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ERC: A Tax Credit that Revitalizes Restaurants

The pandemic has drastically affected the restaurant industry in the U.S.. With the government imposing several restrictions, many in the food industry incurred heavy losses and shut down their operations altogether. Even though things are stabilizing now, there continued to be federal and state restrictions on how restaurants can operate..

If you’re in the restaurant business and are still looking for financial assistance to compensate for the past year, you should look towards Employee Retention Credit (“ERC”). The ERC can act as a cash infusion source for your business as it rewards those firms that have managed to retain their employees during the pandemic. It can completely offset a company’s payroll tax liability and generate a cash refund if it faces setbacks (such as supply chain concerns or capacity limitations) due to government orders.

Sadly, many restaurant owners overlook this credit or disqualify themselves without understanding its full scope. It might be your last chance to claim ERC if you are in the restaurant business.

What does it mean for your restaurant?

Many business owners are claiming ERC to put money back into their companies by keeping employees on the payroll or covering operational costs. You cannot ignore the scope of this tax credit at all! One of alliantgroup’s client with an annual revenue of $74M and a staff of 317 employees, managed to get $1,030,000 in federal and state credits. And while the clock is running out on taking advantage of this credit, you can still claim credits retroactively while filing taxes for 2021.

It’s disheartening to see many businesses not taking full advantage of this tax credit. It may be because they do not fully understand the scope of ERC or think they are not eligible to claim it.

Qualifications

Your restaurant business is qualified to apply for ERC tax credits if you have faced a business disruption that includes but is not limited to any of the following situations:

  • Capacity restrictions on customers;
  • Having to limit hours;
  • Having to limit the number of staff or services provided;
  • Social distancing restricted the number of customers allowed inside the premises;
  • Frequent sanitation breaks (to clean and sanitize the area regularly);
  • Supply-chain interruptions; and
  • Reduction in gross receipts/revenue as compared to 2019.

ERC & PPP

Restaurants can claim the ERC even if they claimed PPP. There is a lot of outdated information out there that is causing businesses to self-censor out from claiming the credit.

Even if you took as much PPP as possible, PPP allows only 2.5 times the monthly payroll expenses, spread out over six months, leaving a significant gap that can be applied for ERC tax credits.

So, if you have not claimed ERC because you have claimed PPP or because your CPA has said so, it’s time to look again. Our clients at alliantgroup have managed to save thousands of dollars with ERC even after claiming the benefits of PPP.

Get the alliantgroup Advantage

Our team at alliantgroup actively works with business owners in every industry to help them claim this lucrative tax break before each quarterly deadline. We have saved several restaurants from shutting down or from deep debts by assisting them to claim ERC tax credits that they thought they weren’t eligible for!

So don’t get left behind. Save money to rebuild your restaurant.
Consult your CPA now or, better, give us a call, and get a free assessment within minutes. Our experts will provide you with an approximate and help answer all your doubts!

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