What Are Some Unusual Uses of the ERTC for Businesses?

December 22, 2023
Dayes Law Firm

The Employee Retention Tax Credit (ERTC) provided financial breathing room for many small businesses. Once your company collects this refund, it’s in your best interest to use it wisely. 

Common ERTC business uses include rewards for employees, investing in new technology, and eliminating debt. Here are a few other ways to re-invest this benefit in your company.

Have You Claimed the ERTC Yet?

First, you must ensure you qualify for the credit. Many legitimate businesses fell prey to ERTC marketing scams, in which third-party services pressure business owners to file for the benefit without checking taxpayer eligibility. Every Form 941-X undergoes close inspection as the IRS battles fraudulent claims. 

If you submitted an amended tax return but later learned that you may not be eligible for the refund, you can use the IRS withdrawal process. The IRS will treat a withdrawn claim as if you never filed it.

How to Use the ERTC for Maximum Benefit

If you qualify for the credit and receive a refund, what should you do next? While possible ERTC business uses are practically endless, it’s important to channel this money into meaningful projects, or it can quickly dissipate. The following are some suggestions for putting your ERTC funds to work. 

1. Expand Your Product or Service Line

Have you often envisioned your company breaking into the market with a new product or service, but you never had the funds to launch it? A substantial refund may give you a chance to expand your reach. You can use this cash flow boost to hire extra team members, invest in product development, run market research, re-brand, and launch an advertising campaign. 

2. Buy Real Estate

Many companies lease expensive office space year after year because they don’t have the funds to buy real estate. If you collect a sizable tax refund, you can channel the money toward purchasing a building that will house your company. This way, you can build equity and secure a better price for your business if you ever decide to sell it.

Your company can also buy real estate as an investment property and lease commercial space to other companies. 

3. Purchase New Equipment

Depending on your industry, state-of-the-art equipment could give you a major competitive edge. Maybe you’ve wanted to upgrade your equipment for a while, but your budget never allowed it. You might invest some or all of your ERTC funds in new gear. Alternatively, you could direct some of the money into employee education and training.

4. Buy Another Business

You could use your extra funds to purchase a business that aligns with yours. If you see a convenient opportunity to buy another company and merge it with your existing brand, the ERTC refund could make such a venture financially feasible. Purchasing another business can give you a chance to expand your market footprint.

5. Start an Emergency Fund

Saving money for a rainy day may not seem as glamorous as other tax refund uses, but it’s a smart move that can give your business financial protection if and when another crisis hits. Keep these funds in a separate account and use them when you need emergency cash.

Dayes Law Firm: Legal Counsel and Compliance Reviews for ERTC Claims

Apart from considering ERTC business uses, are you wondering about your eligibility for this tax credit? Whether you haven’t filed for the ERTC yet or have a pending claim, contact us at Dayes Law Firm for help. We can help you confirm eligibility, review your claim, and reduce the chance of a stressful IRS audit.Please feel free to give us a call at (800) 503-2000 or fill out our online form to schedule your free consultation.