What was the deferral of employment tax deposits and payments for Golden Krust Caribbean Restaurant in 2022?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
100 | $ | (5,271,693) | $ | - | $ (5,101,593) | *No par value, 200 shares authorized, 100 shares issued and outstanding at December 31, 2022 and 2021.
GOLDEN KRUST FRANCHISING, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
| CASH FLOWS PROVIDED BY (USED FOR): | Year Ended December 31, 2022 | 2021 |
|---|---|---|
| OPERATING ACTIVITIES: | ||
| Net income (loss) | $ 1,141,393 $ | (659,030) |
| Adjustments to reconcile net income (loss) to net cash and | ||
| restricted cash (used for) provided by operating activities: | ||
| Related party loan forgiveness | - | (567,961) |
| Depreciation and amortization expense | 91,007 | 106,297 |
| Non-cash lease expense | 54,540 | - |
| Bad debt expense (recoveries) | 196,574 | (490,229) |
| Change in allowance for notes receivable | 14,999 | (61,613) |
| Loss on disposal of equipment | 3,400 | 14,800 |
| Changes in certain assets and liabilities: | ||
| Accounts receivable | (477,332) | 343,400 |
| Inventory | 3,715 | (2,414) |
| Prepaid expenses | 35,908 | (40,254) |
| Other noncurrent assets | 31,812 | (456) |
| Accounts payable | 277,304 | (56,591) |
| Accrued expenses | (2,369,929) | 2,087,305 |
| Deferred franchise fees | (95,050) |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 35)
What This Means (2024 FDD)
According to Golden Krust Caribbean Restaurant's 2024 Franchise Disclosure Document, the deferral of employment tax deposits and payments was recorded as a negative $50,438 in 2022. This figure reflects changes in the company's liabilities related to deferred payroll taxes. This deferral was part of the CARES Act, which allowed employers to postpone paying their share of Social Security taxes during a specific period.
The CARES Act allowed employers to defer the deposit and payment of the employer's share of Social Security taxes due during the "payroll tax deferral period" from March 27, 2020, through December 31, 2021. Half of the deferred amount was due December 31, 2021, while the remaining 50 percent was due December 31, 2022.
For a prospective franchisee, this indicates how Golden Krust Caribbean Restaurant managed its finances during the pandemic. The company took advantage of tax relief measures to manage cash flow. The deferred payroll taxes were fully paid by December 31, 2022, which means that the company met its obligations within the specified timeframe. This detail provides insight into the company's financial management and its ability to leverage available relief programs during challenging times.