Do you own or operate a Culver’s franchise restaurant?
Wondering if your Culver’s location qualifies for the Employee Retention Credit (ERC) due to negative impact of COVID during 2020 and 2021?
As a Culver’s franchisee, yes it does, and here is why.
Your Culver’s restaurant still qualifies for the employee retention tax credit, depending on the mandated state government, county, city, or municipality restrictions placed on your location during the COVID pandemic. Even if your revenue increased during 2020 and 2021, vs. 2019, you still qualify.
If your Culver’s franchise restaurant was forced to close your indoor dining room, or limit seating capacity indoors, or reduce your hours of operation at your Culver’s location, this qualifies your Culver’s restaurant location under the IRS Employee Retention Tax Credit (ERTC) “partial shutdown” rules.
Meaning, your Culver’s restaurant was allowed to still do delivery, carryout, or outdoor seating. Even if your location did not have to be fully shutdown. However, you were mandated to close your Culver’s indoor dining, and / or reduce your hours of operation at your Culver’s location.
Under the IRS ERC rules and regulations, your Culver’s business qualifies because your operations were disrupted due to government intervention by forcing you to reduce your business capacity. This qualifies your Culver’s franchise for the ERC Credit and tax refund from the start date of government restrictions, to the end date when all restaurant capacity restrictions were lifted.
This is exciting news for all Culver’s franchisees and owners to help offset and recoup costs from the negative impact of COVID on your restaurant.
Many Financial and Accounting Professionals, CPAs, Financial Planners, Advisors, and Attorneys are unknowingly advising their Culver’s restaurant clients wrong because they do not fully understand all the Employee Retention Credit tax guidelines as they relate to restaurants and food service-type businesses.
Schedule Your Free Restaurant Employee Retention Credit Consultation to see if your Culver’s franchise location qualifies for the ERC Refund.
Table of Contents
What is the Employee Retention Credit For Restaurant Owners?
The Employee Retention Credit (ERC) allows qualifying restaurants, bars, cafes, and other food service businesses to receive money back on gross wages and some employment taxes by claiming a refundable tax credit equal to 50% of qualified gross wages salaries paid between March 12, 2020, and December 31, 2020.
For 2021, a refundable tax credit equal to 70% of qualified gross wages salaries paid between January 1, 2021 and September 30, 2021 for businesses already in existence prior to February 15, 2020. Restaurants started or purchased after Feb. 15th, 2020 (also known as a Recovery Start-up in IRS ERC terms) can claim employee wages through December 31, 2021.
It was created as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act to assist small and midsize businesses like restaurants and hotels in continuing payroll throughout the epidemic. The goal was to encourage employers staff retention and avert layoffs.
Many amendments and changes have been made to the ERC since 2020. According to the Infrastructure Investment and Jobs Act, it now only applies to wages paid before October 1, 2021 (with the exception of recovery startup businesses working towards recovery, which have until January 1, 2022).
Background on Culver’s Franchise Restaurant Owners and Franchisees
For Culver’s franchisee owners, the average annual sales volume of a Culver’s franchise restaurant location in 2021 was $3,099,000.
Culver’s restaurant franchises overall generated $2,489,000,000 in revenue from 831 locations.
This increased from the previous year by 55.
Overall, Culver’s corporate has a total of 6 company units added to the 831 franchise units, for a combined total of 837 restaurant location units company-wide.
Visit the Culver’s company website at Culvers.com.
Culver’s Employee Retention Credit For Franchise Restaurants
Culver’s franchisee owners are not alone. The restaurant industry continues to struggle with the economic impact of the COVID pandemic, high inflation, and a possible recession. Culver’s restaurant owners are looking for ways to support their Culver’s employees and keep their businesses afloat, especially Culver’s franchise restaurant owners who have a healthy investment in franchise fees and other expenses to recoup and earn a return from owning a Culver’s restaurant.
The Employee Retention Credit (ERC) or Employee Retention Tax Credit (ERTC) was established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act to help restaurant and food service type business employers retain their staff during economic hardship and negative impact due to COVID.
The Internal Revenue Service (IRS) ERC Tax Refund program is an important tool for restaurateurs, restaurant owners, principals, and employers. The ERTC offers tax relief and provides a financial incentive to retain employees during the past economic disruption that occurred during 2020 and 2021.
For Culver’s owners, having a thorough understanding of the ERC credit and how it applies to their Culver’s restaurant franchise, owners and principals can ensure they take full advantage of this tax credit to support their Culver’s employees and locations.
Here is how Culver’s restaurant owners and principals can take advantage of this valuable IRS tax credit to help their Culver’s location stay open with positive cash-flow to continue keeping their W-2 employees on the payroll.
Employee Retention Tax Credit For Culver’s Restaurant Owners
The Employee Retention Credit for Culver’s restaurants is a tax credit available to eligible Culver’s restaurants and other food service businesses. It provides restaurant employers with a federal income tax credit of up to $26,000 per employee for wages paid during the pandemic years of 2020 and 2021.
This tax incentive is intended to help reduce the financial burden of having retained Culver’s employees who may otherwise have been laid off or suspended due to the economic downturn caused by the pandemic.
The ERC applies to gross wages paid to your Culver’s franchise employees between March 13, 2020 and September 30, 2021, only for each quarter during this time frame that may have qualified. 3/13/20 to 9/30/21 time frame is for Culver’s franchises that were in existence prior to COVID.
For Culver’s locations that opened after February 15, 2020, this restaurant is considered a recovery start-up business, and may qualify through December 31, 2021 (12/31/21) of the 4th quarter.
Qualified Culver’s restaurants in 2020 can claim up to $5,000 maximum per employee for all of 2020. This is based on up to 50% of a Culver’s employee’s qualified wages. Eligible Culver’s employers must also have experienced either a full or partial shutdown due to orders, OR a capacity restriction from a governmental authority, OR have experienced a significant decline in gross receipts compared with the same quarter in 2019.
Almost every state forced Culver’s restaurants to close their indoor dining, and / or limited their interior seating capacity. These periods of time occurred in which state, county, and city your Culver’s restaurant is located, will qualify the quarters and periods of time the capacity restrictions were imposed on your Culver’s location.
For all of 2020, Culver’s employers can access up to $5,000 maximum for eligible employees, and up to $7,000 per quarter, per employee, for eligible employees (for each quarter) in 2021. This means up to a combined $26,000 to $33,000 per employee depending on certain factors.
For Culver’s Restaurants, What Are The Eligibility Requirements For The Employee Retention Credit?
To qualify for the ERC, Culver’s restaurants must have experienced a full or partial suspension of their operations due to orders from a governmental authority limiting their ability to operate during specific periods in 2020 due to the pandemic.
Another way to qualify is if your Culver’s restaurant had experienced a significant decline in gross receipts of at least 50% in 2020, or 20% in 2021, compared to the same calendar quarter in 2019, a pre-COVID year for your Culver’s franchise. 2020 vs. 2019 and 2021 vs. 2019, quarter by quarter.
If you had less than 100 Culver’s employees paid in any given quarter in 2020 that qualifies, then all gross wages are counted, whether the employee was full-time or part-time.
In 2021, if your Culver’s restaurant had less than 500 employees paid in any given quarter in 2021 that qualifies, then all gross wages are counted, whether the employee was full-time or part-time working for your Culver’s franchise.
The Internal Revenue Service (IRS) provides the following specific restaurant examples to explain “full or partial closure orders” during a calendar quarter:
•Social Distancing Through Capacity Restrictions at Your Culver’s Location
It appears that government orders restricting the spacing of tables or limiting seating at your Culver’s has more than a nominal impact on the restaurant’s business operations under the facts and circumstances.
•Culver’s Dining Is Closed Indoors, But Open Outdoors or for Culver’s Delivery
Following the order, the Culver’s restaurant can operate only its outdoor sit-down and carry-out service during this period. Since, under the circumstances, a significant portion of the Culver’s restaurant’s business operations, its indoor dining service, has been closed by a government order, the Culver’s restaurant’s business operations are partially suspended.
•Culver’s Restaurants All Interior Dining Rooms Are Closed
Due to a government order closing all restaurants, bars, and similar food service establishments for sit-down service (indoor dining), a Culver’s restaurant must close its on-site dining area.
Culver’s restaurants that qualify for the ERC can receive a tax refund cash incentive equal to a percentage of qualified gross wages paid:
- Services and other gatherings were restricted by government orders; or
- There was a significant decline in gross receipts for these Culver’s restaurants.
What If My Culver’s Restaurant Received a Paycheck Protection Program (PPP) Loan?
Good news Culver’s owners!
Due to recent changes in the ERC program, there are still ERC refund benefits available to organizations and Culver’s owners that have previously received PPP Loans, Restaurant Revitalization Funds (RRF), or Shuttered Venue Operator Grants.
The Culver’s PPP Loan (or loans), if your Culver’s location received two PPP loans, just needs to be correctly subtracted out from the date it was received against the qualified gross wages paid to your employees at Culver’s.
Besides Culver’s franchises, there are many more types of restaurants that are eligible for the ERC credit. If your business serves any type of food similar to Culver’s, you are probably eligible.
How Culver’s Franchisees Can Claim The Employee Retention Tax Credit?
Once your Culver’s franchise restaurant location has met all the eligibility requirements for the Employee Retention Credit, you can claim it on IRS Form 941-X.
It seems simple enough, however, the ERC Credit is highly confusing and complex when dealing with the ERC program.
See If Your Culver’s Restaurant Qualifies For The ERC Credit. Schedule Your Free ERC Tax Refund Consultation For Expert Help In Claiming The ERTC Credit For Your Culver’s Franchise.
When dealing with IRS tax matters, federal payroll taxes, income taxes, tax returns and other matters before the IRS, it’s always best to have expert help to stay safe and compliant.
Additionally, you should keep all your Culver’s records and supporting documents in case the IRS has any questions. As a restaurant employer, understanding and meeting the expectations of the Employee Retention Credit For Franchise Restaurants is critical to taking advantage of the available tax credits.
Most importantly, Culver’s employers must accurately calculate the ERC Credit amount, provide the necessary documentation to support their ERC claim, and ensure they comply with all relevant laws. Culver’s employers are also responsible for keeping accurate records of their employee’s wages and hours worked.
You can also check out the detailed guide on How to Claim the Employee Retention Credit (ERC)?
Is The Employee Retention Tax Credit Only For Culver’s Restaurants?
No, the employee retention tax credit is not only for Culver’s restaurants. The Employee Retention Tax Credit (ERTC) was created as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act to support business owners and Culver’s franchisees who have been affected by the Coronavirus pandemic.
This tax credit is available to all businesses regardless of size or industry, so restaurant employees are not the only ones eligible for this benefit.
To qualify for these tax benefits, Culver’s employers must demonstrate that they experienced either a full or partial suspension of business operations due to governmental orders related to COVID-19 or had significant revenue losses due to the virus.
Besides Culver’s franchises, the ERC program is open to all types of businesses, including educational institutions, churches and other religious organizations, nonprofit organizations, and tribal governments.
Can A Culver’s Restaurant Be Eligible For The ERC Credit And PPP Loan?
Yes! Even if your Culver’s restaurant received an SBA Paycheck Protection Program (PPP) loan, an Economic Injury Disaster Loan (EIDL), or a Restaurant Revitalization Fund (RRF) grant, you are still eligible under current IRS rules and regulations, provided certain requirements are met.
The Culver’s payroll expenses that were paid by PPP loans may not be considered eligible for ERC. You can not claim ERC on the same wages paid by PPP loan. The IRS doesn’t want double-dipping of the same exact wages paid with PPP month to your Culver’s employees.
Is The ERTC Available To Culver’s Locations That Received Restaurant Revitalization Fund (RRF) Grants?
Yes! The “Restaurant Revitalization Fund” was recently established as part of the American Rescue Plan Act of 2021, providing restaurants with additional assistance.
A clarification was issued by the IRS on August 20, 2021, stating that Paycheck Protection Program (PPP) loans nor Restaurant Revitalization Funds (“RRF”) should be considered gross receipts for the purposes of determining eligibility.
Are Tipped Wages at Culver’s Eligible For The Employee Retention Tax Credit?
Yes! As part of this relief measure, certain qualified wages are eligible for reimbursement via an employer’s payroll tax credits. Tipped wages are included in qualified wages if they meet specific criteria as determined by the US Internal Revenue Service (IRS).
If the tipped wages are more than $20 a month and are subject to FICA then those tipped wages are eligible for ERTC.
What Is The Culver’s Full-Time or Part-Time Employee Count For ERC Eligibility for 2020 and 2021?
There is confusion because the IRS changed the criteria in 2021 for ERTC.
If you had less than 100 Culver’s employees paid in any given quarter in 2020 that qualifies, then all gross wages are counted, whether the employee was full-time or part-time.
In 2021, if your Culver’s restaurant had less than 500 employees paid in any given quarter in 2021 that qualifies, then all gross wages are counted, whether the employee was full-time or part-time working for your Culver’s franchise.
Would It Be Better If I Combined The Gross Receipts From All Of My Culver’s Franchise Restaurants?
Restaurants in a group may claim the credit for gross receipts if the value of their gross receipts is equal to or greater than an aggregate sum that’s specified by regulators.
If the group meets the criteria, each individual entity may claim the credit, regardless of whether the group as a whole achieved the minimum threshold.
If the gross receipts present for the group as a whole do not meet the requirements, none of the entities may claim the credit even though some restaurants individually had a decline.
How Do I Compare My Q1 2020 Gross Receipts With My Q1 2019 Gross Receipts If I Didn’t Start My Culver’s Restaurant Until Mid-Q2 2019?
If you opened your Culver’s franchise at the beginning of a quarter this year, you can calculate the gross receipts you have for the entire year. The first 3 months of the Culver’s opening in this year can be used as the basis for this calculation.
Conclusion and Summary for Franchise Owners of Culver’s Restaurants
The Employee Retention Credit is a great way for Culver’s restaurants to offset some costs associated with retaining and keeping employees employed during those tough times experienced in 2020 and 2021 due to COVID.
The ERC Refund will help Culver’s restaurant owners receive a much-needed tax refund to keep their Culver’s franchise profitable.
Your Culver’s location probably qualifies for the ERC based on government orders limiting the indoor seating capacity or hours of operation for your Culver’s.
Culver’s Franchise Owners: Get Help on How to Apply for the Employee Retention Tax Credit (ERC / ERTC): Claim Up To a $26,000 Refund Per Employee for Your Culver’s Location
Disaster Loan Advisors can assist your Culver’s restaurant with the complex and confusing Employee Retention Credit (ERC) and Employee Retention Tax Credit (ERTC) program.
Depending on eligibility, Culver’s owners can receive up to $26,000 per employee based on the number of W2 employees you had on the payroll in 2020 and 2021.
The ERC / ERTC Program is a valuable IRS tax credit you can claim for your Culver’s franchise.
Schedule Your Free Employee Retention Credit Consultation to see what amount of employee retention tax credit your Culver’s location qualifies for.
FAQs
Do franchises qualify for ERC? ›
The ERC is only available for under-performing franchises.
The ERC can be worth up to $26,000 per employee that remained on payroll during the impacted period.
While every restaurant must test its eligibility for the ERC, our experience tells us that most will qualify. The ERC is designed to aid restaurants that experienced either a significant decline in gross receipts or a full or partial suspension of operations due to a governmental order.
How do I qualify for the employee retention credit? ›The credit is 50% of up to $10,000 in wages paid by an employer whose business is fully or partially suspended because of COVID-19 or whose gross receipts decline by more than 50%. after the end of that quarter. Less than 100.
Are restaurants eligible for the employee retention credit? ›Restaurants can now receive up to $33,000 per eligible employee in ERTC across 2020 (up to $5,000) and 2021 ($7,000 for each calendar quarter).
Who is excluded from ERC? ›LLC owners cannot claim the employee retention credit because owner wages come from the business profits, not from payroll. Some owner wages do qualify for the ERC. For example, those with less than 50% ownership or multiple owners with less than 50% ownership may claim the credit.
Who is not eligible for ERC? ›Maintained average annual gross receipts that do not exceed $1 million. Employed one or more employees (other than 50% owners) Has an annual gross income of less than $1 million. Is not already eligible for ERC due to a suspension of operations or decline in gross receipts.
How many employees do you need to get ERC? ›The Number of “Full-Time Employees"
The applicable threshold amount to be used depends on the calendar year. The 2020 ERC threshold is 100 full-time employees, and the 2021 ERC threshold is 500 full-time employees.
Wages paid to persons who are more than 50% owners' relatives do not count as wages under the ERC. Refundable credit paid to a distressed employer and owner and his or her spouse, on the other hand, are eligible for the credit.
Can I get ERC and restaurant Revitalization Fund? ›However, the good news is that you can get both the ERC and the RRF if you claim the payroll costs for the ERC first, and then use all your leftover costs to allocate towards the RRF. As long as Employee Retention Credit funds are available, you are qualified to participate in both programs!
Who qualifies for employee retention credit 2022? ›Businesses can qualify for the ERTC credit if they paid wages while their business was partially or fully shut down due to government orders in 2020 or 2021. This applies to basically any non-essential business that was forced to close its doors during COVID-19.
How will I receive my employee retention credit refund? ›
Once you have contacted the IRS, you should receive a notice within four weeks about the status of your refund. If you do not receive a notice within four weeks, you may need to file Form 8849 (Claim for Refund of Excise Taxes).
Can I still apply for ERC in 2022? ›Can I still claim the employee retention credit? ➤ A recovery startup business can still claim the ERC for wages paid following June 30, 2021, and prior to January 1, 2022. You can also claim the ERC for prior quarters by filling the applicable adjusted employment tax return within the appropriate deadlines.
Can I still apply for the employee retention credit? ›The ARP Act modified and extended the employee retention credit for the third and fourth quarters of 2021. The Infrastructure Act terminated the employee retention credit for wages paid in the fourth quarter of 2021 for employers that are not recovery startup businesses.
How long is the employee retention credit available? ›When Is The ERTC Deadline? The ERTC deadline is March 12th, 2023. Businesses have three years after the program ends to look back at wages paid from March 12, 2020 to October 1, 2021, to determine eligibility. The Infrastructure Investment and Jobs Act notes an exception for wages paid by a recovery startup business.
Will ERC trigger an audit? ›One concern that has been raised is the potential for an ERC audit to trigger a tax return audit due to the crossover in the "Gross Receipts" part of the qualification test. Businesses in a regular tax examination are regularly subject to Form 941 expansion is an auditor sees an employee compensation issue.
Can single member LLC get ERC? ›LLC Owners are Not Eligible for the ERC
That means that self-employed workers (Schedule C and LLC) do not receive qualified wages. LLC owners are not considered employees and don't receive wages because, as sole proprietors, they simply draw funds from the expected profits of the business.
Is the Employee Retention Credit only for full-time employees? No. An employer may include wages paid to part-time and full-time employees in the calculation of the ERC.
Is it too late to apply for ERC? ›Filings for 2020 can be made until April 15, 2024. Employers still have time to file for a refund of payroll taxes by claiming the Employee Retention Tax Credit (ERTC). Filings for 2020 can be made until April 15, 2024.
Is it too late to get ERC? ›The ERC can be claimed retroactively on an amended 941-X payroll tax return, if the statute of limitation remains open. Generally speaking, the statute of limitations is three years from the original filing date of the return.
What is a large employer for employee retention credit? ›The ERC definition of a large employer is different for 2020 than 2021. While in 2020, an employer is considered large if they averaged more than 100 full-time employees during 2019, in 2021, they are large if they averaged more than 500 full-time employees during 2019.
Are spouses eligible for ERC? ›
The wages paid to a major owner and their spouse qualify for the ERC if they don't have any of these living relatives, however. Shareholders owning less than 2% of the business and who are also employees may qualify as well.
Is ERC refund other income? ›While the ERC refund is not taxable during the eligibility period when it is received, earnings equivalent to the ERC amount are subject to expenditure disallowance regulations with a sum of eligible wages for federal purposes.
Is ERC based on gross or net income? ›Solely for purposes of determining eligibility for the Employee Retention Credit, gross receipts for a tax-exempt employer include gross receipts from all operations, not only from activities that constitute unrelated trades or businesses.
Can I sell my restaurant after receiving RRF? ›You may sell your business after you receive RRF funds; however, before the sale takes place: The seller must demonstrate to SBA that all RRF funds have been used for eligible purposes prior to the sale; or The seller may remit to the Treasury any RRF funds that have not been used for eligible purposes.
Can owners pay themselves with RRF? ›However, RRF funds may be used for owner wages such as W-2 income and regular and expected guaranteed payments. Additionally, if the owner has accrued unpaid wages for W-2 income or regular and expected guaranteed payments, RRF funds may be used to bring those unpaid wages current.
Is ERC taxable income? ›While the ERC is not considered taxable income, under IRC Section 280C, employer tax credits create a reduction in wages in the amount of the credit. This reduction occurs in the year the wages were paid – so, a 2021 credit must be reflected on the 2021 tax return, even if the refund has not yet been received.
How is the employee retention credit paid? ›And the longer you keep your employees on payroll, the more benefits you are eligible to receive. For 2021, the employee retention credit (ERC) is a quarterly tax credit against the employer's share of certain payroll taxes. The tax credit is 70% of the first $10,000 in wages per employee in each quarter of 2021.
Can you get PPP loan and employee retention credit? ›Previously, clients receiving a PPP loan during the first round of relief couldn't take advantage of the ERC. However, with the new legislation, a business can take the ERC even if they received PPP funding and loan forgiveness as long as the payroll identified for the ERC was not paid out of PPP funds.
Where is my ERC refund check? ›To check the status of your refund, you can call the IRS at (877) 777-4778. However, because of a shortage of agents available to field phone calls, your “on hold” time may be exceptionally long. It may be more productive to visit the IRS website for additional covid-19 newsroom updates.
How do I claim my ERC credit 2022? ›If the expected credit was more than their payroll tax deposits, taxpayers could request an advance payment by filing Form 7200. Claim the employee retention credit on Form 941, Employer's Quarterly Federal Tax Return, and receive a refund of previously paid tax deposits.
Do S corp owners qualify for ERC? ›
Shareholders of an S corporation must also work for the company for their wages to be eligible for the ERC. Any shareholder who owns less than 2% of the company and is an employee may qualify.
Do C Corp owners qualify for ERC? ›What are Some Examples of Wages That Don't Qualify for ERCs? On August 4, 2021, the IRS issued Notice 2021-49, that states majority owners of S-corporations and C-corporations will not be eligible for Employee Retention Credits.
What qualifies as a recovery startup business for ERC? ›Defining A Recovery Startup Business
— Have average annual gross receipts averaging under $1 million for the three tax years preceding 2021. — Not be otherwise eligible for the ERTC due to suspended operations or a gross receipts decline.
Are self-employed individuals eligible for the Employee Retention Credit? Self-employed individuals are not eligible for the Employee Retention Credit with respect to their own self-employment earnings.
Is the employee retention credit still available in 2022? ›If you meet the eligibility criteria and paid eligible wages during qualifying periods, the ERC is still available to claim on an amended payroll tax return for three years after the original filing deadline.
What is the deadline to claim employee retention credit? ›Employee Retention Tax Credit Deadline
The deadline for qualified firms to claim the ERTC is July 31, October 31, and December 31, 2021, with their Employee per quarter Form 941 tax filings. To file for the ERTC with their quarterly returns, business taxpayers will require extra payroll data and other papers.