In March the US government passed The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). Included in the CARES Act was a highly successful loan program for small business owners, the Paycheck Protection Program (the “PPP”). PPP loans were 100% forgivable—if you closely followed the rules laid out in the bill.

On December 27, a second COVID-related stimulus bill was passed (the Consolidated Appropriations Act, 2021) with another $284 billion made available for PPP funding. “PPP2,” as some are calling it, contains many similarities to the first round of PPP, but also has several important differences. During the first round of PPP, Rewards Network (“we”) received many questions around what restaurant owners needed to do in order to receive 100% forgiveness on their PPP loan. Our restaurant experts studiously combed through the CARES Act, updates from the Treasury Department, and the Paycheck Protection Program Flexibility Act of 2020, to provide you our best take on how to receive full forgiveness of your PPP loan.

We have taken the same steps on changes for PPP2, which you will find below. As the Small Business Administration (“SBA”) and the Treasury Department work towards providing further guidelines, keep in mind that this information is subject to change. This is a rapidly developing subject matter, we will continue providing updates as more information is released in the next several days. As always, you should not make business decisions based solely on this blog, but rather, you should use this to help inform your discussions with your business advisors, accountants, and attorneys.

PPP2 total funding available

$284 billion has been set aside for PPP2 loans, with $35 billion set aside for those small businesses that did not receive PPP funding. An additional $40 billion is set aside for small businesses that either have less than 10 employees or that are in a low-income area and where the employer is seeking less than $250,000.

Who is eligible to apply?

To be eligible for a PPP2 loan, a restaurant must have been in operation by February 15, 2020. If your restaurant did not receive a PPP loan, then the eligibility criteria in the CARES Act apply to your application for a PPP2 loan, with minor changes. If your restaurant received a PPP loan, the following additional eligibility criteria apply to a PPP2 loan:

Second-time qualified borrowers (businesses that received a PPP loan, but need additional funding):

1. Have 300 or fewer employees per location (note: this figure is used as most of our readers are restaurants with a NAICS Code of 72).
2. Have used or will use the full amount of your first PPP loan.
3. Demonstrate a 25% gross revenue decline in accordance with any of the following:
   • If you opened in the third quarter of 2019, then compare your gross receipts from any quarter in 2020 with either your Q3 2019 or Q4 2019 gross receipts.
   • If you opened in Q4 2019, then you may compare your gross receipts from any quarter in 2020 with your gross receipts from Q4 of 2019.
   • If you were not in business in 2019, but you were in business between January 1, 2020 and February 15, 2020, special rules apply to the calculation of your gross receipts for purposes of qualifying for a PPP2 loan.
4. For borrowers that returned all or part of a PPP loan, PPP2 allows for a second loan, but contains special provisions relating to these borrowers.

New allowable uses

As with the PPP, the “allowable expenses” eligible for loan forgiveness in PPP2 include payroll, rent, covered mortgage interest, and utilities. Expanding on the PPP, PPP2 makes the following expenses potentially forgivable, and allows the borrower to choose a “Covered Period” (the amount of time the borrower has to spend their PPP2 loan) between 8 and 24 weeks:

1. Worker protection and facility modification expenditures, including personal protective equipment, made to comply with COVID-19 federal health and safety guidelines.
   1. What does this mean? “Worker protection expenditure” is defined as “an operating or a capital expenditure to facilitate the adaption of the business activities of an entity to comply with requirements established or guidance issued by the Department of Health and Human Services, the Centers for Disease Control, or the Occupational Safety and Health Administration, or any equivalent requirements established, or guidance issued by a state or local government during the period beginning on March 1, 2020.” This category includes costs incurred buying staff PPE, building new outside or drive-up dining capabilities, or adding protective measures such as better ventilation or acrylic between tables.
2. Expenditures to suppliers that are essential at the time of purchase to the borrower’s current operations.
   1. What does this mean? This is defined as “an expenditure made by an entity to a supplier of goods for the supply of goods that are essential to the business operation or that is made pursuant to a contract, order, or purchase order.” Of interest to many restaurant owners, this specifically applies to perishable goods.
3. Covered operating costs, such as software and cloud computing services.
   1. What does this mean? Covered operating costs is defined as “a payment for any business software or cloud computing service that facilitates business operations, product or service delivery, the processing, payment, or tracking of payroll expenses, human resources, sales and billing functions, or accounting or tracking of supplies, inventory, records, and expenses.” For restaurants, “product or service delivery” jumps right off the pages of PPP2, and we will be paying attention to this as guidance is issued by the SBA and the Treasury Department.
4. Covered property damage costs.
   1. What does this mean? A covered property damage cost is defined as “a cost related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that was not covered by insurance or other compensation.”

What you need to provide (specific requirements and acceptable documents may vary depending on the lender)

1. Complete PPP application form.
2. Average monthly payroll cost
   • For Businesses operating for more than one-year, either:
     • your average monthly payroll costs (see below) for the one-year period immediately preceding the loan application date; or
     • your 2019 average monthly payroll costs.
   • For Seasonal business: use any 12-week period between February 15, 2019 – February 15, 2020 to compute your monthly payroll.
3. A good faith certification (a promise) that states:
   • The uncertainty of current economic conditions makes the loan request necessary to support ongoing operations.
   • The borrower will use the loan proceeds only to retain workers and for other allowable uses.
4. Some documents that may be required:
   • 2019 proof of payroll costs;
   • Business information (TIN, EIN, SSN);
   • Owner Information (all owners, title, %, address, TIN (EIN, SSN)).

How much can I apply for?

Most PPP2 borrowers can receive a loan amount of up to 2.5 times their average monthly payroll costs, the same as with the original. Unlike the first PPP, however, the maximum loan amount under PPP2 has been cut from $10 million to $2 million.

PPP borrowers with NAICS codes starting with 72, which includes the vast majority of all restaurants and hotels, can receive up to 3.5 times their average monthly payroll costs, again subject to a $2 million maximum.

What is included in my payroll costs?

Payroll costs DO consist of the following:

• Salary, wage, commission, or similar compensation (for individual employees making up to $100,000 annually);
• Payment of cash tip or an equivalent;
• Payment for vacation, parental, family, medical, or sick leave;
• Payment required for group health benefits, including insurance premiums (employer cost);
• Payment of retirement benefits (employer cost);
• Payment of State or local taxes assessed on the compensation of employees; or
• Paid administrative leave
• Group benefits are defined to include group life, disability, vision, and dental insurance

Payroll costs DO NOT consist of the following:

• Employee compensation for individual employees that exceeds a total of $100,000 in annual compensation (prorated for the Covered Period)
• Payroll taxes and income taxes
• Compensation of employees who reside outside of the United States
• Qualified sick leave wages for which a credit is allowed under section 7001 of the Families First Coronavirus Response Act (Public Law 116– 5 127) and qualified family leave wages for which a credit is allowed under section 7003 of the Families First Coronavirus Response Act

How do I calculate my borrowing amount now that I know my payroll costs?

• The loan amount is calculated at 3.5x your monthly average total payroll costs (not to exceed $2 million)
  • Multiply average monthly payroll costs for the one-year period before the loan is made by 3.5.
  • Multiply average monthly payroll cost for 2019 by 3.5.
  • Compare the two products above and select the payroll costs calculation that is right for you.
  • Example: What is the maximum PPP loan that I can receive?
  • Assumptions:
    • 20.33 FTE employee count (more on that below)
    • ~100K monthly sales
    • 16% tip average, and
    • 30% labor cost (no additional costs were considered here)

Setting yourself up for full PPP2 forgiveness

Many of you are likely thinking just because I can qualify for a loan of 3.5 times my average monthly payroll costs, that doesn’t necessarily mean that I should take the full amount. While more guidance is expected from the SBA and the Treasury Department on topics that influence loan forgiveness, our recommendation for local restaurants is to take the full amount you qualify for, and then maximize every penny you spend with an eye towards full loan forgiveness. The following is designed to help you get there.

The goal of PPP2 has not changed from the original PPP: it is designed to get employees back to work (and keep them employed) and to help you pay other allowed expenses during this time of national crisis. Like before, if you create and follow a strategy based on accomplishing these goals, you will be giving yourself the best shot possible of exiting this crisis with an engaged staff and a strong business footing you can build on.

Streamlined forgiveness on loans under $150,000

PPP2 has simplified the forgiveness process for loans of $150,000 or less. As the average loan during the original PPP rounds was $100,000, and the vast majority of borrowers borrowed less than $150,000, this is likely to be the way most restaurants apply for PPP2 forgiveness.

What borrowers will need to do:

1. Sign and submit a one-page certification to their lender stating:
   1. how many employees the loan helped the borrower keep on staff;
   2. the estimated amount of loan that was spent on payroll costs; and
   3. the total loan amount received.
2. Complete an application provided by the SBA.
3. Attest that the borrower gave a truthful Borrower Certification and otherwise has complied with all other PPP2 requirements.
4. Promise to retain relevant records related to employment for four years, and spending records relating to Allowable Expenses for three years, for SBA audit purposes.

Forgiveness process for loans above $150,000

The Senate Committee on Small Business and Entrepreneurship has been given until February 10, 2021, to create the forgiveness process for PPP2 loans in excess of $150,000. We will update this blog as changes are made but to keep yourself safe in the meantime, please see below for more on keeping track of your PPP funds to achieve full forgiveness.

Button up the books

Irrespective of your loan amount, your first step should be keeping a close eye on how you are spending PPP2 loan proceeds. Many lenders in the first round of PPP loans required the establishment of a dedicated account for PPP loan proceeds this allowed many borrowers to keep a close watch on their PPP funds, and to keep their eye on full forgiveness. Different lenders have different rules, however, and practically speaking, for 99% of restaurants, here is what you can do:

• Keep your PPP loan funds separate from any other working capital;
• Make sure that your spending ratio for money received from the PPP loan is always within the 60% / 40% ratio, meaning you are spending 60% of the loan proceeds on payroll expenses, and the other 40% on allowable expenses eligible for forgiveness;
• Keep records of everything you use the loan funds for;
• Spend your PPP2 funds within the Covered Period you elect (between 8 and 24 weeks).

By following these steps, you will have done everything you can to maximize your potential loan forgiveness.

What happens if I must staff less than the FTE level I used to calculate my loan amount?

Many restaurant owners have told us that one of their biggest concerns is: what happens if I have to staff fewer FTE’s during the Covered Period than I used to calculate my average monthly payroll costs? This was a major topic and concern during the first round of PPP funding, made more pressing by government shutdown orders and capacity limitations, and it led to several SBA rules and regulations, Treasury Department guidelines, and the passage of the Paycheck Protection Program Flexibility Act of 2020. With another round of government ordered closings currently impacting markets across the country, you are wise to have this concern at the forefront of your mind while considering what level of funding to request.

In the first round of PPP funding, a reduction in force or a reduction in employee wages of more than 25% when compared to pre-COVID levels created a “forgiveness penalty”: the more you reduced your staffing levels or staff pay, the more you were penalized. Because of the dramatic impact of public health related closings and capacity limits, the SBA, Treasury Department, and even Congress passed clarifying rules, regulations, and clarifications on this topic. The Paycheck Protection Program Flexibility Act of 2020 went as far as to create a Safe Harbor, and an exception to the forgiveness penalty for businesses severely impacted by closings and capacity limits.

Unfortunately, we cannot state unequivocally that the Safe Harbor and exceptions will apply to PPP2 loans: both are tied to dates that will expire prior to the publication of this blog. Without clear specifications that state what to do if employee reductions occur, and how reinstatement will impact the forgiveness calculation, PPP2 borrowers are without clear guidance on this important topic.

Importantly, the SBA is required by the legislation creating PPP2 to issue guidance on this and other topics by January 6, 2021. Further, the PPP2 legislation empowers the Secretary of the Treasury and the SBA to jointly change dates in the CARES Act to effectuate the intent of PPP2. Rewards Network is calling on the Treasury Secretary and the SBA to extend the Safe Harbor and other exception deadlines through June 2021 so as not to unduly burden restaurant owners and other borrowers, and we will update the blog when more information is released.

Tax implications

While we are normally encouraged to stay away from anything relating to tax information, some things have changed since the initial CARES Act that you should speak with your accountant about. During your 2020 tax preparation conversations, be sure to ask about: not including PPP or PPP2 funds in calculations of your table income and the deductibility of expenses paid with the proceeds of a PPP loan.

Unsure where to apply?

There were many lessons learned during the first round of PPP funding, including where and how to apply. Many restaurants reported to us that they had the most success going directly to their day-to-day local bank or credit union for funding, as opposed to a large national bank. Some restaurants had a tough time securing funding with large financial institutions, even if that’s who they typically bank with. If you are having a hard time securing a loan with your bank you can apply through any existing SBA 7(a) lender or through any participating federally insured depository institution, federally insured credit union, or Farm Credit System institution.

Rewards Network has recently partnered with Womply, a local commerce platform who last year helped over 50,000 small businesses apply for and get approved for a PPP loan. If you would like to apply for a PPP loan with Womply, simply click here to start the process.

This best effort analysis is based upon the reading of the Consolidated Appropriations Act, 2021 and known Treasury and Small Business Administration regulations as of December 30, 2020. This is a rapidly developing subject matter, and your personal accountant, banker, and attorney will be best suited to help you determine how this blog applies to your specific business needs. Provided for information purposes only and subject to revision.

Need more information about coping with COVID-19? Check out our free resource section dedicated to advising restaurateurs on how to navigate the changing rules and regulations during the COVID-19 crisis.

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We recently spoke with a few of our Black customers (who own wonderful restaurants) about their candid thoughts on the industry, and the ups and downs of operating a restaurant. We’re confident that everyone can glean some inspiration from these entrepreneurs and help make a difference by supporting Black-owned restaurants.

Blake Cressey

Owner and Chef of Tasty Treat

What inspired you to get into the restaurant industry?
Being an entrepreneur at heart exploring different businesses is what inspired me to go into the restaurant industry. Also, the ability to provide happiness to people. I love seeing the reaction to people enjoying a Tasty Treat meal it’s priceless — this melts my heart.

What has been your favorite part about owning a restaurant?
My favorite part of owning a restaurant is the ability to advance and have many options to expand. I’m also able to create dishes, uniforms, events, and a whole bunch more but most importantly my schedule is my favorite part about owning a restaurant.

What has been the most difficult part about owning a restaurant?
The most difficult part about owning a restaurant is stress and bills, sometimes the stress from the customers and sometime stress from staff. Last but not least the high turnaround. Sometimes it is not anything that you may be doing wrong as a business owner but it’s a part of the industry.

Can you describe any challenges you have faced specifically as a Black restaurant owner?
Restaurants are a tough business, especially in February when capricious weather can damage facilities and slow the flow of diners. Mentorship, access to capital and community wealth are all crucial to a restaurant’s prosperity, but are not equipollent distributed or available to chefs of different races. Though we might cerebrate of institutional racism primarily in terms of access to inculcation or housing, its influence physically contacts all components of our society, including restaurants. Diners can make an incremental but authentic difference by culling ebony-owned restaurants. In Boston, with our high racial segregation in neighborhoods and schools, and our reputation as a racist city with an unsightly history, making this kind of change should be a priority. Ebony-owned businesses are more liable to hire ebony employees than white-owned businesses. Seeking out and fortifying those businesses in particular is a viable path to lowering the disproportionately high ebony unemployment rate. Higher employment, in turn, leads to more and better opportunities for asset and wealth-building for both business owners and their employees, and comes with a host of other community benefits.

Who has been your inspiration for success in your career and why?
My inspiration in life are my kids, Paris and Corey. Having my kids while being young I knew it was something I had to do for them. I had to own a business, I don’t want to miss any moments with my kids, I needed freedom, and not a 40+ hour a week obligation.

What advice would you give to aspiring Black entrepreneurs?
The advice that I will give to aspiring Black entrepreneurs is to continue to stay focused and keep God first. Don’t stop get it get.

Michael LeBlanc

Owner of PLāYT

What inspired you to get into the restaurant industry?
I was/am determined to change the paradigm of what a Black-owned restaurant could look like.

As a Senior Executive for a Fortune 500 company I traveled around the world for years. I dined at some of the best dining establishments in the world…New York, Paris, London, Hong Kong, Sydney, Melbourne, Singapore, Beijing, Tokyo, Seoul, Dublin, Glasgow, Nice, Frankfurt, Amsterdam, Kuala Lumpur, Jakarta, San Francisco, New Orleans; just to name a few.

Some of the dishes that I had were to die for, the settings, the views, the service; jaw dropping; the wine selection would make you go broke.

But, not one had the combination of my favorite food, a nice setting, with the music that I like. I prefer Southern food. I like an upscale elegant environment. But it has to be hip. Beethoven is great but give me Motown and Miles.

I wanted to lick my fingers, have a $120 bottle of wine or a Hurricane, dress stylish, and bob my head to Marvin…in a really nice looking and appointed place with excellent service — one that celebrates Black culture in a refined way.

If there is any part of this that you miss, then you know why I got into the industry. I needed to create a place that I wanted to take my wife to on a Saturday night and bring friends to when they came to town. I’ve eaten around the world and all of these places were celebrated for their cultural food, their fusion, their authenticity.

I was puzzled and had a question, “Why wasn’t Southern food recognized and elevated to ‘cuisine’ or fine dining?”

The answer was the setting, the service, the ambiance, and the flair. Rarely were these attributes combined in the appropriate balance. That became my mission and journey. You have to take a peek at my life…a bit of a journey that eventually comes together to me opening a restaurant.

I was born and raised in New Orleans. I loved being raised there…a City that celebrates partying, drinking, and food. That’s the real Holy Trinity! When I went away to go to college I enjoyed the food in North Carolina, but it was different. When I went to Pittsburgh for graduate school, that food was different, but not as enjoyable as North Carolina and NOLA. Then, I moved to Boston for 20-plus years.

Lobster was good but it wasn’t crawfish. Scrod, whatever that was, wasn’t even close to catfish. And on top of that, I couldn’t find catfish. Now the steak and onion sandwiches, (subs, grinders, hoagies) they were amazing and gave hot sausage sandwiches a run for the money. Boston had Prince Spaghetti Day. Cool, but NOLA had red beans and rice on Mondays. “Lobstah bisque” and “clam chowdah” made me a fan. Yet gumbo is at the TOP of the food chain!

As I mentioned earlier, in my corporate capacity I had functional responsibilities that spanned the entire US. I had numerous European assignments and extended stays in Ireland and Scotland. I lived four years in Hong Kong before returning to the US. Upon repatriating, I decided to live where I wanted to and become an entrepreneur. Those travels made me realize that I was a true Son of the South. Nothing beats Southern Cooking.

I am a business person at heart. I never really thought about owning a restaurant. However, I did work in one of North Carolina’s most expensive restaurants as a waiter in college. My roommates and I were the first Black waiters.

In summary, to have guests live just a little bit of the joyful experiences I had in my life’s journey — a special ambiance with Southern food, soulful music, and a nuanced type of partying — bringing all of the different geographies, cultures, and socio-economic groups together in a gumbo of epicurean offerings, while at the same time bringing diverse clientele together, all interconnected through a Black welcoming cultural experience was my inspiration and is my mission.
Everyone had to get…a taste of the South!!!

What has been your favorite part about owning a restaurant?
Looking out and seeing a clientele that is diverse and valuing those differences as opposed to seeking homogenization. I like seeing the pride that Black folks have because of the ambiance of elegance and charm at my establishment. I love hearing the City officials and neighborhoods claiming the restaurant as theirs, no matter what ethnicity. I love the “family” that’s been created with the staff. I love observing guests and seeing that split second of “awe.”

What has been the most difficult part about owning a restaurant?
That’s easy…not making money, putting in long hours, being away from my wife and family, babysitting the staff, fighting frivolous nuisance suits, constant emergencies, equipment breaking down…did I say that I loved this?

Can you describe any challenges you have faced specifically as a Black restaurant owner?
Access to capital (institutional, equity, or angel). Stereotyping across the board.

Who has been your inspiration for success in your career and why?
Jackie Robinson…to do what he did, when he did it, how he carried himself when baseball was at its pinnacle in the American lexicon was nothing short of amazing…strength of character, integrity, courage, persistence, and talent.

Muhammad Ali…talented, brash, not humble, showmanship, principled, committed.
Reginald Lewis…a real deal maker, confident, classy, overachiever, circumstances didn’t matter. He created a path.

Black mothers…no stronger people on Earth…constantly have faced and overcome insurmountable odds; our glue, nurturers, providers, protectors, beautiful, disenfranchised, disrespected, raped…and still they rise!

What advice would you give to aspiring Black entrepreneurs?
Become You, Inc.

Create a vision. Establish milestones. Understand finances and cash flow. Watch the money daily. Learn the details. Be decisive and don’t look back. Network within the Black community. Network cross-culturally. Develop an Advisory Board. Join organizations. Form a relationship with both financially successful people and those that tried but gave up their dream. Be persistent. Read within your industry. Meet people in your space. Have fun. Take time off. Include your significant other.

Omar Mitchell

Owner and Chef of Table No. 2

What inspired you to get into the restaurant industry?
This is exactly what I went to school for at Johnson & Wales University Culinary Arts in Providence, Rhode Island.

What has been your favorite part about owning a restaurant?
My favorite part of owning my restaurant is the wide range of creativity without being handcuffed to someone else’s goals or restrictions, complete freedom to your vision.

What has been the most difficult part about owning a restaurant?
Being able to survive eight months of road construction in front of the building and Covid-19 breakout were my most difficult challenges.

Can you describe any challenges you have faced specifically as a Black restaurant owner?
Not being considered to be a solid candidate without being judged or profiled. Also, not being invited to participate in bids or future jobs with the big boys, even if you have more experience than them.

Who has been your inspiration for success in your career and why?
My inspiration would be my family and the Black and Brown community by hopefully being a role model and great example on how to demonstrate what to do and what not to do for success in America.

What advice would you give to aspiring Black entrepreneurs?
Don’t quit your job until you’re financially stable. Keep pushing you’re going to get more “no” answers than “yes” answers. Dream big but be realistic — grow with your sales. Never show what your thoughts are until it’s completely ready for sale. Finally, don’t put the cart before the horse (meaning don’t buy the luxury things until you’re financially ready — you never want to compete with the Joneses).

The restaurant industry is an unpredictable scene even on a good day, but now much more so, due to the coronavirus pandemic. COVID-19 continues to disproportionately affect Black Americans and Black-owned businesses. It’s vital to show your support for the Black community by consistently putting your money behind your favorite local Black-owned restaurants and businesses. We thank Omar Mitchell, Michael LeBlanc, and Blake Cressey for their time and insight into the challenges and nuances of being a Black restaurant owner.

Be sure to regularly visit our free resources section dedicated to advising restaurants on how to navigate the changing rules and regulations during the COVID-19 pandemic.

The post Inspiration and advice from Black restaurant owners appeared first on Rewards Network.

If a restaurant with thin margins needs to charge extra to cover their costs, they can reference the below to learn the best practices for doing so.

Avoid phantom charges

As with any business, it’s important for restaurants to be transparent and honest when it comes to all facets of their operation including food preparation, prices, ingredient sourcing, etc. Placing an additional charge on a customer’s check and simply labeling it “COVID-19 surcharge” without any upfront warning or explanation is a recipe for conflict and confusion. Rather than trying to covertly recapture dollars by putting your brand at risk, it’s a better idea to be upfront and honest with patrons from the moment they sit down.

For example, you can have your server explain to each table upon greeting them that due to the increased safety and sanitation measures your establishment has been taking during coronavirus, that there will be an extra charge added to each bill. Have your staff stress the fact that this additional percentage of revenue is going directly towards PPE, employee testing, and increased sanitation measures to ensure that the restaurant can continue to safely and successfully serve guests during the pandemic.

Increase prices across the board

If you don’t like the idea of adding a specific surcharge line item, you can opt to increase all menu item prices by a certain percentage across the board. This is a viable solution that your staff can also explain to your guests upon greeting their table. Similar to the above option, servers can let customers know that menu item prices have been slightly increased to offset the extra expense of PPE, employee testing, sanitation measures, etc. It will be especially important to inform your loyal customers due to their greater familiarity with your menu prices.

Updating your website’s menu, posting about these changes on your social channels, and sending a mass email blast to your database are all savvy methods for protecting your brand’s values of honesty and transparency.

Encourage guests to support safety efforts

Many times, customers are not privy to the exorbitant amount of work, resources, and money that goes into a restaurant’s ability to meet the ever-increasing safety and health guidelines prompted by COVID-19. You can communicate your efforts with bullet points or easy-to-understand infographics that can be displayed on your website, social pages, emails, and tables (in the form of a table tent), to illustrate exactly where the additional dollars you’re requesting from customers go. After this information is relayed, restaurant owners can include a “health and safety” tip area on each dine-in check. True to the old saying, “If you don’t ask, you don’t get,” this initiative has the ability to spur additional monetary help from patrons that are eager to support their favorite local spot. Again, it’s crucial that your staff also reinforces this new practice early on for dine-in customers so that they are not taken off guard.

We’re all in this together

Take time to remember that all people — restaurant owners, staff, vendors, partners, and guests alike — are in this together. Take stock of your new operating costs and margins and then decide on a fair price increase that satisfies the business’ new bottom line as well as your customers’ pockets. With people as a whole being more frugal during these unpredictable times, it’s vital to not implement a price increase that will deter diners from supporting your establishment altogether. In the end, regardless of which option you choose, effective, clear, and transparent communication is the key. If guests understand that this small percentage increase in price is going directly to their safety and the safety of the restaurant’s staff to ensure a healthful experience for all, they can be more understanding and willing to pay a little bit more.

To discover more restaurant marketing strategies and tactics that can help your business during COVID-19, take a look at our free e-tool, “Coronavirus Era: 13 Restaurant Marketing Tips.”

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See below for the latest updates and enhancements documented under the new PPP Flexibility Act that restaurant owners need to know about:

1. You have more time to use loan proceeds, and the ratios have changed:

2. For anyone struggling to rehire workers, you can worry less about the impact on loan forgiveness, but you will need to step up your documentation game:

3. If you haven’t been able to rehire workers, and you can document that your business has been forced to operate at a reduced capacity due to health and safety restrictions, your loan forgiveness eligibility will no longer be impacted:

4. Your repayment deferral period has likely just extended:

Overall, the goal of PPPFA is to lighten the financial burden placed upon many small businesses during coronavirus. In a display of bipartisanship, politicians on both sides of the aisle aimed to listen and address the many concerns expressed by the small business community in relation to the original PPP. Under the updated program, restaurant owners will now have increased time and flexibility when it comes to how they would like to spend their PPP loan proceeds — allowing you to make the best financial decisions for your specific business.

Be sure to regularly visit our free resource section dedicated to advising restaurants on how to navigate the changing rules and regulations during the COVID-19 pandemic.

The post Enhancements to PPP loans restaurants need to know appeared first on Rewards Network.

There have been many questions and quite a bit of confusion around what small business owners need to do if they are to receive 100% forgiveness on the PPP loan. Our restaurant experts have studiously combed through both the CARES Act and the updates from the Treasury Department, and relentlessly bothered our accounting and legal departments, to provide you our best take on how to receive full forgiveness of your PPP loan.

How much should I apply for?

Before you begin, please read our Restaurants’ COVID-10 Emergency Loan Guide to understand how to calculate your loan amount. A lot of businesses are struggling to decide how much to apply for, and it’s arguably even more difficult for restaurateurs to plan. With variables like short spending windows, employee layoffs, wage reductions, and an unsure landscape post-crisis—what should the responsible restaurant owner/operator do?

Our recommendation? Take the full amount you qualify for, and then maximize every penny you spend with an eye towards full loan forgiveness. This guide will help you get there.

The goal of the PPP is to get employees back to work and allow you to keep the lights on. If you create a strategy based on accomplishing these goals, you’ll be giving yourself the best shot possible of exiting this crisis with an engaged staff and a strong business footing you can build on.

Button up the books

Your first step should be keeping a close eye on how you’re spending PPP loan proceeds. The Treasury Department issued guidance on April 2, 2020, stating that 75% of all loan proceeds must be used on payroll costs. On top of that, 75% of the amount eligible for forgiveness must have been spent on payroll.

Practically speaking, for 99% of restaurants, here’s what you should do:

• Keep your PPP loan funds separate from any other working capital.
• Make sure that your spending ratio for money received from the PPP loan is always within the 75% / 25% ratio, meaning you’re spending 75% of the loan money on payroll expenses, and the other 25% on allowable expenses eligible for forgiveness. This will ensure that even if you have to furlough employees or reduce wages before June 30, 2020, your use of funds will never be in question.
• Keep records of everything you use the loan funds for.

By following these steps, you’ll have done everything you can to maximize your potential loan forgiveness.

While that may seem straightforward, we are in a crisis mode right now, and nothing is really cut-and-dried any more. Here are some possible pitfalls we identified for restaurant owners, as well as guidance on how you can avoid them.

• Spend within your time frame. Expenses should always be kept at the 75% payroll/25% other approved expenses ratio. You must use all the loan money over the eight-week period following receipt of funds, or before June 30, 2020, whichever comes first. This is an important distinction to make as there’ll be a good portion of loan recipients whose eight-week period will expire before June 30. No need to worry, we’ll get to this later.
• Keep forgiveness front of mind. The day your loan arrives, you need to start planning your strategy to be granted full forgiveness. For one, you’ll need to keep your staff employed through June 30, 2020, to qualify. If you’ve laid off employees, or you’ll need to do so before April 25, 2020,you may still qualify for full forgiveness. However, if you lay people off after April 26, 2020, you’ll only be eligible for partial forgiveness.  
• Keep staff wages consistent. You must pay your staff a minimum of 75% of their pre-crisis wages in order to qualify for full PPP loan forgiveness. For tipped employees, this presents special challenges that we’ll cover later.
• Stay nimble, but plan for the future. The point of the PPP is to keep employees on your payroll. If you use a PPP loan properly, not only will you qualify for full forgiveness, but you’ll also retain your greatest asset—your employees. You’ve got the next eight weeks to work with your staff to accomplish goals without interruption. And we’ve got suggestions for what they can do.

Hacking the eight-week restriction

As we’ve already mentioned, depending on when your loan funds, your eight-week spending window may close before June 30, 2020.Not only is this the last day of the covered period for PPP loans, but it’s also a significant date for loan forgiveness and potential waivers.

No doubt you have a lot of questions, like:

• What happens between the eight weeks after I’ve received my funds and June 30?
• Are there actions I might take that could reduce my chances of getting 100% loan forgiveness? 
• Could I be stuck paying my staff inflated wages (representing their lost tips) out of my own pocket?

We have some recommendations to both help you take advantage of the PPP loan and protect yourself as much as possible for a worst-case scenario in your final one to three weeks making payroll out of pocket.

For example, let’s assume that you are a restaurant owner who has not yet furloughed employees or reduced wages. You apply for a PPP loan, and your loan funds on April 22, 2020. This means that your eight-week “spending window” for purposes of loan forgiveness will close on June 17, 2020. What can you do?

• First, from April 15, 2020, to June 10, 2020, pay your staff at 100% of their wages as stated on your calculated payroll costs you provided when you applied for your loan. This is base wage plus tips.
• Don’t make any prepayments of wages and keep a running total of what you’ve spent.
• Take the remaining funds from your loan and use it towards rent, mortgage (interest only), and utilities. Remember, the total you spend on these expenses must stay below 25% of the total loan process you spend.
• In the final two weeks of the guaranteed employment period, pay your tipped staff their minimum wage, making sure all tips from customers, both cash and credit, are claimed. This will help raise the staff members average wage.
• With any luck, your tipped employees will earn 75% of their pre-crisis wages from June 15 to June 20, 2020, without any extra expense from you, which means you will be eligible for full loan forgiveness ¹.

In the example below, we look at a bartender named Sarah, who last year averaged $25 an hour between her salary and her tips. For the eight weeks after the crisis, you paid Sarah her full $25 an hour average wage out of loan proceeds. From June 17 through June 30, though, you’re left with a dilemma…pay Sarah $25 an hour out of your pocket (even though her standard hourly compensation is much, much less), or risk your total loan forgiveness because Sarah’s wages fall below 75% of their pre-crisis level?

Let’s take a look:

From this example, we can see that the hack works. If you pay your tipped employees their full wages for the first eight weeks after your PPP loan funds, and then you switch back to paying their base wage only and encourage your workers to declare every tip, it is highly unlikely that you will trigger the reduction in wage penalty.

Will this still work if Sarah’s average income was higher than $25 an hour?

These examples clearly show that you’ll meet the 75% minimum across the employment period, even with the heaviest of tipped earners, with little to no tips in the final weeks when the PPP loan is no longer able to be used.

What happens if there was already an employee reduction, but employees are reinstated?

There is a waiver that states that reductions in employment or wages that occur between February 15, 2020, and April 26, 2020, shall not reduce the amount of loan forgiveness a borrower is eligible for, but only IF the reduction in number of employees or wages is reversed by June 30, 2020. Any other reduction in force or wages will reduce the amount of forgiveness you are eligible for (see our hack, above, for restaurant-specific help).

You’ve retained your staff—now maximize their creative energy

You may be asking yourself exactly what your staff should be doing while you’re limited to take out and delivery orders. At first glance, there is not much for a bartender to do without people sitting down across the rail for some suds, but this is the perfect opportunity for you and your team to get creative. Along with fulfilling orders, consider offering those with cars (or bikes in more urban areas) the opportunity to deliver directly to your patrons who call their order in.* This will save you a lot of money on repeat orders, especially when compared to the costs associated with orders placed through a delivery app.

While this won’t provide your entire staff with work for the next eight weeks, you can also assign your team tasks that will improve the restaurant. Take this time to have your employees deep clean and organize your restaurant. It’s the perfect opportunity to throw a fresh coat of paint on the walls and repair any broken pieces of furniture. Your team is the lifeblood of your restaurant and often the best grassroots marketers around. Give them the opportunity to develop new menus and marketing ideas you can use now, and when we find normal again.  

If you follow the steps outlined above, you should be able to apply for a PPP loan feeling secure in the knowledge that you can use the money to get your restaurant back on its feet, and be able to receive full forgiveness of the loan.

*Before you start allowing staff to make deliveries, check your insurance policies to make sure you have the appropriate coverage, and that you are following best practices as laid out by the Centers for Disease Control (CDC) for delivery orders.

Need more information about coping with COVID-19? Check out our free resource section dedicated to advising restaurateurs on how to navigate the changing rules and regulations during the COVID-19 crisis.

¹ The CARES Act provides potential additional forgiveness for amount paid to tipped workers in excess of the 75%/25% ratio, but we think that you should not rely on this unless future guidance is issued. The fact remains that restaurants should not have to choose between paying inflated wages for unearned tips and getting full PPP loan forgiveness, and our strategy is designed to help you do this.

The post How to receive 100% Paycheck Protection Program loan forgiveness appeared first on Rewards Network.

Here are some helpful tips to keep in mind when setting up your restaurant’s bookkeeping process.

1. Use Restaurant Bookkeeping Software

Utilizing one of the many restaurant accounting software options available will allow your business to better streamline its finances. And if you don’t come from a number crunching background, don’t worry — this type of software tends to be very intuitively designed so even someone new to the world of accounting can grasp the basics quickly.

Some bookkeeping software brands that specifically cater to restaurants can connect directly to your POS system. In fact, depending on how old your current system is, this might be a good time to upgrade your POS system too.

2. Make Recording Part of Your Routine

Updating and reconciling your financial records is a huge part of the restaurant bookkeeping process. Not only will it give you a clearer picture of where your business is heading, but it may be able to help you identify some potential red flags, such as employee theft or major food waste.

A few metrics to keep in mind:

• A profit and loss statement should be done once a month.
• Counting inventory should be done at least monthly, but weekly is even better.
• Reporting on labor and food costs should be done once a week.

Getting into the habit of these best practices is often the hardest part. Just like your cleaning process and ongoing training programs, it’s all about repetition and making recording the financials a part of your regular routine as a business owner.

3. Evaluate Inventory Costs

Unlike many retail industries, inventory costs for restaurants can fluctuate wildly, even from week to week. Maybe a drought has affected broccoli farmers. Or maybe disease has affected how much cod your fish supplier has in stock. It could also just come down to the fact that you’re ordering asparagus when it’s out of season.

However, if you make it a point to regularly evaluate your inventory costs, you can more confidently decide if you need to make changes to your inventory ordering, your menu prices, or your overall menu.

4. Layer Your Bookkeeping Tasks

Many business owners make the mistake of scheduling time for all their restaurant bookkeeping responsibilities on the same work day. While this might sound like a good way to get all the bookkeeping done quickly, this can actually be less efficient.

Crunching numbers, evaluating spreadsheets, and comparing order forms can become draining if you’re spending several hours on it at a time. Besides your productivity slowing down if you start to become mentally exhausted, you could also start making mistakes.

Instead, try grouping bookkeeping tasks together and schedule each group for a different day. Getting your other work tasks done in between will bring variety to your schedule. This allows you to be efficient with your mental energy, and you can come back to your restaurant bookkeeping with a clear head.

5. Hire an Accountant

While you should be able to handle many of the day-to-day accounting activities of your restaurant yourself, you may also want to consider hiring a professional accountant to help with some of the big-picture accounting tasks. Not only can they help you when tax season rolls around, a restaurant accountant can also advise you on long-term finances.

Need insight into if you can afford to upgrade your kitchen equipment or remodel your bathroom this year? Part of your accountant’s job should be to know what options you have, or at least what plan should be put in place so you have those funds down the line.

The other benefit of hiring an accountant is that they can look at your current bookkeeping system and give advice on how you can be working smarter, not harder, when it comes to balancing the books.

Need a leg up on creating a business plan? Download our free e-tool “9 Essential Parts of a Winning Restaurant Business Plan” today!

Rewards Network® does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

The post 5 Restaurant Bookkeeping Tips for Your Business appeared first on Rewards Network.

We strongly advise every small business owner employ a professional accountant to manage their tax organization and filing, but we have 10 quick tax tips for your restaurant to get started on providing a tax preparer what they’ll need to get you the best result in your quarterly filing.

Write off food and beverage costs.

This should be a no-brainer for almost any restaurant owner since food and beverage likely accounts for a third or more of your total expenses in managing your business. They are the key components for the product you sell, after all.

But be careful that you are deducting costs for everything possible. It’s not just the cost of raw ingredients for your dishes (direct costs like meats and vegetables) that is deductible. You can also account for indirect costs like oil and condiments, as well as food and beverage that is wasted, spoiled, or otherwise discarded. Write off costs as they are incurred, not as the food is consumed.

Restaurants have a “safe harbor.”

The Internal Revenue Service’s Rev. Proc. 2015-56, 2015-49 I.R.B. 827 provides a safe harbor method of accounting for taxpayers engaged in the business of operating either a retail establishment or a restaurant (“Safe Harbor”).

Retail and restaurant businesses may be able to deduct the cost of remodeling or even “refreshing” their locations by treating 75% of the qualified costs paid in a remodel as an “ordinary and necessary” business expense, with the remaining 25% capitalized and depreciated over time as costs for improvement to a qualified building. The remodel or refresh must be of larger scope than just a new paint job or cleaning regimen, however. Those two items are already considered deductible expenses.

Don’t miss deducting employee benefits.

It’s not just employee salaries that you get to deduct as an expense. The cost of every meal you provide your wait staff or kitchen crew is tax deductible as well. Paid sick leave, vacation pay and health (and any other form of) insurance are also expenses that you can deduct, as the employer. Just be careful.

As an owner, your own deduction is not so clear cut if you are taking a regular salary. The IRS excludes profit generated by the restaurant and paid to the owner as a tax write-off in most cases.

Oh! And mileage.

Do you drive for your business? Do any of your employees drive as part of their work tasks? This deduction is one which needs to be tracked very carefully but is well worth the effort. Just make a habit of marking down mileage as you make deliveries, travel for catering events, or pick up supplies.

It’s strongly recommended that you do so in a formal ledger or smartphone app designed for mileage tracking so that everything will be ready for your accountant when they need it.

Make use of the Work Opportunity Tax Credit.

A deduction some business owners may not even realize they qualify for, the Work Opportunity Tax Credit (WOTC) rewards employers for hiring individuals from certain target groups that have historically faced barriers to employment and discrimination in the workplace.

These can include: former felons, unemployed veterans, recipients of Food Stamps, or other public assistance, residents of Empowerment Zones, individuals referred by vocational rehabilitation services, and more. It’s an easy way to earn an extra credit on your federal return in the process of hiring new employees.

Count up your charitable donations.

Just like on an individual tax return, business owners are able to deduct their donations to organizations with 501(c)(3) status (with few exceptions as detailed by the IRS), whether it involves cash or an activity hosted on their behalf.

Take caution in what you itemize, however, as not everything you donate is actually deductible. The cost of food provided is certainly deductible, but staff time or the full cost of services as charged to the public is not. Some enhanced deductions are available specifically for restaurants, though.

The Section 179 deduction is here.

Only temporary until 2016, there is now permanent tax deduction for equipment purchases for small businesses. The new wrinkle in Section 179 of this law? Certain large capital investments, which could previously only be depreciated over a number of years, can now be taken as a lump sum deduction in the year of the purchase.

The break is meant to make it easier on cash flow for small businesses to buy up to $500,000 worth of qualifying equipment — including computers, vehicles, furniture, and kitchen appliances.

Use the 8 percent rule on tips.

This is the Internal Revenue Service’s estimate on tipping amounts in restaurants in the United States. While it seems standard in 2018 to tip somewhere between 15 and 25 percent, for the purposes of reporting income, the IRS errs on the side of caution with 8 percent when tips are not fastidiously accounted for.

It is contingent on the business owner to deduct 8 percent of the employee’s sales each pay period in cash circumstances and to rely on much more accurate reporting through your POS system on credit card tipping.

And don’t forget Form 8027 is due.

Titled the “Employer’s Annual Information Return of Tip Income and Allocated Tips,” IRS form 8027 is due at the end of February for any restaurant owner who files in paper form, with an extra month afforded to those who file electronically. It’s also a good time to brush up on tax obligations regarding the reporting of tips with your current staff. This form requires the presentation of gross receipts and accurate accounting, so everyone needs to be involved to make sure the process goes smoothly.

What if I get a letter?

Don’t panic. There are a lot of reasons the IRS may contact you after you have filed your tax return. You could have a balance due, but you could also have an adjustment to your refund owed. More often than not, however, it’s just that information needs to be confirmed or provided that was overlooked on your initial filing.

Read the request carefully and respond with the material being asked for, consulting your tax accountant or attorney beforehand if any part of the request concerns you. No matter what, make sure you include the notice (CP) or letter (LTR) number on all correspondence back. It will keep all communication grouped correctly in the IRS system.

Worried about cash flow as tax time approaches? We have a free eBook to help you sort out your needs, titled “What’s Eating into Your Restaurant Profit (and How You Can Improve Your Cash Flow).” Get it today!

Rewards Network® does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction

The post Filing It Down: 10 Tax Tips for Restaurants appeared first on Rewards Network.

For more than three decades, Rewards Network has championed local restaurants. Our strong partnerships with top U.S. loyalty rewards programs drive affluent diners to these establishments, increasing sales on a daily basis. And our cash advance products provide working capital that allows restaurants to grow.

So why create a new look?

Our refreshed brand better expresses the future we envision for Rewards Networks, its partners, clients, and consumers. We are aggressively investing in improving our products, scaling our restaurant network, setting up exciting new partnerships, and providing the best dining rewards to members. The new brand reflects our new growth strategy.

At our core, we’ve always been a financial technology company that serves the restaurant industry.

Our new brand identity reflects this in three ways:

• First, the warm yellow and orange are universal colors of creativity, energy, vibrancy, and health. In many cultures, these are the preferred colors for kitchen design. And they evoke so many foods that are common ingredients in a restaurant kitchen. Yellow and orange also suggest hospitality which in turn leads to our essential value of being a trusted, helpful partner to the restaurants we serve.
• Second, our modern font speaks to the cutting-edge technology solutions we provide. From our unique Comment Management System that allows restaurants to interact directly with verified diners to flexible cash advance options to data-driven insights, we strive to provide relevant tools that deliver real value. The font is readable and accessible, as we intend our tools to be.
• Finally, the exponent. In mathematics, we raise something to the “nth power” when we multiply it by itself. It’s an expression of rapid growth. And it is our promise to empower local restaurants and their customer by taking dining rewards to the next level.

A brand conveys a company’s personality and its promise—Rewards Network’s refreshed brand promises to continue to help local restaurants thrive, using modern technology, data, and insights.

Though we have a new look, our mission remains unchanged — to help small business owners achieve their dreams.

Want to learn about how Rewards Networks bring cash AND customers to your restaurant?

The post Our Brand Refresh: The Power of Rewards Network appeared first on Rewards Network.

Answer the questions.

Restaurant leases may be official documents, but they’re flexible enough to include a number of different provisions. Most restaurant owners don’t consider the potential legal hassles they may encounter if their paperwork is too rigid.

For instance, a restaurant lease that prohibits subleasing will be extremely limiting if the restaurant needs to unexpectedly close due to poor sales. If the neighborhood happens to explode in popularity seemingly overnight, the landlord could raise the rents significantly if the lease doesn’t exclusively protect the tenant. While many of these factors are determined by the area a restaurant owner operates in, landlords will sometimes grant a grace period for rent increases so an owner can better plan their budget.

Define priorities.

An owner will have to make a list of what matters to them and what they would be willing to compromise. For example, they may take a hard stand against percentage rent (or the necessity of paying a landlord a percentage of sales if they exceed a certain threshold for the month.) Maybe an owner will only accept a lease if they can guarantee they’ll be the only restaurant of their kind in the general neighborhood (e.g., the sole pizza parlor within two miles of their location.) Once an owner settles on a few crucial goals, they can enter negotiations with both eyes open.

In terms of a landlord’s priorities, they’re usually more willing to work with restaurant owners who make a solid commitment, so keep this in mind before asking for favors.

The devil is in the details.

Tenants may be asked to cover far more than they ever realized in the cost of their restaurant lease, so it’s important to detail exactly what they’ll be paying for. A triple net lease has the tenant pay not only the rent, but also utilities, property taxes, repairs, and insurance on the space. In other cases, a tenant can make their lease contingent on whether or not the landlord can pay for certain repairs or alterations they feel need to be completed before taking over the property. When it comes to these arrangements, the lease should list all of the agreed-upon expectations of the tenant and the landlord: what needs to be done, who’s in charge of organizing it, who will be paying for it, and whether or not a tenant will have to undo the work at the time of move-out.

Seek legal help.

Because not every situation between a landlord and tenant can be addressed, the wording of the restaurant lease is tantamount to the outcome of the residency. Without a qualified real estate or legal professional, it will be difficult to ensure that all points are being covered correctly. The good news is that landlords may pay for broker commissions, so owners can get advice from a broker (at no cost to them.) These consultations can help them formally lay out their expectations so there’s no confusion later on.

Despite this, owners are encouraged to have their own lawyer look it over in case the broker missed something or had their own agenda to help the landlord rather than the tenant. Restaurant owners opening in particularly popular areas will be granted fewer concessions, but it’s certainly not impossible to negotiate better terms.

When a restaurant owner is getting ready to open up shop, they have a seemingly never-ending list of things to do. It’s understandable if they don’t want to read over up to 40 pages of a lease so they can dissect the meaning of every last clause. If they’re not paying attention to their lease terms though, they could potentially endanger their livelihoods by putting themselves into a no-win scenario.

Doing some prep work and having the right legal counsel can make it easier to ensure both tenant and restaurant owner can get what they’re looking for.

Curious about what else it takes to open a brand-new restaurant? Download our free worksheet “The Essential Checklist to Opening a Restaurant” today!

Kris Lindahl is a Minnesota native and owner of The Kris Lindahl Team with RE/MAX Results. Kris believes a great business starts with a great foundation and the right real estate arrangement for its specific needs.

Rewards Network® does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

The post What Restaurant Owners Should Look for in a Commercial Real Estate Lease appeared first on Rewards Network.

What can an accountant do for my restaurant?

Accounting Services
This might seem obvious, but record-keeping and general accounting services are a core part of your restaurant accountant’s job. Some restaurant owners assume since they keep track of their finances themselves, they don’t need an accountant.
While it’s important for business owners to do day-to-day bookkeeping and financial recording, your accountant can help streamline your accounting process, keep track of your budget, and also see the bigger picture of your long-term finances. Which leads to…
Business Advising
Many restaurant owners have backgrounds in the food industry, but might not have background in finance. Or you might have a background in finance, but maybe you’re new to the food industry, where financial planning can be quite different.
Hiring a restaurant accountant is often about bringing a new perspective, one with years of experience that can suggest viable paths to business growth. An accountant can help you plan your target goals and look out for financial trends within the industry. Your restaurant accountant could also offer insurance advice, find ways to trim costs without cutting quality, help you evaluate your menu prices, and even research your potential for expansion.
As you and your employees work hard in the day-to-day aspects of the business, your restaurant accountant can help take a step back and see the forest for the trees.
Tax Advising and Auditing Help
Many individuals only go to an accountant when it’s tax time, and certainly that’s a service your restaurant can consider use your accountant for. Not only can your accountant make sure your restaurant is complying with federal and state tax law, but they can help you plan throughout the year so that your deductibles go smoothly by the time December comes around.
If a restaurant is audited, whether for taxes or during the bank loan process, restaurant accountants can also assure the auditor that the business’ financial documents are correct.

How do I narrow down my choices for restaurant accountant?

As you’re researching accountants, you can ask your peers in the local restaurant scene who they use. What do they like about their accountant? What has improved since hiring them?
From there, you’ll want to interview any potential restaurant accountants before you choose who to hire. This will give you a sense of who they are and what they can bring to your business. Here are some questions you would want to ask your potential restaurant accountant before you make your decision:

Have they worked with restaurants before?

Already having experience working with restaurants is a good sign. An experienced restaurant accountant should know what goes into food ordering and inventory, menu pricing, and the specific tax codes for restaurants. And if they share references (always a good thing to ask for!), it might be worth your time to contact those restaurant owners and ask what they think of the accountant’s work.
Also, if you offer special online ordering for shipped items (like jams, bottled sauces, etc.), seek out a restaurant accountant that has experience in ecommerce. You can also ask if they’re a CMA, or a Certified Management Accountant. CMAs require an undergraduate degree in a related field, so if their undergraduate degree matches the restaurant business, that can be helpful.

Are they local?

There are benefits to having an accountant whose office is in your community. For one, it means they’re more likely to know the market in your area, and be more on the pulse of local financial trends. It also means more one-on-one in-person meetings.
Now, hiring an accountant located outside of your area isn’t unheard of, by any means. If you’ve found a candidate that fits your business needs and has expansive experience helping restaurants, you can always communicate through phone calls, online video meetings, and email.

What financial strategies do they see benefiting your restaurant?

You want a restaurant accountant with a proactive mindset to their clients’ businesses. They should bring practical, specific financial planning ideas to the table. You also would want them to be open to answering any questions you might have, especially if you don’t come from a financial background.
Your accountant should be able to break down their short-term and long-term plans for the finances so you can completely understand your responsibilities within that plan.

What are their fees?

Be as direct as possible when discussing how much their services will cost. You know what your budget is, and any solid candidate should have rates competitive with accountants in your area.
Need a leg-up on writing out your business plan? Download our free eTool “9 Essential Parts of a Winning Restaurant Business Plan” today!

Rewards Network® does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

The post How to Find a Great Restaurant Accountant appeared first on Rewards Network.