ERC Specialists is a specialty tax company focused on helping maximize the Employee Retention Credit (ERC) for businesses affected negatively by COVID-19.
When I caught up with ERC Specialists’ co-founder Josh Zieglowsky, I wanted to learn more about how he and his partners managed to do over $1.7 billion in sales in three years’ time, helping over 73,000 companies save hundreds of thousands in the process. Lucky for me, Zieglowsky was eager to share how the company differentiates itself from the competition.
How did ERC Specialists start?
I’ve been in commercial real estate and real estate investing for 23 years. I started getting into the oil business in 2018 with my dad and in 2020, we acquired a bigger conglomerate where we had a master service agreement. The business was suffering, and I was trying to find extra stimulus for it. We did PPP [Paycheck Protection Program] loans and, in 2021, the ERC program (Employee Retention Credit] came out, a COVID relief fund. My CPA couldn’t help me, saying it was a payroll credit. My ADP rep wouldn’t amend quarterly returns either and said I needed to talk to a third-party service. Over time, I felt like I could just do this on my own.
Two friends became partners, and we adjusted to the way the market was doing it, which no one really knew about. We assisted companies on a contingency basis: If we were able to get you money, we got paid. We started with a couple of us and the business grew into employing 285 employees. In 2022, we were the second fastest-growing company in Utah and the largest in the country for that niche. We did over $1.7 billion in sales in three years, helping 73,000 companies. We also had 50,000+ affiliates, or business-to-business sales associates, and learned a lot about scaling a business to work with an affiliate base, which has allowed a few of us to pivot into other like-minded ventures.
How were you able to scale so quickly?
It was all because of my awesome partners. My partner in charge of our tech, Justin Atkinson, was very good at seeing all parts of the company and what it needed. His system was like the Henry Ford conveyor belt, where the same employee put tires on every day or the same person put on the windshields every day. Justin had the mindset of seeing every piece of the cog and how it needed to work. Our CEO, Mark Sullivan, was one of the best at seeing what we needed in different departments and handling issues we had over our first few years. It was a baptism by fire. We were helping with this credit that was going to last three years, and the clock was ticking.
Rather than figuring out how to do things, we figured out either who to do them with or who could do it for us. Every partner was an expert at what they did.
When you approach businesses, what do they most misunderstand about this credit?
Good question. People didn’t know what this company was that had only been registered for two months [shortly after the credit came out]. They didn’t know if they wanted to send their quarterly returns to this company in Utah. They wanted a CPA — only, CPAs weren’t doing this. It’s a payroll credit. Payroll companies and CPAs are two different things. CPAs want to take care of your 1040s and 1120s, whereas quarterly payrolls are doing your 941 reports. I talked down on CPAs at first; I’d say, hey, if your CPA hasn’t told you about this, you should be concerned. Only, that message didn’t resonate.
Instead, I began to emulate CPAs and say, hey, he or she is really good at your taxes, but we’re really good at this specific credit. We don’t want to do your taxes, but we do want to work together on this credit. Business skyrocketed when we took that approach. We reached out to CPAs and payroll companies. CPAs didn’t want to do what we were doing, but they wanted their clients taken care of. Once they understood who we were and what we were doing, they’d give referrals of, oh, 200 more clients that we could probably help.
If you’re offering a specialized service, it gives you a leg up on competitors, yes?
Yes. About a year and a half into the business, I started hearing about more ERC companies, only we were way ahead of the competition. Our tech was far more advanced. For instance, we would notify our customers when a letter was going to be sent to them from the IRS before they received it in the mail. If you suddenly receive a letter from the IRS, there’s some anxiety involved. But if you know two weeks in advance that a letter is on its way, that’s huge. We were often able to tell them to rip it up, because we had already taken care of things for them.
We didn’t have that in place during our first year, and got a lot of customer service calls. We cleared things up, but there was still anxiety, right? Once we received that API [application programming interface], however, our customer service calls went down almost 60 percent.
You’re able to not only help companies save money on taxes, but you’re also helping remove anxiety by providing that added knowledge. That’s a win-win.
I told my CPA I made a lot more money this year than I did last year. I wondered what I could do to save money on taxes, and he said that wasn’t his job. I was really upset. Knowing what I know now, I understand it really isn’t his job. Here’s a good way to think about it: If you’re going through a divorce, do you call a real estate attorney or a divorce attorney? CPAs specialize in taxes or audits or cost segregation. They’re all accountants. They’re all licensed. But they all specialize in different areas. People often think their CPA knows everything. That’s like asking an attorney: I know you do real estate, but can you defend me in my divorce? Totally different.
Did your company grow faster than the original projections and goals you had for it?
When you start a new business, you put a performance plan together. When we first started, I wanted to make $40,000 a month, but that was short-sighted — it turned into a company with $1.7 billion in sales. We grew well past my original projections. I’m grateful and blessed.
Did your past experience with real estate lead you in this direction?
Great question. It did. In commercial real estate, let’s say I’m buying a shopping center. There’s a guy that does acquisitions — me. I’m the one calling and negotiating. I’m getting the contract together. Once I have it, I hand it off to my partner, who’s an underwriter. He’s over analytics. He comes back to me and lets me know they don’t have a tenant, for example. He discovers if we have cash flow and if we can pay investors. Then, we talk to another person who knows how to raise money, and another partner is added. It’s the “who, not how” mentality. I have talked to people on the commercial real estate side that say they don’t know how I do it, because it’s tough. I look at it like, I think it was Jay Paul Getty who said, “I’d rather make 1 percent of 100 people than 100 percent of myself.” Part of that is having an abundance mindset. I want more people around me to be successful as well. It’s a go-giver mindset, really. I was already doing that, but when I read the book, that dialed it in for me.
What’s the future look like for the company?
There’s a couple of things I’m doing; The sky’s the limit. There’s no one in the industry doing something like this. I’m optimistic about it. If we had enough users on it over time in three to five years, it’d be a multibillion-dollar exit. I compare it to Credit Karma; although they had millions of freemium customers, there’s not an added value.
But there is with our product. It’s helping people save money versus suggesting you go get a credit card that I can recommend. How many customers do we need to be at a valuation of a billion? Once we have that number, we’ll have our goals in place. And Credit Karma was bought for 7 billion in 2019, well before AI, so I’m pretty optimistic about it. It’ll be my biggest venture for sure.