employee retention credit (ERC) has been a valuable resource for many businesses that have been impacted by the COVID-19 pandemic. The ERC was established by the CARES Act and was later expanded and extended by the Consolidated Appropriations Act of 2021 and the American Rescue Plan Act of 2021. This tax credit is designed to help businesses retain employees by providing a refundable tax credit for wages paid to employees during the pandemic.
PwC, a leading global professional services firm, has been at the forefront of providing guidance and best practices for accurate accounting and compliance with the ERC. PwC’s experts have been helping businesses navigate the complexities of this tax credit and ensure they are maximizing their benefits while remaining in compliance with the ever-changing regulations.
One of the key best practices for accurate accounting and compliance with the ERC is to ensure that businesses have a thorough understanding of the eligibility requirements and documentation needed to claim the credit. PwC advises businesses to closely review their payroll records and identify eligible wages for the ERC, including qualified wages paid to employees during periods of economic hardship.
In addition, PwC recommends that businesses establish strong internal controls and documentation processes to support their ERC claims. This includes maintaining accurate records of eligible wages, calculating the credit correctly, and retaining supporting documentation for the credit claimed.
PwC’s experts also emphasize the importance of staying up-to-date with the latest guidance and regulations related to the ERC. Given the evolving nature of the pandemic and the government’s response, the rules and requirements for the ERC have continued to change. PwC’s professionals are constantly monitoring developments and advising businesses on how to adapt to these changes while remaining in compliance.
Another best practice recommended by PwC is to engage with a trusted advisor or tax professional to assist with ERC compliance. The complexities of the ERC and the potential impact on a business’s tax liabilities make it essential for businesses to seek expert guidance. PwC’s experienced professionals have been working closely with businesses to help them navigate the intricacies of the ERC and ensure accurate accounting and compliance.
As businesses continue to seize the opportunities presented by the ERC, it is crucial for them to prioritize accurate accounting and compliance. PwC’s best practices provide a roadmap for businesses to follow as they navigate the complexities of the ERC and maximize the benefits of this valuable tax credit. By adhering to these best practices, businesses can not only secure the ERC but also ensure they are in good standing with the IRS and other tax authorities.