Are Restaurants Eligible for Employee Retention Credit (ERC)?

Key Takeaways

• Restaurants can qualify for the Employee Retention Credit (ERC) if they meet specific criteria related to COVID-19 impacts.
• The ERC provides a significant refund for eligible wages paid to employees, with different limits for 2020 and 2021. 
• There are common misconceptions about ERC eligibility that prevent many restaurants from claiming the credit they deserve.
• A step-by-step guide can help restaurants navigate the complexities of the ERC claim process to maximize their benefits.
• Understanding the full scope of the ERC, including frequently asked questions, empowers restaurant owners to make informed financial decisions.

Are Restaurants Eligible for ERC Refund

Restaurants can tap into the Employee Retention Credit (ERC) for financial support, provided they fit within specific criteria. This boon is aimed at businesses hit by notable revenue drops or subjected to governmental restrictions. So, if your eatery had to trim down its hours, cap diner numbers, or switch to a takeout-only model, the ERC might be within reach.

In 2020, the ERC generously offers to shoulder 50% of eligible wages, capping at $10,000 per staffer annually, equating to up to $5,000 per staff member. The scheme grew more bountiful in 2021, promising up to 70% of qualifying wages per quarter, per employee, maxing out at a whopping $28,000 per employee across the year.

Here’s the scoop: every U.S. restaurant has a shot at the ERC. Two paths lead to qualification: demonstrating a significant sales slump or showing your business weathered partial or complete shutdowns by government decree. The latter affected every eatery, with common mandates including:

• Enhanced cleaning protocols,
• Enforced social distancing,
• Dining capacity caps,
• Exclusivity to takeout services,
• And hurdles in supply chains.

By meeting these conditions, restaurants can secure substantial aid through the ERC, bolstering resilience amid the pandemic’s economic squeeze.

Common Misconceptions about ERC Refund for Restaurants

Despite the potential benefits, many restaurant owners have not claimed their ERC due to misconceptions. Let’s clear the air:

1. 1. Only big businesses qualify: A common misconception. In reality, the Employee Retention Credit (ERC) is designed to aid small and medium-sized businesses, including restaurants of all sizes, not just large corporations.

   2. If I received a PPP loan, I’m not eligible: This is not entirely true. Restaurants that received Paycheck Protection Program (PPP) loans can still qualify for the ERC, but they cannot claim ERC for wages paid with the forgiven portion of the PPP loan. They are eligible for ERC on other payroll costs.

   3. The process is too complicated: While the application process for the ERC can seem daunting, numerous resources and professionals specialize in assisting businesses, including restaurants, to navigate and successfully claim their credit.

   4. ERC only covers full-time employees: This is incorrect. The ERC is available for wages paid to both full-time and part-time employees, providing a wider scope of eligibility for restaurants that often employ part-time staff.

   5. It’s too late to apply for ERC: Many restaurant owners believe they’ve missed the opportunity. However, businesses can retroactively claim the ERC for eligible quarters, even after the program has officially ended, by amending past payroll tax returns.

   6. My business was not closed during the pandemic, so I’m not eligible: Not necessarily true. Eligibility for the ERC is not solely based on whether a business was fully closed. Partial closures, capacity limitations, or a significant decline in gross receipts compared to 2019 can also qualify a restaurant for the ERC.

   7. I must choose between ERC and other relief programs: This misconception may prevent restaurants from maximizing their available relief. While certain limitations apply, such as not double-dipping for the same payroll expenses, restaurants can benefit from multiple relief programs concurrently, optimizing their overall financial support.

   8. ERC is only for businesses that experienced a loss: Incorrect. Eligibility for the ERC is based on several criteria, including business disruptions and declines in revenue. A restaurant does not need to be operating at a loss to qualify for the ERC.

It’s crucial to challenge these misconceptions and explore the possibility of claiming the ERC. After all, it’s about getting the financial support your restaurant rightfully deserves.

How ERTC Express Help Restaurants Maximize ERC Benefits

Step-By-Step Guide: How ERTC Express Help Restaurants Maximize ERC Benefits

At ERTC Express, we specialize in simplifying the Employee Retention Credit (ERC) claim process for restaurants, ensuring you capitalize on every opportunity for financial recovery. Here’s our three-step approach tailored specifically for your business:

Step 1: ELIGIBILITY
Firstly, we at ERTC Express assess whether your restaurant qualifies for the ERC. We meticulously review the pandemic’s impact on your operations, focusing on changes in gross receipts and any government mandates that have influenced your business. Our team of Account Executives is dedicated to guiding you through the application process from start to finish. We ensure all necessary documentation is collected and are always available to address any additional questions or information you may need throughout the process.

Step 2: PROCESSING
Upon establishing your eligibility, our seasoned team of CPAs and Customer Success Agents promptly begins processing your claim. To mitigate audit risk and solidify the defensibility of your claim, we deploy our unique Power of 3 system, where three separate CPA teams must agree on the final credit amount before submission. This step is crucial for accurately determining the qualified wages and ensuring no qualifying expense is overlooked, thereby maximizing your potential credit.

Step 3: RECEIVE YOUR FUNDS
The final and most rewarding step occurs when you receive your funds. Importantly, our billing policy is directly aligned with your success – you will only be invoiced after the funds are in your hands. This ensures our objectives are fully aligned with your financial recovery, highlighting our commitment to not just assisting you but partnering with you in your journey towards financial stability.

By choosing ERTC Express, you’re not just navigating the ERC claim process; you’re embracing a partnership that prioritizes your restaurant’s financial health. Our detailed and supportive approach ensures that you are well-informed and confident throughout each phase, from initial eligibility assessment to the joy of receiving your funds. Let’s embark on this journey together, maximizing every opportunity for your restaurant to thrive post-pandemic. Reach out to us today, and let ERTC Express be your guide to a successful ERC claim.

Get Maximum Restaurant ERC Refund with ERTC Express

Partnering with ERTC Express for your restaurant’s Employee Retention Credit (ERC) claim is a strategic step towards securing the financial health and resilience of your establishment. Our steadfast dedication to IRS compliance not only ensures that your claim meets all regulatory standards but also provides you with the confidence that your financial interests are protected. This commitment to compliance is a cornerstone of our service, offering peace of mind in these uncertain times.

• IRS Compliance: Our rigorous efforts to adhere to IRS regulations and requirements guarantee the highest level of compliance for your ERC claim.

• Trusted by the AICPA: Our services have earned the trust of the American Institute of Certified Public Accountants (AICPA), reflecting our commitment to excellence and the highest professional standards.

• U.S.-Based CPAs: Our team comprises U.S.-based CPAs with specialized expertise in ERTC filings, equipped to navigate the complexities of your claim and provide unparalleled assistance.

• Power of Three – Audit Defense: We enhance your claim’s defensibility through our unique audit defense strategy, involving the consensus of three CPA teams on the final credit amount before submission.

• Refund Maximization: Our goal is to ensure you receive the full refund you’re entitled to, with strategies that often outperform those of large payroll and software companies by 40-120%, thanks to our reliance on expert CPA analysis over software estimations.

Choosing ERTC Express means opting for a partner committed to your restaurant’s recovery and financial success. Our tailored approach ensures that every step of your ERC claim is handled with expert care, from initial eligibility assessment to maximizing your refund. Reach out to us today, and let’s embark on this journey together, leveraging our expertise to secure every benefit the ERC has to offer your restaurant.

Frequently Asked Questions (FAQ)

Now, let’s tackle some of the questions you might have about the ERC and how it applies to your restaurant.

What is the maximum amount a restaurant can claim per employee?

For the year 2020, the ERC can provide a maximum of $5,000 per employee. In 2021, this amount was increased to a maximum of $28,000 per employee. These figures are based on the eligible wages and health plan expenses you’ve paid during the respective years.

How do restaurants calculate their ERC?

Restaurants calculate their ERC based on qualified wages paid to employees during eligible quarters, with limits per employee and additional considerations for health plan expenses.

Can franchise restaurants also claim the ERC?

Absolutely. Franchise restaurants, just like independent ones, can qualify for the ERC if they meet the eligibility criteria. The process may be slightly more complex due to the franchise structure, but ERTC Express is equipped to handle these intricacies.

What types of restaurants have the highest success rate with ERC?

Restaurants that experienced a significant decline in gross receipts or were subject to government-mandated capacity restrictions tend to have the highest success rates in claiming the ERC. However, any restaurant that meets the eligibility criteria should pursue the credit.

How can a restaurant prove partial suspension due to COVID-19 for ERC?

To prove partial suspension, restaurants will need to show how government orders affected their operations. This could be through reduced opening hours, capacity limitations, or a shift to takeout and delivery services. Detailed records and documentation will support your claim.