Important Points
- ERTC offers substantial financial relief, with potential savings reaching millions.
- Eligibility for ERTC is based on factors such as a drop in gross receipts or a halt in operations due to COVID-19 mandates.
- ERTC can be claimed even if a business has received PPP funds.
- Consulting with professionals can make the application process more efficient and increase benefits.
- Proper documentation and a solid understanding of IRS guidelines are critical for a successful claim.
Successful ERTC Claims Case Study: Examples & Tips for Restaurants
The Employee Retention Tax Credit (ERTC) has been a saving grace for many businesses during the COVID-19 pandemic, particularly for the restaurant industry. This article will guide you through the advantages of ERTC, using real-world examples to show how restaurants have successfully claimed these credits.
What’s in Store for You
This article will teach you the ins and outs of ERTC, why it’s a game-changer for restaurants, and how to get the most out of your claim. We’ll examine real-life examples of restaurants that have reaped the rewards of ERTC and give you a detailed walkthrough on how to submit your own claim.
Getting to Know ERTC for Restaurants
What is ERTC?
The Employee Retention Tax Credit is a refundable tax credit that the government created to motivate businesses to keep their employees on the payroll during the pandemic. This credit is accessible to employers who have seen a substantial drop in gross receipts or have been subjected to government orders that limit their operations.
The ERTC’s Role in the Restaurant Industry
Restaurants have been some of the hardest hit by the pandemic, with closures, reduced capacity, and a sharp drop in customers. The ERTC offers a lifeline, helping restaurants cover payroll costs and keep their staff. This support is crucial for keeping businesses going and ready to serve customers as restrictions lift.
Examples of Successful ERTC Claims
Example 1: Family-Owned Diner
First, let’s take a look at a small, family-owned diner that was able to successfully claim ERTC. This diner had been a local favorite for decades, but the pandemic presented them with challenges they had never faced before. Here’s how they were able to get their ERTC benefits:
- Saw a drop in gross receipts by 50% in Q2 2020 compared to Q2 2019.
- Was forced to partially shut down due to local government regulations.
- Kept payroll for 15 employees throughout the pandemic.
Because they met the eligibility criteria, the diner was able to claim $100,000 in ERTC, which helped them cover payroll expenses and prevent layoffs.
Case Study 2: Upscale Bistro
Our second case study is an upscale bistro situated in a busy city. Even though it’s a favorite among locals, the bistro saw a substantial decrease in income due to COVID-19. Here’s how they went through the ERTC claim process:
- Saw a 70% drop in gross receipts in Q3 2020 compared to Q3 2019.
- Got a PPP loan but still qualified for ERTC.
- Kept 30 employees on the payroll, making sure they were paid during the pandemic.
By partnering with ERTC professionals, the bistro managed to claim $250,000 in ERTC, providing crucial financial support.
The Employee Retention Tax Credit (ERTC) has been a lifeline for many businesses during the COVID-19 pandemic, especially for the restaurant industry. This article will guide you through the benefits of ERTC, using real-life examples to illustrate how restaurants have successfully claimed these credits.
What This Article Will Teach You
This article will explain the workings of the ERTC, its importance for restaurants, and how you can get the most out of your claim. We will examine actual examples of restaurants that have profited from the ERTC and offer a detailed guide to assist you in submitting your claim.
Getting to Know ERTC for Restaurants
ERTC Explained
The Employee Retention Tax Credit is a refundable tax credit that was created to incentivize businesses to retain their employees throughout the pandemic. This credit can be claimed by employers who have seen a substantial decrease in gross receipts or have been affected by government orders that limit operations.
Why the ERTC is Crucial for the Restaurant Industry
Restaurants were among the most severely impacted by the pandemic, with forced closures, limited capacity, and a drastic drop in patrons. The ERTC offers a much-needed financial lifeline, assisting restaurants in meeting payroll expenses and keeping their employees. This assistance is key in ensuring businesses stay open and are prepared to welcome customers as restrictions are lifted.
Examples of Successful ERTC Claims
Example 1: Small Family Diner
First, we have a small family diner that was able to successfully claim ERTC. This diner had been beloved in the community for many years but was hit hard by the pandemic. Here’s how they were able to get their ERTC benefits:
- Saw a 50% drop in gross receipts in Q2 2020 compared to Q2 2019.
- Was forced to partially shut down due to local government requirements.
- Kept 15 employees on the payroll throughout the pandemic.
Because the diner met the requirements for eligibility, it was able to claim $100,000 in ERTC, which helped cover the cost of payroll and prevent layoffs.
Case Study 2: Upscale Bistro
Our next example is an upscale bistro in a busy city. Even though the bistro was well-liked, it experienced a substantial decrease in revenue because of COVID-19. Here’s how they managed the ERTC claim process:
- Saw a 70% decrease in gross earnings in Q3 2020 compared to Q3 2019.
- Got a PPP loan but still qualified for ERTC.
- Kept 30 employees on payroll throughout the pandemic.
Thanks to ERTC professionals, the bistro managed to claim $250,000 in ERTC, providing much needed financial help.
Case Study 3: Local Coffee Shop Chain
A local coffee shop chain with several branches also took advantage of the ERTC. With a significant decrease in foot traffic, this chain had to adapt rapidly to stay afloat. Here’s what happened:
- Suffered a 60% drop in gross receipts in Q2 2020 compared to Q2 2019.
- Forced to temporarily shut down several outlets due to state orders.
- Maintained 50 employees on payroll despite the difficulties.
With the assistance of a dedicated consulting firm, the coffee shop chain was able to claim $400,000 in ERTC, allowing them to reopen and retain their employees.
How to File ERTC Claims: A Step-by-Step Guide
Now that we’ve seen how other restaurants have successfully claimed ERTC, let’s go through the steps of filing your own claim. Follow these steps to ensure you get the most out of your benefits:
Determine Your Eligibility
Firstly, you need to ascertain whether your restaurant is eligible for ERTC. You can qualify if you meet one of the following conditions:
- Suffered a major loss in gross receipts (50% or more) when compared to the same quarter in 2019.
- Forced to partially or completely halt operations because of government orders related to COVID-19.
Compute Your Possible Credits
After you’ve established eligibility, the next step is to compute your possible credits. The ERTC is computed as a percentage of qualified wages paid to employees during eligible periods:
- In 2020, the credit was 50% of eligible wages, capped at $10,000 per employee for the year.
- In 2021, the credit was 70% of eligible wages, capped at $10,000 per employee per quarter.
Collect Required Documentation
Accurate documentation is key to a successful ERTC claim. Ensure you have these records:
- Records of employee wages paid out.
- Financial statements that display each quarter’s gross receipts.
- Government orders that caused a halt in operations, if relevant.
Typical Obstacles and Solutions
The process of filing for ERTC can be complicated, and you might encounter a few obstacles. Being aware of these potential obstacles and knowing how to handle them can help make the process go more smoothly.
Getting to Grips with IRS Guidelines
One of the biggest hurdles to overcome is understanding the IRS guidelines for ERTC. These guidelines can be intricate and are prone to changes. Seeking advice from ERTC specialists can help you keep up to date and ensure you’re following the rules.
Handling PPP Loans and ERTC
As a restaurant owner, if you have received a PPP loan, you may be worried about its impact on your ERTC eligibility. Initially, businesses weren’t allowed to claim both, but recent updates have made it possible for you to claim ERTC even if you have received PPP funds. However, you have to make sure that the same wages are not counted for both programs. For more details, check out this ERTC guide for the restaurant industry.
Maintaining Accurate Records
Accurate record keeping is key to a successful ERTC claim. Make sure you keep detailed records of payroll, financial statements, and any government orders that impacted your business. This will be crucial if you are audited by the IRS.
Get the Most Out of Your ERTC Benefits
Here are some additional tips to help you maximize your ERTC claim:
Seek Advice from ERTC Specialists
Collaborating with specialists in ERTC can guide you through the intricacies of the program and increase your benefits. These experts can aid with determining eligibility, calculating credits, and preparing documentation.
Keep an Eye on Policy Updates
ERTC rules can change, and it’s important to stay on top of these changes. Make sure you’re regularly checking for updates from the IRS and getting advice from experts to make sure you’re making the most of the credits you can get.
Maximize Your Credit with Other Programs
In addition to ERTC, there could be other programs and credits available to help your restaurant. Look into options such as state-specific relief programs, grants, and other federal tax credits to get the most financial support.
Wrapping Up
The Employee Retention Tax Credit can be a lifeline for restaurants struggling financially due to the COVID-19 pandemic. By familiarizing yourself with the eligibility requirements, estimating your potential credits, and maintaining accurate records, you can successfully file an ERTC claim and get some much-needed financial relief for your business.
Are you prepared to begin? Head over to ERTC Filing Pros to start your claim today. Their team of specialists is committed to getting you the highest refundable credits possible with a straightforward process that takes less than a quarter of an hour.
Commonly Asked Questions
What is the ERTC and what does it do?
The Employee Retention Tax Credit is a refundable tax credit that was created to motivate businesses to continue to pay their employees during the pandemic. It provides a credit that is a percentage of the eligible wages paid to employees during eligible periods.
Is my restaurant eligible for ERTC if we got a PPP loan?
Yes, recent updates have made it possible for businesses to claim ERTC even if they got PPP funds. However, you have to make sure that the same wages are not counted for both programs. For more information, check out this ERTC guide for the restaurant industry.
What paperwork do I need to submit an ERTC claim?
You’ll need to provide payroll records, financial statements, and any government orders that resulted in an operations shutdown. Having the right paperwork is key to a successful claim.
What is the timeline for receiving ERTC funds?
There isn’t a set timeline for when you will receive ERTC funds. However, working with ERTC experts can help expedite the process and make sure your claim is processed as quickly as possible.
For many businesses, the Employee Retention Tax Credit (ERTC) has been a lifesaver during the COVID-19 pandemic. This is especially true for the restaurant industry. In this article, we will walk you through the advantages of ERTC. We will also use real-world examples to show you how restaurants have successfully claimed these credits.