too. If you have a different payroll cycle for full-time equivalent employees vs. contractors, for example, that could make working out the number of employees eligible for the Employee Retention Tax Credit more confusing. 

Software and Outsourcing to Improve Payroll Processes

Using automated payroll software can simplify your payroll processes as well, and standardizing how all employees are paid (direct deposit vs. another method, for instance) can help with clearly processing payments across the board. Steps like these make records for all payroll processes clear for everyone involved – from business owners to managers to HR to employees, and to the IRS if they ever need to get involved. 

Finally, you might consider outsourcing payroll completely. A third-party vendor can help small business owners who don’t have the resources to effectively manage payroll in-house. A vendor that is used to handling payroll processes for businesses will know all the ins and outs of calculating payments, deciphering payroll regulations, and may even have quite a bit of experience with documenting and supplying the information needed for tax credit needs like the Employee Retention Tax Credit.

Ultimately, optimizing your payroll processes across the board for your business is a smart move whether or not you’re even considering applying for the ERTC. But having those processes be as clear and effective as possible to integrate ERTC documentation needs is an especially wise move in the long run. 

Working with Tax Professionals on the ERTC

It’s also not a bad idea to work with a qualified tax professional, like the ones at Dayes Law Firm, to make sure you completely understand the requirements needed for the Employee Retention Tax Credit and possibly even give advice to optimize the process of payroll documentation to apply for tax credits. 

Please contact us for a free, no-obligation consultation concerning any of your ERTC questions. At Dayes Law Firm, our team has extensive experience in Employee Retention Credit concerns and has been involved in filing for more than $250 million in refunds for many businesses already.

Give us a call today or fill out the form on this page to see how we can best assist you and your business with the ERTC.