 Welcome to Restaurants Hawaii on Think Tech Hawaii. I am your host, Cheryl Matsuoka, the executive director of Hawaii Restaurant Association. Joining me today is Hawaii Restaurant Association's board director, Sarah Nguyen, who is also the owner of Pizza Press in Pearl City. I also have John Gentili, Chief Revenue Officer, ERC Today. Welcome you two. Thank you for having us. Thank you. Today we're answering questions regarding the employee retention credit, also referred to as the ERC. Now to clarify, I would like to state that Hawaii Restaurant Association is not a tax professional. Today's discussion is a general discussion and business owners, please consult with your tax professional on your specific business and financial situation. So the ERC will not run out of funds nor does it need to be paid back. It is a tax credit. Hawaii Restaurant Association is always looking for ways to assist restaurants and businesses to keep their doors open. The ERC was authorized under the CARES Act and encourages businesses to keep employees on payroll. Acclaim your tax credit before it expires on December 31st, 2021. Today we will be discussing the differences between 2020 and 2021 rules overlapped of other grants such as the Restaurant Revitalization Fund, PPP IDLE, and things to keep in mind while filing for this tax credit. I'm going to now turn it over to John who has a few slides to show us. Thanks so much. Appreciate everyone's time. Who is ERC today and that's what we're going to talk about today as well as the employer attention credit. It's a phenomenal opportunity. It's a generational opportunity and again any business to definitely apply because everybody's hurting right now. Who is ERC today? ERC today is a company based out of Huntersville, North Carolina. We let anybody apply to our website or partner's websites at no charge because there's a lot of people that don't know about the employer attention credit right now. Again, once someone applies within five days we can turn around and return. We can also provide opportunities for audit protection. We have industry leading speed and with a proper client we can do things quickly. We'll work with as small as five employees up to as many employees that qualify. We're also able to complete the 941X forms. From start to finish we are doing everything for the business. Again, what is the ERC? ERC stands for the Employee Retention Credit. It was a credit put together by the CARES Act and signed into law on March 27th, 2020. It's a COVID-19 economic stimulus program. Originally businesses had to choose between the paycheck protection program or the ERC until March of this year when the IRS released a notice 2021 which updated the guidance to allow businesses to participate in both programs. Not just the PPP but both PPP and the Employee Retention Credit. So businesses can go back to the beginning of March to claim for this. This is a generation opportunity as mentioned before because now businesses can get both. August of this year the IRS expanded the definition of an eligible employer to include a program called the Recovery Startup Business. We'll get into that soon. It's called a tax credit but it can be received as a cash payment directly from the IRS. There's no dollar limit on the amount a business can receive. There's also no requirements on how the business or the money can be sent. Originally it was just applied to 2020 however the American Rescue Plan Act extended the program into 2021 and interacts very closely with the PPP program which everyone's familiar with. However every dollar of wages can potentially be used for either program but not for both. There's a special process to optimize both these programs and that's what we do at ERC today. The program requires a significant knowledge of the client. The unique details of how it was impacted by COVID-19 was a significant amount of payroll information that needs to be analyzed and again it's very difficult to do this on your behalf so that's what ERC does. We start from application to the amended 941 under behalf. Who qualifies? There's really three programs here we're going to talk about two. The 2020 program and the 2021 program. Every employer must issue W2s in file 941. That's the most important piece. In 2020 you had to have 100 full-time employees or less. In 2019 as well as 100 full-time employees or less in 2020. Very important to understand that this program dates back to 2019. It compares 2019 to 2020 and 2019 to 2021. In 2021 the program switched. Instead of it being 100 full-time employees it was 500 full-time employees. Again two different programs up to 100 full-time employees in 2020 and up to 500 full-time employees in 2021. Very important to note you could have as many part-time employees as you want in either program. If you had 80 full-time employees you could have two 300 part-time employees. Just make sure that you classify them as 100 full-time or less in 2020 and 500 full-time or less in 2021. The next is an either or statement. You don't need to meet both of these. You can either meet the reduction in sales method or the shutdown method. So if your business took a 50 percent reduction in sales from one quarter of 19 to the light quarter of 20 for example if your business took it 100 000 in sales in q3 19 and 50 000 in sales in q3 20 you qualify. Go to 2021 instead of it being a 50 percent reduction it's a 20 percent reduction. So we'll use the same example if you did 100 000 in sales in q3 19 or q2 19 you had to do 20 percent less so you had to do 80 000 in q2 2021. So are some businesses especially restaurants that we work with that didn't take a 50 percent reduction or 20 percent reduction some of them made money some of them increased their sales. So in that instance there's another way to qualify that is called the shutdown method. So what does that mean? So if your business was fully shut down or partially shut down whereas part of a state restriction like Hawaii is right now you qualify most restaurants in the country qualify an option b due to the government or state shutdown. This is the financial opportunity this is where it really makes sense for a lot of businesses especially in Hawaii. In 2020 you can receive up to 50 percent of the wages $10 000 per employee for the pay period. The period in 2020 was March 12th to the end of the year. Again you can get up to $5 000 per employee for that period. I'll give you an example you paid three employees $10 000 you can get $5 000 if you had an additional employee you paid them $3 000 you can get 50 percent of the three and that's how the program works for 2020. Let's move over to 2021 it gets very lucrative here instead of being a year program it's a per quarter program and it's 70 percent of the wages of $10 000 that's $7 000 per employee per quarter or up to $7 000 per employee per quarter. So there are going to be some businesses that potentially can qualify for the full $28 000 which is $7 000 per employee for every quarter of 2021. We've had several businesses qualify for 2020 and Q1 and Q2 this year and there's several businesses that are already qualified for Q3. A lot of people will ask us when does this program end John? Well as we as it stands right now ERC as we know it goes until the infrastructure bill is signed. What does that mean? So we all thought the infrastructure bill was going to be signed a couple months ago at least we thought it'd be signed by now but it hasn't. So once the infrastructure bill is signed businesses will not be able to claim credit past the sign date. So let's say it gets signed December 1st businesses could claim Q4 up to the signing of that bill but more importantly the biggest unknown is how long do I have the opportunity to take advantage of this? You have three years to amend a filed 941. So for example if you filed a 941 and Q3 2020 you have three years from that date to go back and claim opportunity for it. Same thing for 2024 you have three years for 2021 to claim credit for that. The last piece is the recovery startup business. This is an enormous opportunity for Hawaii especially because there are a lot of businesses that opened up and started operations after February 15th 2020. Unfortunately you opened up during the pandemic and you probably had some tough times but the IRS created a third rendition of the ERC that's helping a lot of businesses they just don't know about it. What does that mean? So if your business has under a million dollars in annual gross receipts to qualify it's very simple you can claim up to $7,000 per employee recorder for Q3 and Q4 with a maximum of $50,000 in Q3 and Q4. So again new business started after February 15th you can get up to $100,000 in 2020 across two quarters. Ashley how do you do this? How does your business see if you qualify or not? Well that's where we come in. What you do is you can apply online at erc-today-hra.com. It doesn't cost anything to apply. What we recommend you do is go online fill out the application. Within one to two business days we're going to reply back with a message that tells you you qualify, you don't qualify, most likely you qualify unless you're over the limit or we need more information to help you qualify and that's specifically typically with a control group. If you own multiple restaurants we need to analyze your your ownership structure to ensure that your business qualifies under the guideline but if your business does qualify we're going to follow up with a message and say congratulations your business qualifies for up to a certain dollar amount. We're going to explain our process, we're going to explain our fees and we're going to give you the opportunity for us to analyze it. We'll set up a secure drop box, you submit your information. Within two to three days we follow up and say congratulations our initial estimates were, and I'll just give an example, your initial estimates were half a million dollars in the ERC. You're within 22% of our initial estimate is not now time for you make the decision either move forward with ERC today or take what you learned and do yourself or find another resource. Again we do most of the work up front without having you sign a contract or paying us so if you feel like we've done a good job and you want to move forward with us you pay us a minimal deposit, you sign a contract, we give you the exact dollar amount that you're going to receive, we have you sign a contract, we complete the return, we tell you give you the amount, we send it to you and then email, you receive it, you sign the 941x that we amended for you and then you send it to the IRS and if you qualify for more periods we'll start working on the next period the exact same period that we did for you that we have sent to you. Once you send it to the IRS it takes about four to six months to get paid that's a long time however we do have insight with the IRS and we will notify you ahead of time if you're going to get paid so let's say you follow the day six months from now you're going to get paid we're going to let you know ahead of time if you're going to get paid or not that's the story I hope you apply it's a great opportunity don't miss out as we know now you have three years to amend but it takes four or six months so if you want it now apply now. Thank you John so now I'm going to pass the ball over to Sarah who has a few questions for you. Great yes but yeah so for us we didn't think that we we qualify but we are going to go through the process and so thank you so much for the information it was very helpful and so some of the questions that I do have we are going to for us at the FIFA press we have a meeting set up with our CPA tomorrow and so the question that I have is what kind of question should I ask the the CPA prepare for my meeting tomorrow? The name asks your question is who do you do your payroll through? A Siridian. Siridian so the most important thing is is to ensure that your CPA has access to your payroll data I'm not sure if they do if they do I would I would prepare to run the reports and if you need additional information I can after our discussion I can help with that but on the other hand is your CPA most likely shouldn't should have an understanding of of the ERC however if they don't one great thing about us is we work with a lot of CPA firms as well we're like an extension to them but at the end of the day what you want to make sure you're knowledgeable of is your PPP information that's you want to that's probably the most important part if you offered health insurance and not many restaurants did but if you did you want to make sure you don't know the amount of premium the employer paid because the employer paid premium for health insurance can be used for wages for the employer attention credit that's one thing that a lot of people don't know about but that that then you want to make sure you can have access to your 941s if you don't have it you obviously you trust your CPA you can grant them access to sherry and have them pull the 941s for you as well as have a check register available for 1920 and 21 as well as hours you want to make sure you run hours reports for all your employees because they want to analyze that as well all right good to know my next question so as far as with the process what what do you feel is the most difficult part of the process when submitting for the IRC the most difficult process for us is when we work with a client that either a doesn't have a good relationship with their cga or two when we ask for data they don't know what we're talking about so that's the hard honestly that that's about the that's the process that delays our work and we can do this pretty quickly typically in five days but if we ask a question and they don't have access to it they typically have to reach out to their cga like you like you are or they reach out to their payroll company and what we found is a lot of the payroll companies aren't doing this so it just extends the process but if you have all the data things can go go quickly either through us or your cga okay all right um does does the credit apply to wages and reported just wages only but actually both so that's one thing that we we do internally is we will analyze all that uh in i mean in most cases we just say hey let us grant grant us access to your payroll we'll go run all the reports ourselves we know exactly what reports are running out to run because you know some of that can be tedious some of that can be very involved and when you're not used to running the reports because this isn't your typical process you know most people don't know about this and when we go into detail you'll get confused so it's one part of our consulting process is is at least on our end is let us take all the hardship off your shoulders and put it on ours good um last questions as far as with um with your services uh and so for example if a um business they went through you they fill up the the information they went online and um they do not qualify so is there a fee or service that you charge if they don't qualify no we will not charge them anything we won't even get into that conversation unless we guarantee they're going to get something so for so you know when we give an estimate i'll give you the example of the half a million yeah we give an estimate that they're gonna we believe they're gonna get up to a half a million once we analyze their data we know the exact number we give them the opportunity to move forward or you know go somewhere else uh but one thing i will add uh that's very important that it's not talked about much but it's probably the most important part is on the road so you know i'll use you examples let's say for your restaurant you get a hundred thousand dollars right uh you use it for your business you know you do something innovative you open a new location or you do something uh that everyone loves they because you're you're so innovative so two or three years down the road you've spent any grand right you get audited they come back and say you know what we don't feel like you got you qualify most likely you did but let's just say you didn't right it's up to the IRS as we all know to determine if you qualify or not and the fact that you get audited and for some reason you did not qualify or didn't qualify for as much as is is it a week we qualify for you or we provide audit support that's very key in this in this situation is you come back to us we support you with the audit based on the data that that you supplied us and we work with you on we supply you with the information you need to go through the audit and let's say we're wrong right it let's we will refund a hundred percent of our fees to you which you know that's very very it's like an insurance policy basically restaurants do qualify most of the restaurants do qualify unless you would don't have like for example if you didn't have indoor dining those are those don't qualify uh some do but most don't but again you want to make you want to make sure that whoever you go through your see your day your CPA you want to be able to trust that they know what they're doing with this because it's extremely complex good thank you so much those are all the questions that I have Carol are there additional questions that you have yes I wanted to also talk about some of the misconceptions John you know as you know I hear it all day long after we had our webinar at the Hawaii Restaurant Association and John was on it you know everyone was calling me and saying wait a minute I heard that if I received a restaurant revitalization fund which is a grant or I had a ppp that was forgiven misconception is that I don't qualify for the erc John you want to talk about it absolutely that's that's the number one misperception as well as a couple others it doesn't make a difference if you got it or not we tell everyone to apply now you may not get as much but if there's wages left over or erc you'll get something and something's better than nothing right so again perfect situation apply because don't think you don't qualify don't think because you got ppp one or two you don't qualify a lot of people are giving bad information out so take it upon yourself to do what's right for you and your business and apply you may not get as much as you think you're going to get but if you get a dollar it's more than a dollar you had yesterday that's exactly what I told them so what are some of the other misconceptions that are out there John because I could go through my list but you tell me the top misconceptions because that would really help our listeners know you know that that is a misconception it isn't the truth the top the top misconception of this is ppp that's the number one because even though the irs made an announcement in march a lot of people just don't know about it so if you got ppp one or ppp two you still definitely qualify as as I said before you just may not have as much wages left over here the other misconception is okay I got 2020 but I don't get 2021 that's incorrect as well you qualify for every period that you that you're eligible for the other piece is my sales run down 50% or people are comparing 2021 to 2020 that's the other incorrect part of this everything dates back to 2019 again don't try to figure this out yourself reach out us apply through our website it doesn't hurt to apply and you may get made more than then you expect but you're not going to know until you apply with us there's I could talk all day about the misconceptions on this we've worked with numerous businesses numerous cpa firms that were doing this and elected to work with us because we do this it's all we do and we do it at right and again we're doing what's right for the customer and not to get into details about our fees but the more you get for a credit the less we take again the more you make the less we make because it's all about you it's not about us it's about you and your business and trying to help your employees out and you know what getting through this these are tough times are for us right now but let us help you if you win we win thank you john so in closing I just want to mention one more time that Hawaii restaurant association is not a tax professional you still need to consult your financial advisor and your tax professional and again if your if your business qualifies the employee retention credit is a stimulus for your business designed to support those that were impacted by the pandemic the time is running out everyone as john said it's when that infrastructure bill gets signed or December 31st whichever comes first so please I'm hoping that businesses take advantage it's not only restaurants it's any business that was impacted by the pandemic and again as always I'm Cheryl from the Hawaii restaurant association the Hawaii restaurant association is the voice for Hawaii's food service and restaurants here in Hawaii thank you everyone thank you john thank you sarah thanks for having me