 Aloha. My name is Cheryl Matsuoka, the Executive Director of the Hawai'i Restaurant Association and the Hawai'i Restaurant Association Educational Foundation. Mahalo for joining me here on Restaurants of Hawai'i on the ThinkTech platform. Today, we're going to be discussing if you received your employee retention credit or your ERC. If you did not, it's not too late to apply. I'd like to welcome my guest today, Skip. Hey, Skip, how are you? Cheryl, it's great to see your smiling face again. Always Skip, nice to see you. And I've heard so much wonderful feedback of all of the businesses, especially restaurants that you've helped here in Hawai'i. Skip, go ahead and introduce yourself. Let everyone know your full name, the organization, the company you're with, and a little bit about what you do. Thank you, Cheryl. So, my name is Skip Kanolf. I'm with ERC today. And as name implies, we've helped to educate and assist business owners that qualify for the employee retention credit. It's a stimulus money that came out of the CARES Act during the COVID times. And I got to tell you, probably in my highlights of the past two years of participating in this program, probably the most fun I had was being a participant of the Hawai'i restaurant convention, the hotel and restaurant show. And it was just a lot of fun. It was fun because everybody was getting back from COVID and they were interested in learning. And your members are just phenomenal people. Thank you, Skip. And it's so nice to hear that feedback. During the pandemic, as we're now out of it, I can look back and say, you're right, it was really, really a tough time. But what gives me joy and the reason that I do what I do, Skip, is because we're helping restaurants and we're helping the food service industry. Helping them with things like in the beginning of the pandemic, of course, getting through the PPP. And then, of course, there was the idol. Then there was the restaurant revitalization fund. But nothing brings us more joy than bringing people right. Some kind of a relief and financial relief is always number one. Providing the ERC and explaining to our restaurants to please just apply, even when a lot of the, how can I say it, Skip, the naysayers, the non-believers were saying that it's not real and that they wouldn't qualify. When I get those calls, Skip, from those restaurant tours and say, Cheryl, it's real, I got my employee retention credit. And just so happy because any little bit helps, right, Skip? Maybe you have some stories you want to share about people who were also the non-believers and received an ERC check. That's true. In fact, more chances than not, in the very beginning, when I was calling your members, they were like, you know, I'm not sure that I've heard about this or I'm not sure it's real or it sounds too good to be true and I don't know. And some would go, well, you know, I'm willing to try this out. But I will say, without reservation or question, from the beginning all the way through just the other day, because they were members of the HRA, they were comfortable and confident that y'all figured it out and verified us and they just said, I'm up. Let's do this. I'll ask me the questions and see if we qualify. So it was a lot of fun. And that's, you know, if anything came out of the pandemic, we were just really grateful that, you know, the ERC was approved by our government as part of the COVID relief. So before we get ahead of ourselves, Skip, so explain what is the employee retention credit or ERC and give them a little background about it. Okay. Well, the benefits are you can get up to, as everybody's heard across the every ad, it seems now $26,000 per employee should you qualify. Now that's true mathematically, but not realistically. Myself, I've done 31 million, our company's done over 300 million tax credits across the US. And the reason that number doesn't really happen is because most everybody got PPP. And you can apply for both, you just can't double dip. And so that for that reason, we will get your payrolls in, we pull the PPP out and the remaining, and we go through the formula to make sure you get your maximum. So that's the takeaway dollars from the IRS. Very nice, Skip. And today's topic, because many of the people who are following us and subscribed in our members think that it's already done. The employee retention credit, if you didn't do it back in 2022, it's done. So do you want to discuss a little bit more about the extension and the date of the extension and how they can still go back and apply for this credit? You're correct, Cheryl. So the IRS, realizing that the PPP was broadcast through the US by supporting the supports from the bank. And they spent a lot of money on that. And that was good. But there's very little broadcasting about the ERC. And when they realized it's a good thing, and they should see if they qualify, that there wasn't that much traffic out there. So they did extend it. So the way it goes is that 2019, that's the year that the IRS uses your basis points. See, these are your sales and your payroll prior to the pandemic. And then look at 2020 and 2021, you can qualify accordingly. And the deadline for 2020 is April 15th of 2024. So next year, we just got a few months here and it's out. And for 2021, it will be April 15th of 2025. So the clock is ticking down. And it's one of those things. In fact, yesterday I had a company call me and said, you know what, we just, we kept thinking that we may not qualify. And do you think we may? And yeah, they certainly did. So let us take it upon ourselves at ERC today to see if you do because this is money from the IRS coming back to you as a reward because you know what, you stepped up during this time, you kept your employees on payroll, and you deserve this portion back to you. Exactly. And today's discussion is all about don't miss the boat. And as you said, you know, it will run out and there is deadlines. And so today's discussion is all about please, you know, if you have any, if you haven't already at least attempted to find out if you do qualify, to please find out if you truly do not qualify. Chances are you do. So now let's share, share with us, get who qualifies for the ERC. Right. Well, when we talk about restaurants, it's, it's restaurants that have indoor seating. Okay. You most likely will qualify. And also looking at hotels and hospitality world, any times that you have is called a capacity restriction, which means that if the government says you can't have the, your customers in this area, whatever, then yeah, you should qualify. Now note that there is also a maximum number of employees full-time to plot. Okay. So and in 2020, it was 100 full-time employees unlimited part-time. Okay. And 2021 it goes up to 500 full-time employees unlimited part-time. So these are questions that our analysts ask to make sure you get the money because we don't want a situation that you get a big check and our risk knocks you doors is, hmm, I don't think so. Bring that back. And here's the interest, baby. That's a bad surprise. Also, you need to look at ownership. If your restaurant has a corporate owner, or there are, I can say other members of the ownership, say there's two people and then you're running a restaurant and you've got 20 employees, you're fine. Maybe your partner has another business, then that'd be a restaurant. And they have 500 full-time employees. You're out. Okay. So these are the deep dive questions we go in to make sure that you're getting what if you do qualify, but you get the correct amount. So looking at, so again, for restaurants, hospitality, capacity restriction, most likely you're good to go. Okay. If you aren't in the restaurant world and your sales went down, you could qualify. Again, using 2019 as a basis point. When you look at 2020, if you had a quarter, it was down by 50% compared to the quarter before 2019, you should qualify for that quarter. Okay. And in 2021, if quartered one, two, or three, or taken off the table because of the budget, a quarter, one, two, or three, if you're down by just 20% compared to the same quarter and 2019, you should qualify. And if you qualify on the reduction of sales, get a little technical here. When you get one quarter, the IRS will give you the second quarter. Okay. So most of your members don't have to worry about that, but it is an opportunity. Now don't concern yourself if you're a restaurant and had a capacity restriction. If your sales doubled, you still qualify. So a lot of people said, well, my sales didn't go down and I'm a restaurant and our sales were great. So my accounting professional said, we didn't qualify. You can, most likely can. Okay. And believe that head, the smartest financial advisors tell all-size restaurants from five employees to really big ones that they didn't. And these are the big accounting from, I'm saying, you didn't qualify. Well, because they're a restaurant, they will. Very good. Well, you know, that's what the Hawaii Restaurant Association is all about ensuring that our members and that the industry is very well-affirmed. And that's what you do a great job at SCIP and forming our members. Now, the IRS changed the rules after the first year. And so we want to talk about PPP plus, if they receive PPP, do they still, are they still able to qualify for an employee retention credit? Yes. You still can get both. The first year, you're right. You couldn't do both. And then they realized it's a really good thing. Most weren't applying for the ERC, changed the rules, and that's what we got in the game. And it was interesting. I'm watching the national news and I hear about the stronghold from your local government about restrictions. And I go, those people need help more than anybody else in the US. Let's give them a call and go see them. But yeah, that did change. Very good. Thank you for informing our members because it's coming straight from you. So now the other question that I get asked often is, do I have to pay back the employee retention credit funds that I receive? Do I have to pay it back? Cheryl, you're right. No. Yes, the PPP you had to qualify for. But the ERC or ERTC, you do not. It's the IRS rewarding you for you stepping up and helping your every employee during that period of time. So it's yours. Now, it's one of those things that it's unrestricted to so long you use it and the growth for your company. So whether you want to buy a cooler or put in your payroll for your employees that you have discretion of how you want to use it so long as it's for the benefit of the company. Very nice. Yes. And we received our employee retention credit funds at my restaurants. But in general, how long does it take for a restaurant tour to receive the money from the IRS? It depends on the amount. And it's not really clear. It hasn't been really clear about this. But our best understanding is that if your total amount is less than $200,000, you should get it within two months. If it's over that, it could be six to nine. And that's a long time away. And I think people are pretty much well to wait knowing that they weren't going to have it otherwise. So this is great news, great information. We do have an advanced funding option. It costs more. I'm not a fan of that to pay more. But it's yeah. So two months, small, six to nine months if you're larger. And I got to tell you, if you got two companies, same size, they sent their application on the same day, they're not going to get it the same month. It's just the way it goes, but they'll get their funds. You said it's hard to predict, right, when you're going to be getting that check, but you will be getting the check. That's the main part of it all. So I've been following the news skip and there has been a lot of fraud out there with the PPP. What should our members be on the lookout for? Oh, true, Cheryl. In fact, the PPP fraud, you're right, has been pretty big. I think that the ERC fraud will be probably twice the amount that we saw with the PPP. And it's from both sides, processors and applicants. We've heard of applicants out there, processors, I see processors out there that aren't asking these questions about ownership, they're not asking about, did you get PPP? And really, we heard of one company that called us and said, we've got 10 employees and one of your competitors said we're going to get 10 times $26,000. And our question was, well, did you get PPP? Oh yeah, we did. Said, well, it's not going to work out. And yeah, anyway, it happens that way. Also, we've had applicants send in, we get about a number of them a week that we can tell they're not correct. When do you have two companies that are different with identical 941s? Never gonna happen. So that's, yeah, it's a sad state, but it happens. Gosh, Skip, so talking about that subject, so what about being audited? What does ERC today offer to help the business that they've filed? Well, they've submitted the ERC, what are they doing to help the people, the customers, their clients? Thank you. Yes. Well, we include in our initial charge, the, it's called an audit protection documentation, which simply states, should you get audited, it will deliver to you for no additional costs, the documents, so it shows one that we're saying that you do qualify for these reasons, and that the amounts that you receive are correct for these perils and sales. And basically it's just, here it is and you sent out an SNP, that should take care of everything. Sometimes your CPAs want this information ahead of time, we're happy to give that to them as well, because we believe that this is really details that you need to have in hand. Now, the opportunity or the probability of being audited, it's pretty small, unless you get over a million dollars. So it's there, but if you go through us, I don't think you have anything to worry about. That's a sharing skip. Thank you so much. So, as I mentioned in the very beginning, you know, one of the initiatives for the Hawaii Restaurant Association is always to ensure that we provide information to our members. And I shared with you some of my experiences when people receive their check, and they just want to thank me, they say, oh my God, Cheryl, it was just like a Christmas gift from heaven, right, that they're just so happy. What are some of the experiences that you experienced from your clients regarding the employee retention credit? Well, people use it in all different ways. It's interesting that some say, I've got a cooler, I got it fixed. Some say I have a fryer oven or renovation. Everybody has these in their mind. And what's interesting is, especially the ones that, you know, my average returns are about $585,000. And so they go through it. We process them. We send them the 941s. They sign it, melt the IRS, one month, two months. And then they call and say, hey, have you seen anything? They say, no, we've still got some more time. And then they'll call back and say, you know, I want to order this and this and this. I said, well, you know, that's when you get your check, that's when you have your money, that's up to you. But I guess my point is, in the beginning, it's just a dream of what could happen. Then when they built the IRS, they're in their mind already spending on what they could do it with it. And then I've had a few that just said, you know, I'm cash this checks and I'm just going to put in the bankals. You know, there may be another situation in the future that I'll need it. So it's quite a variety of it. But truly, everybody is very excited to have that relief. It's just very endearing. Well, one of the comments I hear from the restaurant for as often as you know, in the beginning of the pandemic skip, there was the PPP and then the idle and then restaurant revitalization fund and the ERC, right? And they're telling me that, you know, pretty much they know that there's not going to be any more support, you know, coming out of the federal government. So today's message is if you haven't taken advantage of the employee retention credit, the deadline is next year, 2024. And a skip set also for the year's filing skip, you want to give them the dates again if they hasn't filed for the ERC in 20. So April 15 of next year, 24, as your deadline filing for 2020, and then following year April 15 of 24 for 2021. We would encourage everybody to do it all. Let me tell you about what we'll need from now to process this. Okay. For 2019, 2020, 2021, we'll need your payrolls per quarter and then we'll need your sales per quarter. And if you have any health insurance, that's, it does help a little bit, but we'll do all those. In fact, if you have a payroll service, most likely we'll be able to pull that automatically from the payroll service with your permission. So payrolls, sales, and if you have health insurance on top of that. And then we're getting back pretty quickly for confirmation of some qualifying. And then it takes about seven, 10 days after that. And you'll get the information and email and sign it, Mount Tire S. Our process takes anywhere from, it depends on quickly or slowly, we get the information from the client and restaurant. Once it's all in, it's about a couple of weeks. And then it's back to them to sign off and Mount Tire S and then the long wait there. But it's, I always say there's nothing you can do with your own calendar that gives you a turn better than this. And I know some people have been really, really busy, swamped. They're having to cover a lot of different roles people have left and they can't find anybody to fill it. I understand. That's tough. And so maybe it's a good thing to carve out something at night and send us an email and say, let's dig this through and we'll just pick it up as we can. So if you have an online payroll service, we'll probably pick that up for you. And if you need help with your CPA giving us the information on your sales, we can work with them. So anything and everything we do to help life easier for your members, we'd love to do it. Thank you, Skip. And thank you so much for joining me today. And in closing to our members and subscribers, the Hawaii Restaurant Association remains steadfast in our commitment to supporting Hawaii's restaurants and the food service industry. And we understand the challenges that we are all facing together and together we can overcome them. The extended employee retention tax credit, the largest government stimulus program in history, is here to booster our efforts and has been extended to April 15, 2024. Again, my name is Cheryl Matsuoka, the executive director of the Hawaii Restaurant Association. Thank you. Thank you so much for watching Think Tech Hawaii. 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