The Covid-19 pandemic severely impacted the restaurant industry. Shutdowns, social distancing, supply chain issues, and labor shortages have forced many restaurants to either close permanently or significantly reduce indoor dining capacity.
For our client, a restaurant group based in Massachusetts, government shutdown orders during the pandemic compelled them to take out two Paycheck Protection Program (PPP) loans. However, they didn’t realize that they were eligible for some serious savings through the Employee Retention Tax Credits.
ERTC and PPP: A Common Misconception
Many business owners believe that since they took out PPP loans, they aren’t eligible for ERTC tax savings. But that’s not true.
Before the CAA passed in December 2020, businesses couldn’t claim the ERC if they took out a PPP loan. The CAA changes allowed, businesses to apply for ERC even if they took out a PPP loan.
The among of wages eligible largely depends on how the qualified wages were reflected on the PPP loan forgiveness application.
During 2020, our client experienced a forced shutdown due to government orders. With over 200 employees on payroll and no work, the business suffered a significant decline in revenue. The owners took out an initial PPP loan. They had that loan forgiven. But another round of forced business closures in 2021 compelled them to take a second draw of the PPP loan.
The C&A Process
At Cunningham & Associates, we have a dedicated ERTC Study Team who will submit all the necessary forms, coordinate with payroll companies, and monetize the credit. The C&A process for calculating and obtaining the ERTC credit is the same for all clients.
This is what we did for the restaurant group, and what we’ll do for your business:
- Created a summary and narrative to support ERTC claims
- Conducted a financial review and gross receipts test of 2019, 2020, and 2021
- Drafted supporting arguments identifying the specific segments of the client’s business that were partially or fully suspended due to government shutdowns
- Conducted qualified wage computations, analyzing where PPP funds were used as employee wages to optimize the number of wages qualifying for the ERTC while preserving PPP forgiveness.
- Completed all federal tax forms and additional supporting documents as required
- Fulled audited support of periods analyzed.
As a result of the C&A efforts, the restaurant group claimed $1,242,410 in refundable tax credits.
Go the C&A Way
Ready to get the total amount of ERTC savings you’re entitled to? Go the C&A way.
Reach out to us today, and we’ll maximize your tax credit savings while preserving your ability to get the PPP loan forgiven.