Tax Credits Available For Business Owners
0:27 Jeffrey Davis
Hello everybody, welcome back to Radio Entrepreneurs. My name is Jeffrey Davis. We continue to stream stories of entrepreneurship and leadership in this chaotic economy. This is a special segment FEI, Financial Executives International, that means my co-host is the one and the only Evan Macedo of Sapers and Wallack with a little bit of a raspy voice. Welcome Evan!
0:51 Evan Macedo
Good morning Jeffrey! It’s a pleasure to be here. We have a wonderful show in store for us today so I’m very excited to get into it.
0:58 Jeffrey Davis
I’m glad I could hear your voice. I thought this was going to be the coda segment then you’re going to be doing signings but I guess not. Our guests today are Catherine Tindall and Skyler Kressin, partners at Dominion Enterprise Services. Welcome!
1:16 Catherine Tindall
Thank you, thanks for having us!
1:18 Skyler Kressin
Thanks for having us Jeff!
1:19 Jeffrey Davis
Well I know Dominion is very busy during this covid time, why don’t you tell us a little bit about your services?
1:30 Skyler Kressin
Sure! We are a tax advisory and credit specialty firm that deals primarily with entrepreneurs, startups, business enterprises, closely held family enterprises. We deal primarily in the realms of tax strategy consulting and right now we’re really focused on a couple of covid related tax credits. One of them is the Employee Retention Credit and then we’re also on an ongoing basis helping particularly startups and innovative businesses with the R & D tax credit.
2:06 Evan Macedo
Great and Skyler, I know you guys do a lot of work. I know I’ve personally talked to you about the Employee Retention Credit for our company. For our listeners out there, do you mind giving a broad overview of what the Employee Retention Credit is? How much you might be able to get and who might be eligible for it?
2:27 Skyler Kressin
Yeah, absolutely! So this is one of those credits that was part of the incentive packages that were passed as part of the legislation that occurred during the pandemic. It’s a tax credit that is claimed on your payroll tax returns or on amended payroll tax returns unlike some of the other programs that are loans, like the PPP loans that many people are familiar with. It is a claim that you make on a payroll tax return that is a refundable credit that basically is a check written from the IRS to you. The amount that you can claim is up to $26,000 per employee for the period of the pandemic which basically ranged from the second quarter of 2020 all the way through 2021 in some cases, in some areas.
3:23 Evan Macedo
Well that’s a pretty big $26,000 per employee. I imagine if you have, I don’t know 100 employees that credit can add up pretty quickly over there.
3:33 Skyler Kressin
Absolutely! And that’s not to say that everybody qualifies for that full amount, many don’t but in the best case scenario that’s the amount that you can qualify for. There are other complications to this and calculations and interactions with other things like the PPP but in the best case scenario, it’s a very attractive incentive here.
3:52 Jeffrey Davis
A lot of people might wonder if they might think my business is too small. Is that a fair assessment or you know can you respond to that?
4:02 Skyler Kressin
Sure! Really the only requirement that you need to have is you need to have employees. For instance a sole proprietor that does not pay wages out, that’s not going to work. If you make profits based on your own labor etc. and you pay 1099s, contractors or what have you that’s not going to work but if you do have employees you can potentially qualify. So even if you have a small shop with five employees you can still qualify for this credit.
4:30 Evan Macedo
And Catherine, I wanted to ask you. What do you guys do in terms of helping to see if somebody actually qualifies for this credit and what if they ever get audited? Do you provide any sort of audit support? How does that work?
4:46 Catherine Tindall
Basically because we’re a specialty CPA firm we do a lot of work for other CPA firms. So for people where their tax practitioner doesn’t do this kind of work, we come in and as part of our exploration process we’ll do a rough calculation of what your company would be eligible for and if you’re eligible and the rough amount of the credit. Also we take care to explain how the credit interacts with other things that are going on in your income tax situation because like anything in the tax code it’s not straightforward. That’s part of our process we do initially, so that before you make a decision you have all the facts in front of you then on the back end we’re able to represent clients before the IRS. That ends up being a big part of the service that we provide because with these claims, it’s such high dollar figures, we’re expecting a lot of IRS activity in the future around them.
5:51 Evan Macedo
Well that’s fantastic! And I know we wanted to move on to the Research and Development Credit as well. Do you guys want to give us a brief overview of what the R&D credit is? And who might be eligible for that?
6:08 Skyler Kressin
So the R&D credit is something that was enacted back in the early 90s. It was an incentive for domestic enterprises to basically innovate and to pay people to innovate. It was made more powerful and more permanent back in 2016. It’s been incentivizing companies that pay employees to do technical work related to the development of a new product or process within their enterprise and so it has to be their own intellectual property, their own physical property, their own designs. It can’t be something that they’re doing as custom work for someone else but if they pay employees or contractors to develop a new product or process within their enterprise then they are potentially eligible for the credit. And the more you pay as a proportion of your wages or subcontractor costs in relation to the development of a new product or process, the more you’re going to benefit from this credit.
7:16 Evan Macedo
And Skyler, you and I are writing a blog together which should be coming out in a couple of weeks, probably around the same time this radio show will come out. But I wanted to ask you at what point like what’s the dollar figure that somebody will spend on an R&D product where it makes sense to give you guys a call and start looking into this credit?
7:37 Skyler Kressin
Yeah. I would say if you spend somewhere around, let’s say $ 200,000-300,000 dollars on an annual basis in wages or subcontractor costs towards the development of a new product or process, then yeah it’s worth looking at. A lot of times you’ll find startups where they have low payroll but then as they ramp up they start having high payroll and even though they’re still in a lost state, they can still take advantage of the credit by carrying it forward or they can offset payroll taxes.
8:15 Evan Macedo
8:16 Jeffrey Davis
We’ve been speaking with Catherine Tindall and Skylar Kressin partners at Dominion Enterprise Services with Evan Macedo of Sapers and Wallack. All very important tax credits during this time. I know the R&D tax credits are something that a lot of my clients over the years have taken advantage of and it’s really helped them during different and various times. Catherine and Skyler, if someone’s looking for Dominion Enterprise Services or wants to know more about what you do, how would they find you?
8:49 Catherine Tindall
You can visit us online. Our website is DominionES.com and we’re both fairly active on linkedin. We often post different interviews and different things that we’re up to on Linkedin, so feel welcome to connect through there as well.
9:05 Jeffrey Davis
Great! Do you want to add anything to that Skyler or that captures it all?
9:11 Skyler Kressin
Pretty much captures all. I would just say as a final note this Employee Retention Credit is a time sensitive thing we have basically till April of 2023 to claim these and so don’t miss your opportunity to claim these six figure plus credits for your company in this short time frame.
9:28 Jeffrey Davis
It’s there you might as well take it.
9:30 Skyler Kressin
9:32 Jeffrey Davis
And Evan Macedo from Sapers and Wallack, also our FEI representative, you want to give us the connection for both organizations?
9:39 Evan Macedo
Absolutely! I’ll start with Sapers and Wallack, we have a brand new website. If you go to sapers-wallock.com, you can check us out there. We have our team page where you can contact myself or anybody else at the company. We also have built out a very extensive learning center with all kinds of articles and blogs and podcasts and videos on all kinds of different financial service topics. So I really ask you to go check that out and then this is an FEI segment. FEI is Financial Executives International, I’m part of the Boston chapter. We have over 450 members and are growing and it is a great networking group. If you want to be around other peers who are senior financial leaders in your area, you can check them out at feiboston.org.
10:26 Jeffrey Davis
Great and that new website for Sapers and Wallack, do they have your full picture on the homepage?
10:32 Evan Macedo
Oh they do Jeffrey, so you can look at me all day.
10:37 Jeffrey Davis
What more would I want? Remind everybody my name is Jeffrey Davis Radio Entrepreneurs also Mage LLC. I want to thank our guests and for being on the show today and remind everyone this is Radio Entrepreneurs.
Tax Credits Available For Business Owners
Don’t be the next victim of ERC mistakes!!
If you want to learn more about the credit and the process for claiming it, be sure to check out our short e-book that goes through the top five mistakes we see time and time again in the restaurant and other industries when it comes to the ERC