Starbucks Licensed Store Employee Retention Credit

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Do you own or operate a Starbucks Licensed Store Coffee Shop?

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

As a Starbucks Partner, yes it does, and here is why.

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

Meaning, your Starbucks Coffee Shop 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 Starbucks indoor dining, and / or reduce your hours of operation at your Starbucks location

Under the IRS ERC rules and regulations, your Starbucks business qualifies because your operations were disrupted due to government intervention by forcing you to reduce your business capacity. This qualifies your Starbucks Licensed Store for the ERC Credit and tax refund from the start date of government restrictions, to the end date when all Coffee Shop capacity restrictions were lifted.

This is exciting news for all Starbucks Partners and owners to help offset and recoup costs from the negative impact of COVID on your Coffee Shop.

Many Financial and Accounting Professionals, CPAs, Financial Planners, Advisors, and Attorneys are unknowingly advising their Starbucks Coffee Shop clients wrong because they do not fully understand all the Employee Retention Credit tax guidelines as they relate to Coffee Shops and food service-type businesses.

Schedule Your Free Coffee Shop Employee Retention Credit Consultation to see if your Starbucks Licensed Store location qualifies for the ERC Refund.

Background on Starbucks Licensed Store Coffee Shop Owners and Partners

For Starbucks Partner owners, the average annual sales volume of a Starbucks Licensed Store Coffee Shop location in 2021 was $1,200,000.

Starbucks Coffee Shop Licensed Stores overall generated $24,300,000,000 in revenue from 6,497 locations.

This increased from the previous year by 113.

Overall, Starbucks corporate has a total of 8,953 company units added to the 6,497 Licensed Store units, for a combined total of 15,450 Coffee Shop location units company-wide. 
Visit the Starbucks company website at Starbucks.com.

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Starbucks Employee Retention Credit For Licensed Store Coffee Shops

Starbucks Partner owners are not alone. The restaurant industry continues to struggle with the economic impact of the COVID pandemic, high inflation, and a possible recession. Starbucks Coffee Shop owners are looking for ways to support their Starbucks employees and keep their businesses afloat, especially Starbucks Licensed Store Coffee Shop owners who have a healthy investment in Licensed Store fees and other expenses to recoup and earn a return from owning a Starbucks Coffee Shop.

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 Coffee Shop 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, Coffee Shop 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 Starbucks owners, having a thorough understanding of the ERC credit and how it applies to their Starbucks Coffee Shop Licensed Store, owners and principals can ensure they take full advantage of this tax credit to support their Starbucks employees and locations.

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

Employee Retention Tax Credit For Starbucks Coffee Shop Owners

The Employee Retention Credit for Starbucks Coffee Shops is a tax credit available to eligible Starbucks Coffee Shops and other food service businesses. It provides Coffee Shop 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 Starbucks 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 Starbucks Licensed Store 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 Starbucks Licensed Stores that were in existence prior to COVID. 

For Starbucks locations that opened after February 15, 2020, this Coffee Shop is considered a recovery start-up business, and may qualify through December 31, 2021 (12/31/21) of the 4th quarter.

Qualified Starbucks Coffee Shops in 2020 can claim up to $5,000 maximum per employee for all of 2020. This is based on up to 50% of a Starbucks employee’s qualified wages. Eligible Starbucks 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 Starbucks Coffee Shops to close their indoor dining, and / or limited their interior seating capacity. These periods of time occurred in which state, county, and city your Starbucks Coffee Shop is located, will qualify the quarters and periods of time the capacity restrictions were imposed on your Starbucks location.

For all of 2020, Starbucks 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 Starbucks Coffee Shops, What Are The Eligibility Requirements For The Employee Retention Credit?

To qualify for the ERC, Starbucks Coffee Shops 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 Starbucks Coffee Shop 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 Starbucks Licensed Store. 2020 vs. 2019 and 2021 vs. 2019, quarter by quarter. 

If you had less than 100 Starbucks 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 Starbucks Coffee Shop 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 Starbucks Licensed Store.

The Internal Revenue Service (IRS) provides the following specific Coffee Shop examples to explain “full or partial closure orders” during a calendar quarter:

  • Social Distancing Through Capacity Restrictions at Your Starbucks Location

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

  • Starbucks Dining Is Closed Indoors, But Open Outdoors or for Starbucks Delivery

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

  • Starbucks Coffee Shops All Interior Dining Rooms Are Closed

Due to a government order closing all Coffee Shops, bars, and similar food service establishments for sit-down service (indoor dining), a Starbucks Coffee Shop must close its on-site dining area.

Starbucks Coffee Shops 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 Starbucks Coffee Shops.

What If My Starbucks Coffee Shop Received a Paycheck Protection Program (PPP) Loan?

Good news Starbucks owners!

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

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

Besides Starbucks Licensed Stores, there are many more types of Coffee Shops that are eligible for the ERC credit. If your business serves any type of food similar to Starbucks, you are probably eligible.

How Starbucks Partners Can Claim The Employee Retention Tax Credit?

Once your Starbucks Licensed Store Coffee Shop 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 Starbucks Coffee Shop Qualifies For The ERC Credit. Schedule Your Free ERC Tax Refund Consultation For Expert Help In Claiming The ERTC Credit For Your Starbucks Licensed Store.

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 Starbucks records and supporting documents in case the IRS has any questions. As a Coffee Shop employer, understanding and meeting the expectations of the Employee Retention Credit For Licensed Store Coffee Shops is critical to taking advantage of the available tax credits.

Most importantly, Starbucks 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. Starbucks 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 Starbucks Coffee Shops?

No, the employee retention tax credit is not only for Starbucks Coffee Shops. 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 Starbucks Partners who have been affected by the Coronavirus pandemic.

This tax credit is available to all businesses regardless of size or industry, so Coffee Shop employees are not the only ones eligible for this benefit. 

To qualify for these tax benefits, Starbucks 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 Starbucks Licensed Stores, 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 Starbucks Coffee Shop Be Eligible For The ERC Credit And PPP Loan?

Yes! Even if your Starbucks Coffee Shop received an SBA Paycheck Protection Program (PPP) loan, an Economic Injury Disaster Loan (EIDL), or a Coffee Shop Revitalization Fund (RRF) grant, you are still eligible under current IRS rules and regulations, provided certain requirements are met.

The Starbucks 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 Starbucks employees.

Is The ERTC Available To Starbucks Locations That Received Coffee Shop Revitalization Fund (RRF) Grants?

Yes! The “Coffee Shop Revitalization Fund” was recently established as part of the American Rescue Plan Act of 2021, providing Coffee Shops with additional assistance.

A clarification was issued by the IRS on August 20, 2021, stating that Paycheck Protection Program (PPP) loans nor Coffee Shop Revitalization Funds (“RRF”) should be considered gross receipts for the purposes of determining eligibility.

Are Tipped Wages at Starbucks 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 Starbucks 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 Starbucks 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 Starbucks Coffee Shop 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 Starbucks Licensed Store.

Would It Be Better If I Combined The Gross Receipts From All Of My Starbucks Licensed Store Coffee Shops?

Coffee Shops 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 Coffee Shops 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 Starbucks Coffee Shop Until Mid-Q2 2019?

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

Conclusion and Summary for Licensed Store Owners of Starbucks Coffee Shops

The Employee Retention Credit is a great way for Starbucks Coffee Shops 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 Starbucks Coffee Shop owners receive a much-needed tax refund to keep their Starbucks Licensed Store profitable.

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

Starbucks Licensed Store 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 Starbucks Location

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

Depending on eligibility, Starbucks 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 Starbucks Licensed Store.

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

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