restaurant - Linkenheimer LLP CPAs & Advisors

Does Your Business Have Employees Who Get Tips? You May Qualify for a Tax Credit

If you’re an employer with a business where tipping is routine when providing food and beverages, you may qualify for a federal tax credit involving the Social Security and Medicare (FICA) taxes that you pay on your employees’ tip income.

Credit fundamentals

The FICA credit applies to tips that your staff members receive from customers when they buy food and beverages. It doesn’t matter if the food and beverages are consumed on or off the premises. Although tips are paid by customers, for FICA purposes, they’re treated as if you paid them to your employees.

As you know, your employees are required to report their tips to you. You must:

Withhold and remit the employee’s share of FICA taxes, and
Pay the employer’s share of those taxes.

How the credit is claimed

You claim the credit as part of the general business credit. It’s equal to the employer’s share of FICA taxes paid on tip income in excess of what’s needed to bring your employee’s wages up to $5.15 per hour. In other words, no credit is available to the extent the tip income just brings the employee up to the $5.15-per-hour level, calculated monthly. If you […]

By Linkenheimer LLP|2024-01-12T17:05:38+00:00January 12th, 2024|tax credit|0 Comments

Optimizing Depreciation in the Restaurant Industry Through Cost Segregation

Understanding the intricate dynamics of the tax code is crucial to optimizing profitability in any business, and the restaurant industry is no exception. One area of tax strategy that often offers substantial benefits is depreciation, particularly when coupled with a well-planned cost segregation study. As a part of our commitment to providing the most value to our restaurant clients, we delve into these topics, highlighting how they can significantly impact your bottom line.

Specialized Shorter Lives for Machinery, Equipment, and Furniture

In the restaurant and retail sectors, certain assets such as machinery, equipment, and furniture and fixtures are characterized by their shorter lifespans. The Internal Revenue Service (IRS) allows these assets to be depreciated over five years instead of the standard seven-year period applicable to many other industries. This accelerated depreciation schedule means restaurant owners can recover their investment costs more rapidly, thereby reducing their taxable income and optimizing cash flow in the earlier years of an asset’s life.

Bonus Depreciation

Bonus depreciation is a tax incentive designed to encourage businesses to invest in certain assets. It allows eligible businesses to deduct a substantial portion of the cost of qualifying assets in the year they are […]

By Linkenheimer LLP|2023-08-02T20:52:22+00:00August 2nd, 2023|cost segregation, restaurant|0 Comments

Featured Client: Pizza Leah- Leah Scurto

Featured Client

Pizza Leah- Leah Scurto

1. Can you share what motivated you to follow your current career path, and how you began your journey in this industry?

My family has always been deeply rooted in the restaurant business, from family-owned eateries to my grandparents’ careers as bartenders. Despite my father advising me not to go into the restaurant world, the allure was too strong. I got my start in the industry while in high school. In college, at UC Santa Cruz, I discovered a particular affinity for pizza, landing a job at a pizzeria. I’ve been crafting pizzas ever since. My passion has led me on numerous travels, including trips around Italy, and even Naples most recently. As a member of the USA pizza team, I’ve competed in the World Pizza Championship in Parma, Italy, achieving an impressive 7th place in the last competition. My favorite style of pizza to make and eat is Artisanal New York. I also love making dough utilizing the amazing local flour and produce we have available. When in Italy though, my favorite is the Roman style pizza.

2. How has your personal background and experiences influenced your […]

By Linkenheimer LLP|2023-08-03T18:20:03+00:00August 2nd, 2023|featured client, restaurant|0 Comments

The Restaurant Revitalization Fund is Now Live

The COVID-19 pandemic has affected various industries in very different ways. Widespread lockdowns and discouraged movement have led to increased profitability for some manufacturers and many big-box retailers. The restaurant industry, however, has had a much harder go of it — especially smaller, privately owned businesses in economically challenged areas.

In response, the Small Business Administration (SBA) has launched the Restaurant Revitalization Fund (RRF). It was established under the American Rescue Plan Act (ARPA) signed into law in March. The RRF went live for applications on May 3, and the SBA is strongly urging interested, eligible businesses to apply as soon as possible.

Who’s eligible?

Funds are available for restaurants, of course, but also many other similar types of businesses. Food stands, trucks and carts can apply, as well as bars, saloons, lounges and taverns. Catering companies may also file an RRF application.

In addition, the program is available to snack and nonalcoholic beverage bars, as well as “licensed facilities or premises of a beverage alcohol producer where the public may taste, sample, or purchase products,” according to the SBA.

For some restaurant-like businesses, on-site sales to the public must comprise at least 33% of gross receipts. […]

By Linkenheimer LLP|2021-05-05T15:31:54+00:00May 5th, 2021|restaurant, sba|0 Comments

Apply for Restaurant Grants Starting Monday, May 3

The SBA will allow potential applicants to register and open up accounts to apply for revitalization grants starting April 30, 2021, at 9:00 a.m. EDT. Actual applications may be submitted starting Monday May 3, 2021, at noon EDT. The online application will remain open to any eligible establishment until all of the $25 billion of available funds is exhausted.

For the first 21 days that the program is open, the SBA will prioritize funding applications from businesses owned and controlled by women, veterans, and socially and economically disadvantaged individuals. However, all eligible applicants should submit applications as soon as the online application portal opens. Following the 21 days, all eligible applications will be funded on a first-come, first-served basis.

In preparation, the SBA recommends qualifying applicants familiarize themselves with the application process in advance to ensure a smooth and efficient application experience, specifically by:

Registering for an account in advance at restaurants.sba.gov starting Friday, April 30, 2021, at 9 a.m. EDT.
Reviewing the official guidance, including program guide, frequently asked questions, and application sample.
Preparing the required documentation.
Working with a point-of-sale vendor or visiting restaurants.sba.gov to submit an application when the application portal opens. [Note: […]

By Linkenheimer LLP|2021-04-29T15:25:29+00:00April 28th, 2021|business, restaurant, sba|0 Comments