Hospitality and the Employee Retention Credit (ERC): Strategies for Success

The hospitality industry has been hit hard by the COVID-19 pandemic. With travel restrictions and social distancing guidelines in place, hotels, restaurants, and other businesses in the industry have had to adapt quickly to survive. One of the biggest challenges facing hospitality businesses is employee retention. However, there is a solution that can help - the Employee Retention Credit (ERC).

What is the Employee Retention Credit?

The Employee Retention Credit is a tax credit that was introduced as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. It is designed to encourage businesses to keep employees on their payroll during the pandemic by providing a refundable tax credit of up to $5,000 per employee.

Who is eligible for the Employee Retention Credit?

Any business that was partially or fully suspended due to a government order related to COVID-19 or experienced a significant decline in gross receipts is eligible for the ERC. This includes businesses in the hospitality industry.

Not sure if your company qualifies for ERC? We can help with a free eligibilty assessment.

Strategies for Success

If you are a hospitality business owner looking to take advantage of the Employee Retention Credit, there are a few strategies you can use to maximize your benefits:

1. Keep detailed records

In order to claim the ERC, you will need to provide documentation that shows how the pandemic has affected your business. Keep detailed records of any government orders that have impacted your operations, as well as financial records that show your decline in gross receipts.

2. Evaluate your workforce

Take a close look at your workforce and identify which employees are eligible for the credit. The ERC is available for all employees, including full-time, part-time, and seasonal workers. However, there are some limitations based on salary and the number of hours worked.

3. Consult with a tax professional

While the ERC can be a valuable tool for hospitality businesses, it can also be complex. Consult with a tax professional who can help you navigate the requirements and ensure that you are maximizing your benefits.

4. Plan for the future

The pandemic has created a lot of uncertainty for businesses in the hospitality industry. While the ERC can provide some relief in the short-term, it's important to plan for the future. Consider how you can adapt your operations to meet changing customer needs and reduce your reliance on government orders.

Conclusion

The Employee Retention Credit can be a valuable tool for hospitality businesses looking to retain employees during the pandemic. By keeping detailed records, evaluating your workforce, consulting with a tax professional, and planning for the future, you can maximize your benefits and position your business for success.