Government Stimulus: Is your family business missing out?

By Chris Luckhaupt, CPA, Advisory Manager, Cassady Schiller CPAs & Advisors

The past year has seen every level of government – federal, state, county, and local – pump trillions of dollars in stimulus cash into the hands of many business owners looking to stay afloat during government-imposed operational restrictions and shutdowns. While certain programs have made the headlines for their bold and favorable terms, subsequent federal legislation has provided small and family-owned businesses the opportunity to claim benefits from not just one, but multiple programs.

While many family-owned small businesses took advantage of the Paycheck Protection Program (PPP) early within the pandemic, the Employee Retention Credit (ERC) did not receive as much consideration at the time, and rightfully so.  Originally, PPP-borrowers were unable to claim both forgiveness on their PPP loan as well as the ERC. However, in December 2020, provisions within the Consolidated Appropriations Act of 2021 removed that prohibition and permitted businesses to glean the benefits of both programs. 

Currently, many small businesses are working through the process of understanding their eligibility for the 2020 calendar year, as well as looking forward into 2021. 

For 2020, if a business experienced a decrease in revenue by at least 50% in a 2020 calendar quarter, compared to the same quarter in 2019, the business could be eligible for a 50% tax credit on up to $10,000 of wages paid to each employee (i.e. $5,000 credit per employee). Even if a business may not have experienced such a significant revenue decline, any government-imposed shutdown and/or restriction to that business’ operations may provide an avenue for eligibility.

For 2021, the program becomes “sweeter” with a lower revenue decline threshold. If the business experienced a decrease in revenue by at least 20% in a 2021 calendar quarter, compared to the same quarter in 2019, the business could be eligible for a 70% tax credit on up to $10,000 of wages paid to each employee within that specific calendar quarter (i.e. $7,000 credit per employee per calendar quarter). Even though many of the imposed restrictions are beginning to be lifted, any remaining restrictions to operations imposed by a federal, state, county, or local government could also provide an opportunity for eligibility.

Generated out of the American Rescue Plan of 2021, the Restaurant Revitalization Fund (RRF) aims to assist businesses within the food service industry pay their bills beyond just payroll and rent. Businesses obtaining this grant may utilize the funding to buy food, beverages, supplies, pay operational expenses, pay construction costs for outdoor seating, and/or many of the allowable PPP expenses. Eligible businesses range from those running hotdog and food stands, to caterers, to breweries and sit-down restaurants.

The Shuttered Venue Operators Grant (SVOG), born out of the Consolidation Appropriations Act, targets businesses operating live performances or artistic displays. Funding from this program can be used to pay off scheduled debt, insurance expenses, advertising, independent contractors, and more. However, eligible businesses include only those operating theatrical or live performances, museums, motion picture theaters, and the like. Talent representatives may also be considered an eligible business.

As a general rule, expenses incurred and/or paid by the business can only be used by one program. Therefore, it behooves business leaders to appropriately schedule out their expenses amongst these programs to glean the biggest bang for their buck. As government leaders continually express that the shutdowns to these targeted businesses were of no fault to either the owners or employees, we recommend claiming these benefits while you still can.

Chris Luckhaupt is an Advisory Manager at Cassady Schiller CPAs & Advisors, a Goering Center member organization. For more information about Cassady Schiller CPAs & Advisors’ process improvement services, please reach Chris at cluckhaupt@cassadyschiller.com or 513-827-3923.

Cassady Schiller CPAs & Advisors is a Goering Center sponsor, and the Goering Center is sharing this content as part of its monthly newsletter, which features member and sponsor articles.