During 2020, if an employer took a PPP loan they were ineligible for the Employee Retention Tax Credit program. However, retroactively to March 2020, this restriction was removed in Dec 2020. This retroactive lifting of a significant restriction to participation in the program creates an opportunity to look-back for most small restaurants. Employers with 100 full-time employees or less can access ERTC to on-premises working employees in 2020. Employers of 500 full-time staff or less can access ERTC to on-premises working employees in 2021. The employer status is calculated based on the average number and duration of full-time employees during 2019.
Here are five ERC quick bites that will come in handy when you file your claims. Modern Restaurant Management will store the above information once you create an account. We will not share this information to third parties. You have the right to delete your data from our system at anytime. Maxwell spoke to FSR about what's available, namely the Employee Retention Tax Credit. He also explained why some of the incentives are too great for restaurants to pass on. If you think you may be eligible to claim the ERC, please reach out to your Withum advisor.
However, the Consolidated Appropriations Act, which was enacted in December 2020 eliminated this restriction retroactively until March 13, 2020. Employers that received PPP Loans in 2020 can claim ERC if qualified wages were paid in 2020. Each pay period, business owners withhold a certain amount of their employee's earnings for federal unemployment tax . Payroll tax credits can be used by businesses
The CAA and the American Rescue Plan Act, the maximum ERC for this year is 70% of upto $10,000 in qualified wages per quarterly -- that's $28,000 per employee for the entire year. Businesses that received credit in the initial round, and who are eligible for the additional credit, will be contacted to provide additional information by May 16th. Your restaurant is considered partially closed during times when there are restrictions on seating. This also applies to outdoor dining. The savings can be as high as $5,000 per employee per quarter for 2020, and as high at $7,000 per eligible employee per quarterly for 2021.
Many restaurant owners dismiss the ERC as ineligible, assuming that they are not eligible because they didn't shut down completely or lose enough business to qualify for a Paycheck Protection Program loan. However, as discussed below, recently enacted legislation permits employers to claim the credit even if they received a PPP loan. PPP loans might have received most of the attention, but the Employee Rebate Tax Credit is an equally valuable source of restaurant funding.
Restaurants that previously filed Form 94-X to claim ERC gratuity can file a new Form 941X for the current quarter. Restaurants wishing to include tips on their second Form 942-X should wait to receive the refund for the first Form 941-1. Restaurants struggling to make ends meet in the wake of the government shutdown and social distancing order eagerly used the Payment Protection Program for much needed cash flow.