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As the third quarter draws to a close, businesses should take a moment to review their financial health. The third quarter is a pivotal time for analyzing your financial performance, making necessary adjustments and preparing for year-end tax obligations.Â
Third-Quarter Financial Review
The third quarter offers an opportunity to evaluate your business’s financial position. This includes reviewing income statements, balance sheets and cash flow reports. Your income statement helps assess whether your business is meeting its revenue goals, while the balance sheet gives insight into your company’s assets and liabilities. Cash flow is particularly important in Q3, as it impacts decisions like year-end spending or investments. Ensure all revenue streams are accurately recorded and expenses are categorized correctly.Â
Adjusting Quarterly Estimates and Preparing for Q4
Businesses paying quarterly estimated taxes must assess their liability after the third quarter to determine if any adjustments are necessary. Reviewing your income and expenses to date helps you determine if your previous quarterly payments were sufficient and whether adjustments are needed for the upcoming payment.
Tax Planning Strategies for the Final Quarter
Tax planning in Q3 sets the stage for a smooth year-end filing process. By this point, you should consider deferring income or accelerating expenses to balance your tax burden. If your income has exceeded expectations, accelerating expenses can help offset taxable profits. Alternatively, you may defer some income to the next tax year if you anticipate lower revenue.
Engaging with your accountant or tax professional now allows time to strategize, including reviewing retirement contributions, credits or deductions that could provide tax advantages. Taking proactive steps in the third quarter minimizes surprises when the year ends.
ERC Supplemental Claim Process for Third-Party Payroll Companies
The IRS recently announced the opening of a new, supplemental claim process to assist third-party payers, like employee leasing companies, in resolving incorrect claims for the Employee Retention Credit (ERC) (IR-2024-246). This update is essential for businesses that have utilized third-party payroll companies, as it addresses how to correct errors in ERC filings.
Understanding Third-Party Payroll Companies and the ERC
Third-party payroll companies, including certified professional employer organizations (CPEOs), professional employer organizations (PEOs) and Sec. 3504 agents, handle payroll and tax reporting duties on behalf of their clients. These entities report and pay federal employment taxes under their own employer identification numbers (EINs), often consolidating multiple clients under one umbrella.
In some cases, these third-party payers may have filed ERC claims on behalf of multiple employers. If a client later determines they are ineligible for the ERC, it is the responsibility of the third-party payer to correct the claim.
How the Supplemental Claim Process Works
The newly announced supplemental claim process enables third-party payers to withdraw claims for clients that are not eligible for the ERC, while still retaining the claims for eligible clients. This process aims to expedite and simplify the correction of ERC claims in complex multi-client arrangements.
The supplemental claim process is only available to third-party payers who filed ERC claims on an adjusted employment tax return using their EIN and made the claim prior to January 31, 2024. The IRS has emphasized that these claims must be filed separately for each tax period, with specific instructions on how corrections should be submitted. All submissions must be completed by November 22, 2024, at 11:59 p.m.
Why This Matters for Businesses
For businesses working with third-party payroll companies, this supplemental process provides an avenue for correcting any misfiled ERC claims. Correcting these claims promptly is critical, as improperly filed ERC claims can lead to complications with the IRS, including penalties or delays in processing.
Businesses should communicate with their payroll providers to ensure that all claims are accurate and that necessary adjustments are being handled correctly. This not only ensures compliance but also protects businesses from potential liabilities arising from incorrect claims.
Corporate Capital Is Ready To Assist
The third quarter is a crucial time for financial management and tax planning. Regularly updating and reconciling your books, making strategic tax decisions and staying informed about changes like the ERC supplemental claim process can put your business in the best possible position as the year-end approaches. Proactive management during Q3 will help avoid costly mistakes and ensure a smoother transition into the final quarter.
If you are looking for assistance with tax filings and bookkeeping or have questions about tax planning strategies, our Corporate Capital team in Las Vegas, Nevada is ready to assist. Please call 855-371-0070 to learn more or schedule a consultation with one of our financial specialists. Â
Source Article:
ERC supplemental claim process opened for third-party payroll companies AICPA (Association of International Certified Professional Accountants).