Employee Retention Credit for Law Firms

employee retention credit for law firms

What is ERC and How Much Money Are You Eligible For?

Guest Post: LeanLaw Accounting Pro, Kathy McQuiggan, Beach Cities Accounting

What exactly is the ERC?

The Employee Retention Credit (ERC) is a cash refund from the IRS to reward businesses for keeping employees on payroll during the Covid 19 pandemic. One key component of the program is that the business must have W-2 employees (not contractors).   

Businesses, including nonprofits, are eligible for a cash refund up to $26,000 per employee 

Breakdown: How it Works

If an employee is paid wages of $10,000 or more per quarter, then you could receive a $26,000 refund from the IRS. If the employee is paid less than $10,000 per quarter, you would still receive a prorated portion of the $26,000. 

How does my business receive the money?  

1) Check for eligibility.   

2) Calculate the amount. 

3) Provide documentation and fill out the necessary forms for the IRS.

4)  Get paid by the IRS! 

What about Law Firms?

Law Firms qualify by showing a 50% reduction in revenue for a quarter in 2020 compared to the same quarter in 2019. The firm will continue to qualify in 2020 until gross revenue is greater than 80% of gross revenue for the same quarter in 2019. For 2021, you must show a 20% reduction in a quarter in 2021 compared to the same quarter in 2019. There is also a look-back quarter that may provide additional eligibility.  

Businesses that began operation after February 15, 2020 automatically qualify for the 3rd quarter in 2021 and 4th quarter 2021 for a cash refund up to $100,000. There are no revenue or government restrictions required for eligibility. In order to qualify, the business’s revenue must be less than $1 million annually.

Many complex calculations are involved in receiving the ERC. Specialized knowledge is a must, due to the ever-changing IRS guidance. Of course, clients want to maximize the benefit of all government programs, including the ERC, PPP loan forgiveness, COVID sick pay, COVID Family Leave pay, as well as familial and business relationships. You are not allowed to double dip between different programs, so submitting correct documentation is essential.  

Warning – Many firms charge 20% to 30% of the amount of the ERC refund in return for helping a business file the paperwork. They are taking advantage of the businesses most in need of the money. 

Have questions?  Call me or email me. Helping clients receive the (ERC) has warmed my soul. I love helping clients gain a huge, unexpected windfall, especially after difficult years. 

Phone: (424) 257-0253 

Email: [email protected]

We generally charge less than 10%, customizing our pricing to fit the complexity of the business we are helping.  

Kathy McQuiggan
is a CPA and CEO of Beach Cities Accounting, a boutique accounting firm located in Manhattan Beach, CA. We specialize in working with law firms, ranging in size from starts-up to 20 attorneys. Kathy is an Advanced Certified QuickBooks ProAdvisor with Big 4 accounting experience and over 20 years of accounting and business consulting experience.   We provide services to clients across the country. Kathy is a LeanLaw Accounting Pro.