 Welcome to Restaurants of Hawaii on Think Tech Hawaii. I am your host, Siobhan Garcia, the executive assistant for the Hawaii Restaurant Association. I am filling in for our ever so lovely executive director, Cheryl Matsuoka. This is a twice a month program. We discuss important and timely topics centered around our Hawaii food service industry. And today we will be talking about how you can get your ERC money for your restaurant today. Today we will be talking with Jerry Packer. Jerry is the business development director for Omega Accounting Solutions. So before I welcome him and let him introduce himself, I did want to say thank you to Omega Accounting Solutions for becoming one of HRA's most recent corporate partners. With that said, welcome Jerry and tell us a little bit about yourself. Thank you Siobhan and it's a pleasure to be here and it's also a pleasure to sponsor and form a partnership, so we appreciate that. My name is Jerry Packer and as you said, I am the director of business development here at Omega Accounting Solutions. My job is to educate and inform referral partners and business owners about ERC and really go through the good, bad and ugly of the whole process. Well, thank you so much. We're so glad to have you. So I think we've talked a little bit before that the HRA has been talking about the ERC for some time now, but we wanted to give our viewers who are new or who have never heard about the ERC a little bit of background. Jerry, could you please tell us a little bit what the ERC is and who qualifies? Sure, the ERC stands for the employee retention credit. It's part of the CARES Act. Initially, when the CARES Act came out, there was PPP and there was ERC. A business owner could not take both. They had to choose one or the other and 99.9% of the business owners went with PPP. In 2021, in the beginning of 2021, Congress made some amendments and one of those amendments was that businesses that had taken PPP could now apply for ERC. So it's really a refund, if you will, for wages and employer paid, their employees during the pandemic. Well, great. Thank you for giving a little bit of a background. You know, for those viewers who are not new and who have heard about the ERC but maybe haven't taken advantage of it yet. Can you tell us if there's been any updates since the inception of the beginning of the ERC? Absolutely, thank you. A great question. In part of that amendment or in addition to the amendment, the change that I just talked about as far as allowing business owners to take or apply for ERC, if they had taken PPP, there were several other changes that were made. One was is that in 2020, the maximum number of full-time employees a business owner could have to qualify for ERC was 100. In 2021, that was raised to 500 full-time W-2 employees. Another change that was made, which is quite significant, is the maximum an owner could get per W-2 employee in 2020 was $5,000. The maximum in 21 jumped to $21,000, so a huge jump. Also, the threshold to qualify on the revenue test was lowered. And what I mean by that is in 2020, you had to show a quarterly decline of 50% compared to the same quarter of 2019. And in 2021, you only had to show a 20% credit or excuse me, a 20% decline in revenue in the quarter compared to the same quarter of 29th threshold was significantly lowered. So you're saying that there's these new updates and I guess one of my questions too would be what do you tell somebody who says, I started a business in 2020. I opened up a new restaurant. I was right at the beginning or I was already planned to open in the middle of 2020. Is there anything for those businesses? There is. There's something called the recovery startup credit, which a business can qualify for. And as long as their annual, their annualized revenue did not exceed $1 million. So if they started up in December and let's say they did $50,000, that would be annualized to $600,000. So they could actually potentially qualify for that. If they had done $100,000 in December and that's annualized, that would be $1.2 million. So they would not qualify or would not be able to actually apply for it. Okay. And when you were talking about the new updates and everything too, we've had some questions from people saying, we don't know what all the changes were with all the closures and there was so many different, statewide we had different ones and I know in different states they had different closures as well. Is that something you would be able to help them with getting all of that accounted for? Absolutely. Absolutely, we definitely would. We track all of the state and county orders that actually were instituted during or implemented during COVID. So yes, we could absolutely help them with that. Okay. So that's not something they would have to do on their own. That's part of working with Omega. That is correct, Siobhan. We are specialists when it comes to accounting and really to the tax credits. We've been doing R and D credits for a number of years. We handle literally everything from the time that we collect the documents to the time we actually do the filing. So the business owner just needs to provide us with some answers and the required documents and we handle the rest of that. Okay. So that leads me to my next question. You know, why would a business choose Omega accounting as their ERC provider? Great question. ERC is huge. It is one and a half times the size of PPP. And there are what we call pop-ups getting into this field, if you will. And many of them have no accounting experience, have no experience in government tax credits. And my experience has been that some of the business owners that I have talked to and that provided the documents, they have not been given correct information. In fact, I had one business owner that he was told qualified for $1.4 million and we actually went through an audit for him on his request and he didn't qualify for any credit whatsoever. And the way that they're able to do that is because the government essentially is not approving or denying the applications, except if they're really large. For the most part, they're just processing them. So a business owner might think, wow, I got whatever I got and I'm in the clear. But potentially there could be an audit down the road. The IRS has time, has five years to go back and audit. So you wanna make sure that somebody who you are working with is established. We've been in business for 15 years. We have been here and we will be here long after the ERC program is over. So you touched on a little bit about the audit side. Can you talk a little bit about your guys audit protection package? Sure. There's really two ways to qualify for ERC. There's one, which is the decrease in revenue. And the other one, which I'm sure a lot of restaurants, this would apply to a lot of restaurants, which is the technical term or the government term is full or partial suspension. I think that that's kind of misleading. We choose to call it a nominal disruption. So what we've gotta be able to do is prove that a business and quantify this that a business was affected nominally 10% or more. So in order to do that, we produce an impact study and we tell the narrative as well. So we provide what we call an audit protection package at the end of the process. So God forbid the business owner is audited. They literally have a book report, if you will, that they can hand the IRS that will have our methodology, our calculations and the narrative, which is really the most important when it comes to nominal disruption. Oh, that sounds amazing. Especially for these people, that's their biggest concern, right, is audit. And especially with these newer credits that kind of were introduced, in the last couple of years during the pandemic, I know that's a big topic for people. So I think that's a relief to know that you guys have a whole process that will really ease their mind into this. We've heard a lot of people say to, oh, I'm not gonna apply for ERC, my business doesn't qualify, or it's gonna be too difficult. Can you kind of touch on what types of documents they may need or what would help them make ease their mind into knowing that this is not gonna be as difficult as it sounds? Sure. Well, let me, there's really, I think two answers to what you were saying there, Siobhan. And first is, I think there are a lot of misconceptions when it comes to ERC, when you're saying that a business owner might think that they don't qualify. I think some of those misconceptions are number one, I receive PPP, therefore I don't qualify. Two, our business was up and therefore we don't qualify. Or three, we never shut down either partially or fully. So none of those are disqualifiers. So just wanna make that really well known. As far as the documentation that is required, we ask for P&Ls, a profit and loss statements, buy quarter, calendar quarter for 19, 20 and 21. We ask for payroll reports for 20 and 21. If the business offers employee benefits, healthcare, we're gonna need healthcare statements. And lastly, we're going to need PPP forgiveness applications. So really just four areas of documentation is what we need. After that, we literally handle everything. And I'm sure this is not really, not everybody has a typical, but in a typical setting, about how long does this process take? Our process from the time that we get all the documents collected takes anywhere from two to four weeks. If it's a pretty much just on revenue decline, it's gonna be on the shorter end of that. And if we have to do an impact study because of nominal disruption, it's on the higher side closer to four weeks. And is that, when you say four weeks, is that for like here in Hawaii, right? We had a lot of different orders and different shutdowns. Does that have anything to do with that process? Yes, it's researching and making sure that we can document everything and that it really is an airtight case. Again, should the business owner be audited? We don't want them having a problem with the IRS and we don't wanna be having a problem with the IRS. So we are, while we try to get the most amount of money we can for the business owner, we wanna make sure that it will hold water. Gotcha, makes sense and smart. So big question everybody's gonna ask is how long do they have to claim this credit? And is there a deadline? It takes up, the government as I'm sure everybody has heard the IRS is extremely backed up. Refunds are taking anywhere from about four to 10 months depending on the size of the refund. So we also have an option though, when we qualify, when we determine that a business will qualify, we present them with the option of being able to get their money sooner. And that would be done through our finance division that we have. So a business owner can get that in as soon as five days. But typically the average that the government is running is like I said, it's about four to 10 months. Probably the average is six to eight. Okay. And for a business? And that comes in the form of a check, by the way. Oh, perfect. And so it is actually it's a tax refund versus a tax credit. Is that correct? Well, it started out as a tax credit when the pandemic first hit. And they still consider it a tax credit but you're no longer actually taking the credit is coming in the form of a check. It actually comes in the form of many checks because it comes in checks per quarter because we file per quarter based on the 941s. I see. And is there a deadline for them to be able to do this? We're all coming upon tax season soon, right? So will they need to do this by a certain date? Yes, there's a three year window from the time that they filed the 941 for that quarter. So essentially 2020 ends at the end of 23 and 2021 ends at the end or the end of the third quarter of 2024 is the latest we can actually file for that last quarter of 2021. So the sooner somebody can do it quite honestly, the better. I see, okay. And, you know, I'm assuming right with as with any company if for some reason they go through you folks and they say, oh, find out they don't qualify is there any money required from them? No, there is no risk whatsoever. We do require a very small deposit to initiate the process and that is fully refundable if in fact the business does not qualify. If the business does qualify, we hold that and we credit that against the balance that they pay us when they receive their check from the IRS. So besides that refundable deposit they're not out anything until they actually get their money from the IRS. And when you say when they get their money, is it, I know you mentioned the check do they also have the option like with other refunds to get it electronically or will it always be in the form of a check? They always come in the form of a check. I see. So because we were talking about how there's the deadline and I guess the other question a lot of people have is, well, I guess more in the sense of you said it takes about however long the government is taking. The other thing is trying to figure out the way to say this exactly but are there stipulations on how they can use that money? Great question. No, there are not. This is not like PPP where it has to be applied to certain things. So we all, I'm sure have heard about the gentleman that went out and bought a Lamborghini with his PPP money. No, you can use this. The business owner can use it for anything they want. It is not alone and it does not have to be forgiven. Oh, okay. That's perfect. I mean... This is actually, again, it's a rebate for wages paid to their employees during the pandemic. So it really is their money that they're getting back. Right, I see. And so if they don't have all their documents in order and it takes them a little while and they're working with somebody, let's just say they're working with their accountant and they come to you and don't have everything. Is there a time limit with you guys that they have to get everything to continue to work with you guys as a partnership? Well, we'd like to try to move it along as quickly as possible. Each client is assigned a case manager and that is the point of contact through the entire process. So they're really only going to be dealing with one person. And part of the job of the case manager is to help them. A lot of times they don't really know where to go for the documentation or how to get the documentation. So part of their job is to actually advise them and kind of coax them along in that. So we have had some cases where we're waiting months and literally we have filed a credit in as short as three days. We got the documentation the same day that they signed the agreement and we literally filed it within three days. So we can move as quickly or as slowly as really dictated by the business owner. So what do you say? I mean, I know, like I said, we've been talking about this for so long and to still run into so many businesses who say, I don't qualify. What do you say to them to really get them, push them to the edge to say, okay, I'm gonna do this. What is that next? Well, I would just say that I don't know why somebody wouldn't look into it. There's absolutely no risk to do it. And potentially we're talking about large sums of money. And even if it's not, even if you're getting 30 or 40 or 50 or a couple hundred thousand or even in the millions, we've gone up to as high as $6 million in credits. I'm not saying that that's going to happen every day, but it's money that is available to the business owner. We're all gonna pay for it. They might as well take advantage of it and get what is coming to them. I just don't understand why a business owner wouldn't look into it. I've talked with a lot of business owners and they say, I'm really busy. I just don't have time to pull the documentation together. And we understand that and we're going to be patient, but we are really trying to help as many business owners as we possibly can. And I encourage anyone who is watching this to contact Omega or somebody else who is a reputable firm and I'm going to stress reputable and has a history and look into it. I think that you're doing yourself a disservice if you're just saying I don't qualify or I don't think I qualify. There are several different calculations that can be made. There's not just one calculation. There's actually alternative quarters and there's different methods. So really leave it to a professional to do it. And I just think that you owe it to yourself to check it out. I completely agree it doesn't cost them anything. They should always look in to see what kind of refunds or credits they can get because that's sometimes makes the difference whether there's here next year or not. And so I agree with food costs going up and labor going up. I mean, I think we can all use a helping hand and if you can help stoke the word chest if you will, I think it's a very smart idea. I completely agree. So we talked a little bit too about, I think this program will sunset in 2024 if I'm correct. Do we see any or have we heard anything about any revisions that we think that might extend it beyond 2024? None whatsoever. So once it's done, it's done. It's done. That's correct. Until the next government credit that comes out and God only knows what that will be. Gotcha. So even more sense of urgency is we're already coming upon 2023 and what almost three years into the pandemic. And so I think everybody needs to take advantage of it as soon as they can. And, you know, I know we- That's a good point, Siobhan, and I hate to interrupt but that's true because 2023 is upon us. So the end of the first quarter of 2023 will be the limit or actually will be the deadline for filing for the first quarter of 2020. So after that, they could potentially lose out on money if they would have qualified for the first quarter of 2020. So, yes, it really is imperative that you look into it sooner as opposed to later. Perfect. And then, you know, you and I have talked a little bit. If somebody wants to get in contact with you guys, is there a way that they would do that? I know we've talked about a landing page. Do you wanna talk a little bit more about that? I believe you're going to have a landing page on your website and anybody who is interested can just click on that, fill out their information and one of our representatives will call you. It is strictly an informative and educational call. We're trying to find out more about your business and we're going to explain the program. Look at that. We're going to explain the program and we're gonna explain our process and walk you through it. It is not high-pressured. Literally, we are there to answer questions if you'd like to proceed with the program and have us look at it. Great, and if not, happy to have the call. Yeah, it's nice for everybody to know that there's nothing involved, just to learn and to be a little bit more educated. I think that's a great way. And so, I know we've talked about there's a little bit of a time difference for us. Is there times that people should be aware of here in Hoy? Well, we are based on the West Coast, but we do have people here from six a.m. until seven p.m. So that's what four o'clock, I believe your time. So, they can also, with the link that they can click on, we will realize or we'll see where they are calling from and we will make sure that we call back during the appropriate hours. That's great. Well, thank you so much. I feel like you've really given so much more education to the program. You've explained a lot. We both said I think everybody needs to jump on it before time runs out because, like we said, 2023 is upon us. And one more thing, I think we are the restaurants of Hoy and that's think tech, but does this mean that other businesses here in Hoy? So if they're listening and they're not a restaurant, do they qualify for this as well? Absolutely, potentially qualify. I can't really say without really having a conversation and finding out the circumstances, but I will tell you that I really haven't come across a restaurant that we have not been able to qualify. Well, that's great news. That says it all right there. Thank you again so much, Jerry, for coming on. We really are very glad to have you guys as our newest corporate partner and we're glad to have you be able to explain a little bit more in detail how this program works and to be able to help our restaurants and our local businesses. And as always, the HRA is the voice of Hoy Restaurant Food Service Industry. And if you would like to reach out to us and learn more, please email us at info at hoyrestaurant.org. And as Jerry mentioned, we will have that landing page up on our website shortly. So if you would like more information, please visit our hoyrestaurant.org website and we will be happy to help you. Thank you again so much, Jerry. Thank you so much for watching Think Tech Hawaii. If you like what we do, please like us and click the subscribe button on YouTube and the follow button on Vimeo. You can also follow us on Facebook, Instagram, Twitter and LinkedIn and donate to us at thinktechhawaii.com. Mahalo.