The U.S. government has distributed over 1 billion dollars in ERTC funds. Your competitors are collecting these funds. Make sure you don’t miss out on money that is owed to you for your business efforts during the pandemic.
Not all businesses qualify. But many businesses in the hospitality industry, in fact, do qualify. Take our quick ERTC eligibility quiz to find out.
Why ERTC Exists
More than 670,000 hotel industry operation jobs and nearly 4 million hospitality jobs were lost in 2020 due to the pandemic, according to the American Hotel and Lodging Association’s State of the Hotel Industry. More than 2.5 million restaurant industry jobs were erased in 2020, according to a study by the National Restaurant Association cited in CNBC.
The ERTC (Employee Retention Tax Credit) was created specifically to reward businesses such as hotels, restaurants, and bars that kept employees on payroll during the COVID-19 pandemic. Your hospitality business can receive as much as $7,000 per employee per quarter for the first three quarters of 2021. This equates to $21,000 per employee. Your business may also qualify for an additional $5,000 per employee for 2020. That’s a total of $26,000 for each employee.
If you assumed your business wasn’t eligible, or if your accountant told you your business wasn’t eligible, might it be worth getting a second opinion? Your business did not have to fully shut down to qualify for ERTC. Remember, ERTC is a tax credit. It’s not a loan. The U.S. Treasury has already set this money aside for you to claim. As an example, we secured a $718,000 ERTC refund for one of our restaurant clients.
Asure is the fastest-growing payroll company in North America, and we are a publicly traded company listed on Nasdaq (ASUR). We can safely process your paperwork. Your first step is to take 2 minutes to find out if your business is eligible.
What Is ERTC for the Hospitality Industry?
The government recognized that lockdown mandates hurt many businesses, especially those operating in the hospitality sector in areas such as lodging, food and drink, travel agencies, and more.
One way to visualize the effects of these lockdowns is with this statistic from the Transportation Security Administration: In April 2019, approximately 70 million people passed through TSA security checkpoints. In April 2020, this number plunged to under 5 million. With so few people traveling, the hospitality industry suffered.
Your restaurant business may have been forced to stop serving customers inside or to limit on-site dining due to government rules. Your lodging business may have experienced a serious loss of business due to a lack of in-person business events.
To encourage businesses to keep workers on their payroll despite these enormous challenges, Congress enacted the Employee Retention Tax Credit (ERTC). ERTC encourages small businesses, including hotels, motels, restaurants, travel agencies, and more, to apply for refunds on their payroll taxes. Your business can be granted a tax refund of up to $26,000 per employee.
Does Your Business Qualify for ERTC?
Not all businesses qualify for ERTC. Beware of any ERTC service that guarantees your company is eligible. Asure is a reputable company that is listed on Nasdaq. We serve 100,000 small and midsize businesses in all 50 states.
Your business may be eligible if you were required by government regulations to partially or fully shut down during specific periods in 2020 or 2021. Your business may also be eligible for ERTC if it suffered a significant decline in gross receipts compared to one of two prior years, such as 2019 versus 2020 or 2021.
For ERTC purposes, a “significant decline in gross receipts” is at least 50% in 2020 as compared to the same quarter in 2019, or at least 20% in 2021 compared to the same quarter in 2019.
Hospitality ERTC Qualification Examples
Your hotel business had to postpone events such as parties, weddings, and corporate functions due to a government mandate in your state that severely limited group gatherings.
A mandate in your state prohibited non-essential business travel for meetings and trade shows. This caused your hospitality business significant losses.
Your restaurant needed to reduce its operating hours for customers due to governmental orders to spend more time cleaning to reduce COVID-19 exposure as mandated by government orders.
Your bar was negatively impacted by a supplier being unable to make deliveries. If one or more of your suppliers were required to shut down due to government orders and you couldn’t find an alternative, and this made your business unable to perform normal operations, your business may be eligible for ERTC.
How to Apply for ERTC
Businesses can file for retroactive ERTC by completing IRS Form 941-X. With this form, you can adjust employment taxes filed within three years of the original return or two years from the date the employer paid the tax. This means eligible companies can still file for ERTC through 2024, depending on when they originally filed or paid their business taxes.
Remember, ERTC is only available for the 2020 tax year, along with the first three quarters of the 2021 tax year. So, the eligibility criteria doesn’t apply for Q4 of 2021 or any tax year thereafter.
The IRS administers the ERTC, which, like other IRS forms, involves intricate and time-consuming paperwork. While it can be worthwhile for many small business hospitality owners, it necessitates meticulous documentation that can be challenging to navigate. To ensure compliance with IRS eligibility criteria and the submission of a complete and accurate application, consider engaging a business consultant or advisor who can help you secure the entitled funds.
Many small business owners often turn to their tax preparers or accountants for ERTC guidance. However, these professionals may not possess the resources to confirm whether your business experienced a partial suspension of operations or identify the specific government orders that caused the impact. They may also lack the expertise required for the intricate calculations and documentation necessary for a comprehensive ERTC application.
Be Selective About Your ERTC Partner
Instead, think about collaborating with a reputable firm known for assisting hotels, event venues, restaurants, and hospitality providers in determining their eligibility and filing for the ERTC. A trustworthy advisor will possess financial expertise to accurately calculate your refund and enlist CPAs to validate documents.
Not to be alarmist, but the IRS has issued warnings about tax credit mills that exploit businesses by failing to conduct proper eligibility checks. This results in delays, obstacles, and potential loss of refunds.
Be sure to partner with a company you trust. Asure (Nasdaq: ASUR) is a public company headquartered in Austin, Texas, with 500 employees serving 100,000 small and midsize business clients.