ERTC Documentation: How Business Owners Can Get Organized

August 31, 2023
Dayes Law Firm

While many businesses are eligible to apply for the Employee Retention Tax Credit, it’s not as easy as checking off a box and being done with it. The ERTC involves quite a bit of documentation, and you want to make sure you do it all correctly so you don’t have to be prepared for an IRS audit. Here are a few tips on how small business owners can stay organized when it comes to ERTC compliance and documentation, whether you’re applying on your own or with the help of a team of tax professionals

Staying Organized for the ERTC

It is extremely important to have proper documentation when applying for the ERTC and to make sure that information stays organized. The IRS previously warned that “improperly claiming the ERC could result in taxpayers being required to repay the credit along with penalties and interest.”

You’re going to want to be able to prove that your claim is legitimate, and having strong documentation of your ERTC eligibility is part of that. A request for information that includes a list of documents you’ll need to provide to verify your ERTC claim should be sent by the IRS if you do end up getting audited, and if you stay organized, it will be easy enough to deliver that information. 

But even if you don’t get audited for your claim, it’s still not a bad idea to have all of that information well-organized for compliance purposes. If you’re doing the claim yourself, you will need the same sort of records as you’ll need to provide to an ERTC team if you decide to enlist the help of one to apply for the tax credit.

The first step is to make sure all records of payroll reports are documented and organized. Those records may include wages paid to each individual, the taxes withheld, healthcare benefits provided, and more. To be extra safe, you may want to have both digital and physical copies of these records to produce as needed.

ERTC Record Keeping 

You’ll also need to have records of how your business was impacted by the COVID-19 pandemic, including any decline in gross receipts and partial or full suspensions of operations as a result of government orders. Those records are crucial to claiming the credit, so keeping them all organized in carefully constructed folders and accounts is key. 

Speaking of folders and accounts, you’ll want to use dedicated, dependable software and tools to manage the records and make sure they’re secure. The last thing you want is for the software to fail or for there to be a breach of your business records or your employees’ personal information. An ERTC team may even be able to advise you on what tools and other resources can help you when it comes to ERTC compliance and documentation!

Some of this documentation should be accessible to your Human Resources team or whoever handles employee records, and whoever handles all tax matters should also be able to pull up that information as necessary. While organization is important for the ERTC, it may not be a bad idea to also be sure all of that information is organized in general, so those individuals or departments can easily provide payroll or tax reports for other purposes, too. 

ERTC Application Assistance 

Our team of tax professionals has a clear or complete sense of the Employee Retention Tax Credit. Trained ERTC tax lawyers can calculate the refund amounts due to your business and verify any information and documentation needed with their own team and resources, which can ultimately save you time as a busy business owner. 

While your ERTC specialist may ask for documentation to make a claim on your behalf and will need you to be organized to provide that information, they will be able to handle much of the rest of the process on their own – including any ERTC matters and communication involving the IRS. They can offer you peace of mind that handling the process on your own may not. 

Feel free to give our skilled team of tax professionals a call so we can discuss your Employee Retention Credit options with you. The consultation is free, and you are under no obligation to work with us after the initial evaluation.

Please contact us today to discuss your situation, and see how we may be able to help you with the ERTC process, including compliance and documentation.