Eligible restaurants can now access ERC for both 2020 and 2021 for eligible employee wages as long as these specific payroll wages and/or group benefits were not directly paid with Paycheck Protection Program (PPP) loan funds. Employers can access up to $5,000 per eligible employee in 2020, and up to $7,000 per eligible employee for each calendar quarter in 2021.
The ERC was not widely used until March 2021, when updated IRS regulations made this type of COVID-19 Relief more accessible. In short: thousands of businesses who once picked between the Paycheck Protection Program (PPP) and ERC can now possibly use both, by amending their Quarterly Form(s) 941.
Criteria #1: Must Issue a Formal Payroll
Employers must file Form 941s and W-2s. (Sole-proprietors are ineligible)
Criteria #2: Eligible Employee Headcount
Employers must have below a certain number of full-time employees in 2019. (NOTE: this is not the same as full-time equivalents – FTEs)
– 2020 program: fewer than 100 full-time employees (unlimited part-time employees)
– 2021 program: fewer than 500 FT employees
(unlimited part-time employees)
Criteria #3: Must Meet one (not necessarily both) of:
A: Reduce Business Receipts (Sales for a Calendar Quarter)
For example: A business with $100k in sales for Q2 2019 vs
– Q2 2020: eligible with < $50k in sales (or 50% lower)
– Q2 2021: eligible with < $80k in sales (or 20% lower)
B: Must have been fully/partially shut down by government order
A “Stay At Home” order for non-essential businesses, or a capacity limit for a restaurant, would meet this test. (The order is likely jurisdiction specific.) You can also have the same, or even more sales, and still qualify.
Learn more about the HRA’s partnership with ERC Today and how they can help you take advantage of these tax benefits for your restaurant.