Oops! Sorry!!

This site doesn't support Internet Explorer. Please use a modern browser like Chrome, Firefox or Edge.

ERTC Express Reviews Logo

Employee Retention Tax Credit

Restaurant Revitalization Fund And Employee Retention Credit

Are you a business affected by the COVID-19 pandemic? If so, you'll want to pay attention to the latest deadlines for filing Employee Retention Credit (ERC) claims.


In these challenging times, your restaurant may need financial support to stay afloat. You're likely juggling with many responsibilities, and managing finances can be daunting.

But here's some good news - the Restaurant Revitalization Fund (RRF) and the Employee Retention Credit (ERC) could provide much-needed relief. These programs are designed to help businesses like yours thrive amid adversity.

The RRF provides direct funding, while the ERC offers tax credits for keeping employees on payroll even during business downturns. However, navigating through eligibility requirements, calculating credits, and understanding deadlines can be complex.

Don't worry – we've got you covered! This article will break down all you need to know about these financial lifelines in a detailed yet digestible manner.

So grab a cup of coffee as we delve into how you can take advantage of the RRF and ERC to give your restaurant a fighting chance in this tough economic climate.

Understanding ERC

To grasp the concept of ERC, picture it as a lifeline thrown to drowning businesses, allowing them to keep their employees on board during tough economic times. The Employee Retention Credit (ERC) is part of the CARES Act passed by Congress in March 2020. 

It's a fully refundable tax credit for employers equal to 50% of qualified wages (including allocable qualified health plan expenses) that eligible employers pay their employees.

The intention behind ERC is to encourage businesses not to layoff their workers during the Covid-19 crisis. If your business operations were fully or partially suspended due to government restrictions related to COVID-19, or if you've experienced a significant decline in gross receipts compared to 2019, you're probably eligible for this credit.

However, figuring out how much credit you can claim can be tricky - it depends on several factors like your average number of full-time employees and how much you paid them. But don't fret; there are numerous guidelines and resources available online that can guide you through this process.

So remember, while navigating these uncertain economic waters may seem daunting, tools like the ERC exist specifically to help keep your business afloat and protect your workforce from layoffs.

Eligibility Criteria

Intricate stipulations determine one's qualification for these financial aids, designed with the purpose to stimulate business recovery and encourage staff loyalty. It's critical that you understand whether your business meets these requirements.

Firstly, to qualify for the Restaurant Revitalization Fund (RRF), your establishment must not be part of a publicly-traded company or own over 20 locations. This ensures smaller businesses are prioritized. Moreover, it is necessary to show that your revenue in 2020 was less than in 2019 due to COVID-19.

Secondly, the Employee Retention Credit (ERC) has its specific requirements:

  • Your operations had to be either fully or partially suspended due to government orders relating to COVID-19.nn2. You experienced a significant decline in gross receipts – specifically more than 50% less compared to the same quarter of the previous year.nn3. For 2021, eligibility extends if there is a decrease by more than 20%, comparing quarters from 2019 and 2021.

  • Knowledge about these specifics leads you towards making accurate decisions regarding financial assistance measures for your business' recovery plan post-pandemic era.

    Benefits for Qualifying Restaurants

    Once you've crossed the hurdle of eligibility, a world of financial benefits awaits your business, offering much-needed relief and a chance to bounce back stronger than ever.

    The Restaurant Revitalization Fund (RRF) provides funding equal to your pandemic-related revenue loss up to $10 million per business and no more than $5 million per physical location. This can significantly reduce the burden on your cash flow, giving you breathing room to focus on operational improvements.

    You're also encouraged to take advantage of the Employee Retention Credit (ERC), which has been extended through December 2021. The ERC allows you to claim 70% of qualified wages paid up to $10,000 per employee for each quarter. Meaning, you could potentially receive up to $7,000 in credits per employee every quarter.

    The RRF and ERC are effective tools not just for survival but growth as well. By offsetting costs and providing capital injections where needed most – such as payroll or facility modifications – they empower restaurants like yours with resources necessary for resilience in these challenging times.

    So look beyond merely staying afloat; seize this opportunity for reinvigoration and robust recovery.

    Calculating the Credit

    Navigating the calculation of these financial benefits isn't as complex as you might think, and it's worth every moment spent crunching those numbers.

    To start with, you'll want to identify qualified wages; this includes health plan expenses paid by the employer. For larger businesses employing more than 100 full-time employees in 2019, only wages paid to employees not providing services due to COVID-19 are considered. For smaller entities, all wages qualify.

    To calculate your credit under the Employee Retention Credit (ERC), multiply 70% of the first $10,000 of an employee's qualified wages each quarter in 2021. So if a worker received $10,000 or more in pay during a quarter, your credit would be $7,000 for that particular period. Remember though that any wage used in this calculation cannot be used for other tax credits like Paid Leave Credits under FFCRA or PPP loan forgiveness.

    Keep precise records—documentation is critical—and don't forget to subtract this credit from your overall payroll tax liability on your quarterly federal employment tax returns. It's no picnic navigating these fiscal nuances but rest assured—it can result in substantial savings for your restaurant business.

    Claiming Process

    It's essential to comprehend the claiming process, as this is where you'll see your efforts come to fruition. You can claim the Employee Retention Credit (ERC) on your quarterly employment tax return, specifically Form 941.

    This form allows you to report income and Social Security and Medicare taxes withheld from employees' wages. In addition, it calculates the employer's portion of Social Security and Medicare tax.

    To claim ERC, you'll need to fill in Line 11C of Form 941 with the total eligible credit for the quarter. Remember, this amount should also include any advance payments received from IRS Form 7200. Furthermore, ensure that all information provided is accurate to avoid any potential issues or delays with your claim.

    Besides form submissions, maintain detailed records documenting how your business meets eligibility requirements. These could include documents proving a significant decline in gross receipts or mandatory full or partial suspension due to COVID-19 related government orders.

    When it comes to managing finances during trying times like these, every dollar counts. By understanding and accurately implementing the claiming process for ERCs and utilizing restaurant revitalization funds wisely, you're better positioned for financial stability amid uncertainty.

    Deadlines and Important Dates

    Keeping track of deadlines and key dates is non-negotiable, as failure to comply with these can result in missed opportunities for financial relief or potential penalties.

    The Restaurant Revitalization Fund (RRF) and the Employee Retention Credit (ERC) have distinct timelines you must bear in mind.

    For the RRF, applications were accepted from May 3rd to May 24th, 2021. It's essential to remember that applications submitted after this timeframe won't be considered. You also need to ensure all supporting documents are submitted within a given timeline.

    On the other hand, the ERC is available for eligible employers who kept employees on their payroll throughout 2020 and up till December 31st, 2021. Originally set to expire by the end of June 2021, it was extended through December via The American Rescue Plan Act of March 11th, 2021.

    Understanding these timelines helps businesses better plan their operational strategies while maximizing available tax credits or financial aid. Keep an eye on updates from IRS or Small Business Administration websites so you won't miss out on any crucial information about future changes or extensions in these programs.

    Contacting a Professional Accountant

    Engaging the services of a professional accountant can prove invaluable in managing these financial complexities, as their expertise could potentially save you substantial sums and prevent costly errors. They're well-versed in the intricate regulations and guidelines associated with both the Restaurant Revitalization Fund (RRF) and the Employee Retention Credit (ERC).

    These professionals understand how to navigate through often convoluted paperwork, ensuring that you comply with all necessary requirements while maximizing your benefits. An experienced accountant can help dissect your business finances, pinpointing areas where you may qualify for additional funds or credits. 

    They can also guide you on strategic spending of RRF money, ensuring it's used effectively to not only sustain but grow your restaurant business during this challenging time.

    Moreover, they're skilled at forecasting potential tax implications related to these grants and credits—an aspect many restaurateurs may overlook. So don't hesitate to seek out such professional assistance. Their knowledge could be instrumental in guiding your decisions regarding RRF and ERC applications.

    It's a small investment that might yield big returns for your restaurant's financial health amid economic uncertainties caused by the pandemic.

    Frequently Asked Questions

    What is the restaurant revitalization fund (RRF) and how does it correlate with the employee retention credit (ERC)?

    The Restaurant Revitalization Fund is a program devised to provide funding to help restaurants and other eligible businesses keep their doors open. The Employee Retention Credit is a fully refundable tax credit designed to encourage businesses to keep employees on their payroll. Business owners, particularly restaurant owners, can leverage both the RRF and the ERC to maximize their potential funding and tax savings. However, the IRS mandates that you can't claim the ERC for wages paid with the forgivable portion of a Paycheck Protection Program loan or the RRF.

    How can restaurants qualify for the employee retention credit?

    To qualify for the ERC, a restaurant must satisfy two major criteria. First, the restaurant's business must have been fully or partially suspended by a government order, which can include restrictions on the start date of restaurant capacity. Second, the restaurant should have suffered a significant decline in gross receipts, which is defined as a more than 20% decline in 2021 compared to the same calendar quarter of 2019. If a restaurant meets these criteria, it can qualify for the ERC.

    How can a restaurant owner claim the employee retention credit?

    Claiming the ERC involves reporting total qualified wages and health insurance costs for each quarter on IRS Form 941. If a restaurant qualifies for the ERC, it can claim the credit by reducing employment tax deposits in anticipation of the credit. If the credit exceeds the available tax deposits, an eligible employer can request an advance payment of the credit from the IRS by submitting Form 7200.

    What types of restaurants are eligible for the employee retention credit?

    The ERC is available to restaurants of all types, including dining establishments, food trucks, bars, bakeries, brewpubs, taprooms, caterers, and inns. The key requirement is being impacted by a government order suspending operations or experiencing a significant decline in gross receipts, regardless of the size or concept of the restaurant.

    How much is the employee retention credit per employee for 2020 and 2021?

    The ERC amount a business can receive differs between 2020 and 2021. For 2020, the credit was capped at $5,000 per employee for the year. For 2021, the credit was expanded to cover 70% of qualified wages (including health care costs), up to $7,000 per employee per quarter. This signifies that the maximum ERC refund per employee for 2021 could be as high as $28,000.

    Can you amend a previous tax submission to claim the employee retention credit?

    Yes, restaurant owners who did not claim the ERC credit when they were eligible can file an amended employment tax return to receive the credit. This involves submitting a Form 941-X for each effected quarter, and is typically overseen by tax professionals to ensure the proper execution.

    How can the employee retention credit help restaurants during the COVID-19 pandemic?

    The ERC program was specifically designed to encourage businesses, including restaurants and bars, to keep their employees on the payroll during situations where operations might be decreased due to government restrictions related to COVID-19. By offering significant tax credits, the program gives restaurants the financial breathing room needed to maintain their staff.

    If a restaurant received a Paycheck Protection Program (PPP) loan, can it still claim the employee retention credit?

    Yes, a restaurant that received a PPP loan can still qualify for the ERC but not for the same wages. The IRS stipulates that employers cannot claim the ERC for wages covered by the PPP loan during the forgiveness period. However, if a restaurant has eligible expenses beyond what was covered by the PPP loan, it may still claim the ERC.

    Can all employees’ wages be counted towards the employee retention credit?

    Unfortunately, not all employee wages count towards the ERC. Only the wages and compensation (including health benefits) paid to employees that do not exceed the respective calendar quarter limitations are eligible. Furthermore, any amounts paid to an employee above $10,000 in a given quarter in 2021 cannot be used to calculate the ERC.

    What are the requirements for restaurants to financially benefit from the restaurant revitalization fund?

    Restaurants that were in operation for most of 2019 and experienced a reduction in gross receipts in 2020 compared to 2019 due to the pandemic are typically eligible for the RRF. The fund includes expenses such as payroll costs, mortgage and rent payments, utilities, maintenance, supplies, food and beverage expenses, and operational expenses. However, some RRF recipients might not be eligible for the ERC depending on their use of the fund's proceeds.


    You've now got a solid grasp on the ERC and how it benefits restaurants. Remember, determining your eligibility, calculating your credit, and claiming can be complex. Stay vigilant about deadlines too. If you're unsure or overwhelmed, don't hesitate to contact a professional accountant. They'll help ensure you maximize these benefits while staying compliant with laws and regulations.

    Don't miss out on this unique opportunity to revitalize your restaurant business!