Smashburger Franchise Employee Retention Credit

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Do you own or operate a Smashburger franchise restaurant?

Wondering if your Smashburger location qualifies for the Employee Retention Credit (ERC) due to negative impact of COVID during 2020 and 2021? 

As a Smashburger franchisee, yes it does, and here is why.

Your Smashburger 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 Smashburger franchise restaurant was forced to close your indoor dining room, or limit seating capacity indoors, or reduce your hours of operation at your Smashburger location, this qualifies your Smashburger restaurant location under the IRS Employee Retention Tax Credit (ERTC) “partial shutdown” rules. 

Meaning, your Smashburger 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 Smashburger indoor dining, and / or reduce your hours of operation at your Smashburger location

Under the IRS ERC rules and regulations, your Smashburger business qualifies because your operations were disrupted due to government intervention by forcing you to reduce your business capacity. This qualifies your Smashburger 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 Smashburger 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 Smashburger 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 Smashburger franchise location qualifies for the ERC Refund.

Table of Contents

Background on Smashburger Franchise Restaurant Owners and Franchisees

For Smashburger franchisee owners, the average annual sales volume of a Smashburger franchise restaurant location in 2021 was $3,331,000.

Smashburger restaurant franchises overall generated $253,000,000 in revenue from 128 locations.

This increased from the previous year by 9.

Overall, Smashburger corporate has a total of 117 company units added to the 128 franchise units, for a combined total of 245 restaurant location units company-wide. 

Visit the Smashburger company website at Smashburger.com.

Image Credit: © Brent Hofacker / Bhofack2 / 123RF.com, Licensed for Editorial Use.

Smashburger Employee Retention Credit For Franchise Restaurants

Smashburger 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. Smashburger restaurant owners are looking for ways to support their Smashburger employees and keep their businesses afloat, especially Smashburger franchise restaurant owners who have a healthy investment in franchise fees and other expenses to recoup and earn a return from owning a Smashburger 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 Smashburger owners, having a thorough understanding of the ERC credit and how it applies to their Smashburger restaurant franchise, owners and principals can ensure they take full advantage of this tax credit to support their Smashburger employees and locations.

Here is how Smashburger restaurant owners and principals can take advantage of this valuable IRS tax credit to help their Smashburger location stay open with positive cash-flow to continue keeping their W-2 employees on the payroll.

Employee Retention Tax Credit For Smashburger Restaurant Owners

The Employee Retention Credit for Smashburger restaurants is a tax credit available to eligible Smashburger 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 Smashburger 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 Smashburger 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 Smashburger franchises that were in existence prior to COVID. 

For Smashburger 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 Smashburger 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 Smashburger employee’s qualified wages. Eligible Smashburger 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 Smashburger 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 Smashburger restaurant is located, will qualify the quarters and periods of time the capacity restrictions were imposed on your Smashburger location.

For all of 2020, Smashburger 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 Smashburger Restaurants, What Are The Eligibility Requirements For The Employee Retention Credit?

To qualify for the ERC, Smashburger 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 Smashburger 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 Smashburger franchise. 2020 vs. 2019 and 2021 vs. 2019, quarter by quarter. 

If you had less than 100 Smashburger 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 Smashburger 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 Smashburger 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 Smashburger Location

It appears that government orders restricting the spacing of tables or limiting seating at your Smashburger has more than a nominal impact on the restaurant’s business operations under the facts and circumstances.

Smashburger Dining Is Closed Indoors, But Open Outdoors or for Smashburger Delivery

Following the order, the Smashburger restaurant can operate only its outdoor sit-down and carry-out service during this period. Since, under the circumstances, a significant portion of the Smashburger restaurant’s business operations, its indoor dining service, has been closed by a government order, the Smashburger restaurant’s business operations are partially suspended.

Smashburger 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 Smashburger restaurant must close its on-site dining area.

Smashburger 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 Smashburger restaurants.

What If My Smashburger Restaurant Received a Paycheck Protection Program (PPP) Loan?

Good news Smashburger owners!

Due to recent changes in the ERC program, there are still ERC refund benefits available to organizations and Smashburger owners that have previously received PPP Loans, Restaurant Revitalization Funds (RRF), or Shuttered Venue Operator Grants.

The Smashburger PPP Loan (or loans), if your Smashburger 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 Smashburger.

Besides Smashburger 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 Smashburger, you are probably eligible.

How Smashburger Franchisees Can Claim The Employee Retention Tax Credit?

Once your Smashburger 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 Smashburger Restaurant Qualifies For The ERC Credit. Schedule Your Free ERC Tax Refund Consultation For Expert Help In Claiming The ERTC Credit For Your Smashburger 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 Smashburger 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, Smashburger 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. Smashburger 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 Smashburger Restaurants?

No, the employee retention tax credit is not only for Smashburger 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 Smashburger 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, Smashburger 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 Smashburger 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 Smashburger Restaurant Be Eligible For The ERC Credit And PPP Loan?

Yes! Even if your Smashburger 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 Smashburger 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 Smashburger employees.

Is The ERTC Available To Smashburger 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 Smashburger 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 Smashburger 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 Smashburger 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 Smashburger 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 Smashburger franchise.

Would It Be Better If I Combined The Gross Receipts From All Of My Smashburger 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 Smashburger Restaurant Until Mid-Q2 2019?

If you opened your Smashburger 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 Smashburger opening in this year can be used as the basis for this calculation.

Conclusion and Summary for Franchise Owners of Smashburger Restaurants

The Employee Retention Credit is a great way for Smashburger 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 Smashburger restaurant owners receive a much-needed tax refund to keep their Smashburger franchise profitable.

Your Smashburger location probably qualifies for the ERC based on government orders limiting the indoor seating capacity or hours of operation for your Smashburger.

Smashburger 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 Smashburger Location

Disaster Loan Advisors can assist your Smashburger restaurant with the complex and confusing Employee Retention Credit (ERC) and Employee Retention Tax Credit (ERTC) program. 

Depending on eligibility, Smashburger 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 Smashburger franchise.

Schedule Your Free Employee Retention Credit Consultation to see what amount of employee retention tax credit your Smashburger location qualifies for.

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