Navigating Restaurant ERTC Claims: A Guide for Small Business Owners

Getting Started

Running a restaurant is no small feat, especially in the wake of the pandemic. Many owners faced shutdowns, restrictions, and financial uncertainty. But here’s some good news—if your restaurant kept employees on payroll during those tough times, you might be eligible for the Employee Retention Tax Credit (ERTC). This credit isn’t just a minor tax break; it could mean tens (or even hundreds) of thousands of dollars back in your pocket. Let’s break down how you can claim it.

Understanding ERTC for Restaurants

You know what? The ERTC isn’t just another complicated government program. It was designed to help businesses—especially restaurants—recover from COVID-19 setbacks. The credit applies to wages paid between 2020 and 2021, and depending on your eligibility, you could claim up to $26,000 per employee. That’s money that can help cover payroll, invest in new equipment, or even keep the lights on.

Do You Qualify? Let’s Simplify the Criteria

ERTC eligibility revolves around two main factors:

1. Did your restaurant face a full or partial suspension of operations? If government orders forced you to shut down dining services, limit capacity, or restrict hours, you could qualify.
2. Did you experience a significant revenue decline? For 2020, that means a 50% drop in gross receipts compared to 2019. In 2021, the threshold was adjusted to a 20% decline.

If you meet either of these conditions, there’s a strong chance you’re eligible to claim ERTC.

How to Claim Your ERTC—A Simple Step-by-Step

Here’s the thing: while the credit itself is lucrative, the process to claim it can be tricky. But don’t worry—I’ll walk you through it.

1. Gather your payroll records. You’ll need documentation of wages paid during the eligible periods.
2. Confirm eligibility. If you had a significant revenue decline or faced operational restrictions, you’re likely in the clear.
3. Calculate your credit. The amount depends on wages paid per employee and the applicable credit percentage for each year.
4. File an amended Form 941-X. If you haven’t claimed ERTC yet, you’ll need to amend your payroll tax filings.
5. Wait for your refund. Processing times vary, but with high demand, expect delays. Stay patient and keep an eye on updates from the IRS.

Maximizing Your ERTC Benefits

You don’t just want to claim ERTC—you want to make the most of it. Here are a few strategic moves:

• Coordinate with PPP loans. You can claim both, but not on the same wages. Make sure you allocate payroll expenses wisely.
• Document everything. IRS audits are no joke. Keep clear records of revenue declines, government restrictions, and payroll data.
• Seek expert advice. The rules have changed multiple times. A tax professional can ensure you maximize your claim while staying compliant.
• Review past payroll records. Some businesses overlooked wages that qualify for ERTC—double-check before you submit your claim.

Common Pitfalls to Avoid

Now, let’s talk about the mistakes you don’t want to make:

• Missing deadlines. The IRS still allows retroactive claims, but the clock is ticking.
• Assuming you don’t qualify. Many restaurant owners overlook their eligibility. Double-check before you dismiss the opportunity.
• Filing incorrectly. The paperwork can be confusing, and mistakes could delay your refund—or worse, trigger an audit.
• Ignoring state-level relief programs. While ERTC is a federal credit, some states offer additional relief measures—take advantage of every opportunity.

What’s Next for Restaurants?

As the industry rebounds, financial relief like ERTC can make a world of difference. But tax credits aren’t the only way to strengthen your bottom line. Consider reviewing other incentive programs, optimizing cash flow strategies, and staying up to date with regulatory changes.

Many restaurants are also reevaluating their operational models, integrating new technology, and adjusting menus to account for fluctuating costs. Staying agile in today’s economic climate is key to long-term success.

Final Thoughts

The ERTC isn’t just another tax credit—it’s a financial boost that could help your restaurant thrive. If you haven’t claimed it yet, now’s the time to take action. Whether you tackle it yourself or work with an expert, don’t leave money on the table.

Need help figuring out your claim? Reach out to a tax professional who understands the restaurant industry and can guide you through the process. With the right approach, you can maximize your claim and keep your business financially strong for years to come.