How to Record Employee Retention Credit in QuickBooks? 

 October 25, 2023

By  Jace W Campbell, CPA

How to Record Employee Retention Credit in QuickBooks

Understanding the Employee Retention Tax Credit (ERTC) is critical for businesses… It allows you to potentially claim tax credits if you’ve kept employees on your payroll during the COVID-19 pandemic. As per IRS.gov and Treasury.gov, a comprehensive understanding of this program can be quite involved… However, let’s break down its essentials.

The Employee Retention Credit is designed to incentivize employers to keep their staff employed during the challenging economic conditions brought on by the COVID-19 pandemic. By doing so, employers may be able to claim a tax credit that could help offset some of their costs.

Qualifying for the ERTC

Eligibility for these tax credits isn’t automatic… There are specific criteria that your business or non-profit organization must meet to qualify for ERTC. Almost every type of business and non-profit organization in the US can potentially claim these credits as long as they had W-2 employees on payroll during specified periods affected by the pandemic.

Key Eligibility Criteria

One primary criterion for eligibility is that you have paid payroll taxes on those employees… This crucial aspect of ERTC qualification should not be overlooked when considering whether or not your organization might be eligible.

False Promises from Firms

Another point worth noting is that there are firms out there using lies and deceptions to lure businesses into signing up with them for assistance in claiming these tax credits… But don’t let these so-called “experts” sway you without doing your research first.

Read more: When Will Employee Retention Credit be Paid?

Recording ERTC in QuickBooks

Now, let’s delve deeper into our primary question – how do you record Employee Retention Credit (ERTC) in QuickBooks? Although QuickBooks does not offer a specific function to record ERTC, you have the ability to manually input the data. The short version is that you will need to reduce the payroll tax expense you recorded in the associated period, which in turn results in an increase of net income for the period. This process requires a thorough understanding of your financials and tax obligations to ensure accuracy… After all, it’s essential to remember that ultimately, you are responsible for these tax credit claims.

The Importance of Knowledge and Expertise

Regardless of where you stand on your ERTC knowledge journey, be it a business owner who has done some independent research or a CPA seeking ways to serve clients more efficiently and ethically, having a strong grasp of this process is key. Let’s not forget any “expert” can provide advice on claiming the ERTC… But truly understanding these complexities will empower you to make well-informed decisions unique to your situation.

ERTC Eligibility Basics

Now let’s turn our attention towards eligibility for claiming Employee Retention Tax Credits… Nearly every type of business or non-profit organization in the U.S can claim these credits as long as they had W-2 employees on their payroll during specified periods affected by the pandemic. Remember though, having paid payroll taxes on these employees is crucial for qualifying for the ERTC.

Beware of Deceptions from Firms

In this complex landscape, numerous firms may try enticing you with promises of effortless ERTC claims… It’s essential to stay vigilant against such deceptions. A complete understanding of this program with its many intricacies could fill pages, but instead, we aim to distill this information into digestible details that will aid in your comprehension and decision-making processes regarding ERTC.

By grounding ourselves in solid knowledge and ethical practices, we can navigate this process more efficiently, ensuring our decisions regarding ERTC are well-informed and responsible. Remember, knowledge is indeed power when it comes to leveraging programs like the ERTC.

Also read: Who Gets the Employee Retention Credit: Employers or Employees?

IRS Crackdown on ERTC Fraud

In the current financial climate, it’s more important than ever to note that the Internal Revenue Service (IRS) is ramping up efforts to crack down on fraudulent ERC promoters… These firms have been disseminating misinformation about ERTC, promising “free” money with no risk. They’ve been selling businesses on their alleged expertise in securing these tax credits, but the reality is often far from their claims.

The IRS has been unequivocal in its stance – each taxpayer is always responsible for their own tax filings. As a licensed CPA and owner of a registered CPA firm, it’s my duty to warn the public about rampant fraud within my industry.

The Reality Behind ERTC Claims

Over the past few years, I’ve had countless conversations with prospective clients who were misled by ERC promoters promising they were eligible for ERTC even if their business was only marginally impacted by the pandemic. Unfortunately, many of these hopeful individuals didn’t have a legitimate claim for these credits.

But make no mistake, this doesn’t make me the “bad guy” denying clients of ERC they don’t qualify for… Rather, this places me in the position of being an ethical advocate helping ensure our clients can rest easy knowing that any claims made are legitimate and supportable in case of an audit.

The Fight Against ERTC Fraud

Fraud has become so prevalent that the IRS is launching two new programs allowing taxpayers to voluntarily pay back their ERTC refunds without penalty or withdraw their claims before receiving illegitimate refunds. This step underscores why businesses must fully understand and comply with all eligibility requirements before claiming ERTC

After all, understanding and abiding by tax laws is not only a civic duty but also provides peace of mind that you’re making accurate claims – saving you from potential penalties and legal complications down the line.

Benefits of Working with JWC ERTC Advisory CPA

The final part of our discussion centers on why engaging a reliable partner like JWC ERTC Advisory CPA can make a difference. With the recent IRS crackdown and the intricacies involved in claiming these credits, having a knowledgeable partner can alleviate fear, reduce uncertainty, and maximize potential gains.Working with JWC ERTC Advisory CPA ensures an independent eligibility review, which means you’ll have clear visibility into your organization’s potential qualification for these credits… And remember – knowledge is power when it comes to programs like the ERTC.

Jace W Campbell, CPA

Jace founded JWC ERTC Advisory CPA in March 2021 as the nation's first and only public accounting firm focused solely on ERC . . . and nothing else. He has personally signed over 9,000 ERTC claims and is proud to be executing these claims conservatively, and how intended by Congress.

He has a passion for educating clients so they can make the best decision for themselves.  If you read articles and watch videos that Jace produced in 2021, his approach is the same now as it was then.

While other firms pivot their messaging to comply with new IRS guidance, Jace continues preaching the same conservative principles that have helped clients recover hundreds of millions . . . while sleeping easy at night.

related posts:

Can You Claim Employee Retention Credit in 2023?

Can You Claim the Employee Retention Credit in 2022?

Employee Retention Credit Scams: What You Need to Know

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