July 30, 2023

Applying For Employee Retention Credit Restaurants & Bars

Navigating the world of tax laws can be challenging, especially when you're running a bustling restaurant or bar. You're constantly juggling inventory management, staffing concerns, and customer satisfaction, all while trying to maintain profitability.

Amid these challenges, it's critical that you stay informed about financial opportunities like the Employee Retention Credit (ERC). This federal program provides substantial tax credits for businesses that retain employees despite facing economic hardship.

Wondering how to apply? Not sure if your establishment qualifies? Or perhaps you're unsure about the ERC's status in 2023? Maybe your venture is a hotel with a restaurant or bar - does that qualify? Don't fret! We'll dive deep into these questions and equip you with the knowledge necessary to take full advantage of this significant opportunity.

As an owner or operator in the hospitality industry, it's time to learn how this tax law could significantly benefit your bottom line.

Are restaurants eligible for Employee Retention Credit?

Absolutely, as a restaurant owner, you're eligible for the Employee Retention Credit (ERC), which can put some serious money back in your pocket by offsetting certain employment costs. This aid was established under the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide financial support to businesses such as yours during these challenging times.

The ERC is a refundable tax credit that directly targets your gross wages and certain employment taxes. You can claim up to 50% of qualified gross wages paid between March 12, 2020, and December 31, 2020.

Let's not forget about the potential windfall in 2021: a whopping 70% of qualified gross wages paid from January through September.

Now here's where it gets even more interesting if you've just started or purchased your restaurant after February 15th, 2020. In this case - known in IRS language as a Recovery Start-up - you can claim employee wages all the way through until December of this year.

Don't get spooked by recent changes made to ERC rules though; they still work in favor of establishments like yours. The Infrastructure Investment and Jobs Act now states that ERC applies only to wages paid before October 1st – except for recovery startups who have an extended deadline till January of next year.

So yes! Your establishment is absolutely eligible for the ERC. It's a fantastic opportunity designed with businesses like yours in mind! It offers significant relief on wage costs and other related expenses - making it easier for you to keep your staff employed and your business thriving amidst uncertainty.

 How do I get approved for ERC if I own a restaurant?

To get approved for ERC as a restaurant owner, it's crucial that you can show evidence of how your business took a hit during the pandemic and demonstrate that you continued to pay your staff through these challenging times. You'll need to carefully document and track the impact of COVID-19 on your restaurant's operations and revenues.

Here are four key steps you need to follow:

1. Determine Eligibility: Verify if your business qualifies for the credit based on stipulated requirements such as drop in quarterly gross receipts or partial/full suspension of operations due to government orders.

2. Identify Qualified Wages: Not all wages qualify for ERC. Understand what constitutes 'qualified wages' under this program - it typically includes regular pay, tips, certain healthcare costs, etc.

3. Calculate Your Credit: The amount of credit varies depending on different factors like number of employees and eligible quarters. Ensure accurate calculations to maximize benefits.

4. Prepare Necessary Documentation: Keep detailed records showing how your restaurant was affected by the pandemic and proving payment of qualified wages.

Remember, even though the ERC program has ended, you can still claim credits for eligible quarters within three years from its sunset date including if you received PPP loans.

Navigating tax laws can be complex but understanding these provisions will help optimize benefits for your restaurant amidst these tough times. It's always advisable to consult with a tax professional or financial advisor who understands the nuances of your specific situation before proceeding with an application for Employee Retention Credits (ERC). A little bit of knowledge goes a long way in ensuring that every dollar counts towards keeping doors open and lights on in our beloved eateries!

Are restaurants still eligible in 2023?

Even though we've rung in 2023, guess what? Your eatery could still potentially cash in on past tax credits if you haven't already made a claim!

The Employee Retention Credit (ERC) is designed to support businesses like restaurants and bars that have been significantly affected by the COVID-19 pandemic. While it's true the credit was initially meant for 2020 and 2021, there might still be hope. You see, tax laws can be complex, but they also offer opportunities for those who know how to navigate them.

If your restaurant faced full or partial shutdowns due to government regulations during specific periods of 2020 or 2021, or if you experienced a significant decline in gross receipts compared to either of these years against 2019, you may still qualify. Gross receipts include your total sales and other income sources such as interest from investments or rents.

Remember that the IRS counts payroll wages towards this tax credit if you had less than 100 employees per quarter in 2020 (or up to 500 employees in 2021). It doesn't matter whether they were full-time or part-time; their salaries count towards the ERC!

And don't worry about proving operational changes due to COVID-19. The IRS has provided guidelines for situations where social distancing forced capacity restrictions at your location or when dine-in services were replaced with delivery/pickup options.

Although we're now in 2023, don't overlook this potential lifeline from previous years! Check with a tax professional right away to ensure you're not leaving any unclaimed benefits on the table. Remember - staying informed about these financial supports is crucial for weathering ongoing economic challenges.

Do hotels qualify for ERC?

Yes, hotels as part of the hospitality industry can qualify for this relief measure. However, there are specific eligibility requirements that should be met. For instance, your hotel must have experienced significant revenue loss due to lockdowns or other government-mandated shutdowns caused by the COVID-19 pandemic. This means that if your hotel's operations were severely affected leading to substantial financial downturns during specific periods identified by the legislation, you could likely qualify for ERC.

Keep in mind though that these conditions are not arbitrary and require documentation to prove such losses or restrictions. You would need verifiable records showing decreased revenues in comparison with previous years or official orders demonstrating forced closures or reductions in operations.

Furthermore, it's essential to remember that while ERC can provide much-needed relief for struggling businesses like yours, it's not a permanent solution but rather a temporary reprieve designed to assist organizations weathering unprecedented circumstances.

The good news? If you meet these criteria and have retained employees despite economic hardships brought on by the pandemic, chances are high that your business could indeed benefit from this tax credit. It's advisable though to seek professional advice on how best to navigate this process given its complexities and nuances involved. Navigating through tax laws can be complex; however, understanding them is crucial in maximizing potential benefits while ensuring compliance with all requirements.


So, you're in the restaurant or bar industry and want to utilize the Employee Retention Credit (ERC). It's certainly possible, given your understanding of tax laws and business operations.

Keep in mind that eligibility may vary year by year, so stay updated. Also, if you're a hotel owner pondering the same question, yes, you too can qualify for ERC.

You've got this! Stay informed and proactive in your financial decisions.

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