What the CARES Act had for you and your business...

Preface

COVID 19 has proven to be a cataclysmic event that has thrown the world into a tizzy. With over 20 million infected worldwide and over 300 thousand deaths here in the USA alone, this novel virus has proven to be one of the worst global events, in recent times. The financial implications are astounding when you consider millions of people have lost their jobs and many small businesses closing their doors in places like my hometown of Jamaica, NY. But, Congress provided over $2 trillion in relief to help many individuals and dying businesses via sweeping legislation called the Coronavirus Aid, Relief and Economic Security Act (or the "CARES Act” as it is commonly known) and Families First Coronavirus Response Act (or "FFCRA"). Today, I will highlight certain provisions (as they relate to businesses) of the Act that will add clarity to or, if nothing else, encourage you to ask your professional about the varied tax implications.

 

IRS Payroll Tax Relief for Small Businesses Impacted by Coronavirus

Small businesses can benefit from various types of federal payroll tax relief through 2020. The changes include a deferral of payroll taxes and several refundable payroll tax credits. These changes are temporary but, taken together, the laws help employers and businesses survive these terrible economic conditions.

 

Deferred payroll taxes

Under the Act, employers can claim payroll tax relief by deferring payment of their part of Social Security contributions, which they should have submitted to the IRS between 27 March 2020 and 31 December 2020. Employers must continue deducting and transferring employees' tax contributions. But, these business owners can delay the 6.2% they would otherwise be required to pay.  By paying 50% of the total amount starting December 2021 and then what is left by 31 December 2022, small business owners can delay their current social security contributions.

Changes may be reflected in the employer's quarterly payroll tax return, Form 941, and company owners are not obligated to take a special election to defer their payments.

While most of Jamaica, NY, employers has the option of deferring the employer's share of social security contributions, those who received a loan through the Paycheck Protection Program were initially only allowed to defer their payments until their loan forgiveness date. But, now can defer paying their share of social security contributions even after the PPP loans have been forgiven. This correction was made by the PPP Flexibility Act of June 2020.

Note this deferral applies only to Social Security taxes. Employers cannot postpone their share of Medicare taxes.

Employee retention credit (or ERC)

For pandemic-affected companies, the CARES Act also provides a tax credit but only when employees are kept working. This credit is designed to help workers on the job and is available to most employers. The equivalent of 50% of the qualifying wages of up to $10,000 for employees paid in the last three quarters of 2020 is allowed as a credit.

Criteria for eligibility: Employee Retention Credit (ERC)

To be considered qualified employers, the business operations must have been partially or completely discontinued due to government orders mandating a shut-down. Alternatively, employers who experience a decline in the gross income of more than 49.99% in a relevant quarter compared to the same quarter of the previous year may qualify too.

Government regulation cannot only suggest that businesses close operation, but there must be a mandatory shut-down. An eatery that needs to close to stop the pandemic, for example, may qualify, but a pharmacy that closed due to a recommendation may not be eligible for the ERC.

Self-employed people that paid themselves wages cannot take the credit but can count the wages they have paid their employees. The PPP Flexibility Act also allows borrowers to defer their payments.

 

How businesses claim the credit for employee retention

Business owners in places like Jamaica, N.Y. can immediately claim the employee retention credit for their employees by withholding payroll tax credits equal to the total of their quarterly payments. Employers can file Form 7200 if the withheld payroll taxes do not cover the entire credit to receive advance payments.

 

How do Small Business Administration Interruption loans affect the ERC?

Since the SBA interruption loan is intended as an alternative to the credit program, companies that have received from SBA are not eligible for the employee retention credit. Employers can only claim the retention credit if they never got an interruption loan from the SBA.

What about the paid leave tax credit?

Under the FFCRA, most small and medium-sized enterprises are obliged to offer paid leave to their employees when such workers are debilitated due to the pandemic. The bill also includes tax credits for paid leave on a dollar-for-dollar basis.

 

Eligibility rules for paid leave tax credits

Most Jamaica, NY (and the surrounding areas) companies with fewer than 500 employees are entitled to paid leave tax credits under the FFCRA and are also subject to statutory leave requirements. Companies with fewer than 50 employees can be, however, exempted from FFCRA requirements for childcare. The exemption applies if the company can prove the cost of childcare would jeopardize the company’s viability.

 

Mandated paid leave credits

Business owners whose employees are ill or have been diagnosed with COVID-19 can receive 100% credits for each employee who takes paid sick leave. The tax credit reimburses the cost up to $511 per day of required paid sick leave. The company must pay the employee his regular wage for up to 80 hours through paid sick leave.

If an employee is forced to take leave due to pandemic-related circumstances to care for a family member, (including caring for a child whose school is closed or a family member quarantined) and the employer pays wages then 33% of the regular wage will be reimbursed to the employer up to $200 per day for up to 10 days.

Under certain circumstances, employers may also claim an additional child care credit at a reimbursement rate of 66.6% of the employee's regular rate for up to 10 weeks. The credit is available for up to $200 per day.

Getting the paid leave credits

Companies that are required by COVID-19 by the FFCRA to offer paid leave to an employee may deduct the money they paid for paid leave from their contributions to payroll taxes which would include the employee and employer share of Medicare and Social Security taxes, as well as the federal income tax that would have been paid.  Companies can request an accelerated refund if the payroll taxes they pay are insufficient to cover the cost of paid sick leave.

These temporary changes will be effective until 31 December 2020. Companies can benefit from applying for the refundable payroll tax credits and the deferral of their payroll tax payments. Tax relief can really help these businesses stay viable during the pandemic.

 

In conclusion

The government should stand up for its constituents. And, it is remarkable that our elected officials have passed these laws to help small businesses like me here in Jamaica, N.Y. so that we have a fighting chance. The stimulus packages associated with the CARES Act have had positive results, but taxpayers need to know how these programs work, so talk to your tax expert to ensure you are on the right track.

IMPORTANT: Our firm specializes in tax resolution. We serve clients virtually so don't hesitate to reach out.  If you want an expert tax resolution specialist who knows how to navigate the IRS maze, reach out to our firm so we can schedule a confidential consultation to explain options to permanently resolve your tax problem.  Make an appointment here!  Or, call Toll-free 1-855-254-1892.

All the Stimulus You Need!

 

We’ve made it through 2020 now, and amidst all the noise in the news about vaccines and stimulus bills that seem to be funding everyone BUT business owners in the United States, I want to share a few things:

First of all, while Congress did eventually pass another stimulus bill that does have have provisions in it for small businesses, we can’t depend on that always happening.  A lot of money got spent keeping companies afloat in 2020 and those debts are going to come due soon – some of my PPP clients are already in the process of getting those loans forgiven (or at least a good deal of the principal reduced).  It’s CRITICAL if you received any kind of help from the SBA last year that you attend to that paperwork WELL in advance of Tax Day.

…In short, that means now. 

Seriously, just like when the “new” tax laws went into effect in 2017/2018, there are a lot of pieces of the SBA/PPP loans that are unprecedented.  While we, as tax professionals, “know” what the laws say, many times, when new laws are enacted, there is always room for those laws and programs to be interpreted. 

So the deal is simple:  YOU HAVE TO MAKE SURE ALL YOUR FINANCIAL DUCKS ARE IN A ROW!

This is certainly not a time to wait, either.  Act now, while it’s early, and go back through that paperwork.  Look at all those emails from the SBA, dig into anything you might have signed last year in the Spring and Summer and make sure you’ve lived up to your obligations. 

That is literally the difference between repayment and forgiveness. 

Now, let’s be real for a moment…

I know that a lot of folks signed a lot of paperwork last year, and the SBA tasked banks to fund the PPP (Paycheck Protection Program) loans.  So it’s important to remember that if you have a PPP loan, it originated from a bank. Nearly ALL the big national banks were “in” on it, and many, many regionals.  Some of those banks, like BB&T, merged and became other banks – namely, Truist. Also, the bank that originated your loan may no be the current servicer of your loan.

Could there be some challenges with the documentation as a result? 

You bet! 

All the more reason to get your ducks in a row now rather than at the 11^th hour in March and April. 

So, this week – not next, or the next, or the next – I want you to be systematic in your search and track down all the documentation you signed for any SBA/PPP monies your business received last year. 

Once you’ve done that, I want you to review what standards you’ll need to achieve to be able to have that loan forgiven, and if you have ANY questions or worries about it, then set up a call with me immediately. 

It’s incredibly important that you do this right, as there are literally thousands of dollars in savings on the line – but only if you do it correctly. 

Let’s Chat Soon-

IMPORTANT: Our firm specializes in tax resolution. We also serve clients virtually so don’t hesitate to reach out.  If you want an expert tax resolution specialist who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem.  Make an appointment here!  Or, call Toll-free 1-855-254-1892. 

Retirement funding...

This month, I’ve been spending a lot of time discussing retirement accounts.  It’s no secret, and it’s for a good reason – most Americans don’t know where they’ve put their 401(k) funds. 

Seriously. When I was still in the workaday world, I would ask my coworkers about their investment strategies and they either knew exactly what they were doing or nothing about it at all. 

Some folks bought because they liked the company, or their parents had worked there, or they liked the way the prospectus was laid out. 

Very few times did I receive answers that could be regarded as “informed.”

Take the term “growth” in mutual funds. 

A lot of employees assume that “growth” is going to result in higher earnings, and it usually isn’t so.  Yes, the companies in the fund are “growing” but the usual result is a lower dividend. 

…And potentially lower “perceived” value from investors, keeping the value of the fund down. 

It’s great for investors making the long play, but maybe not so good for building value in a 401(k). 

Of course, the biggest problem with company-based 401(k)s is they are rarely administered by the company, usually that’s handled by another company contracted to do that. 

…And those guys rarely have a fiduciary responsibility to take care of that business’ employees.  Instead, they want to push “their” portfolio into the employee pool to drive the value of the overall investment higher. 

And make money.  Whether that employee makes any.  Whether that employee can ever afford to retire. 

A lot of you guys – myself included many years ago – bought right into this scam. 

It’s time to “buy” out it!

There’s never been an easier time to get educated on your options for retirement and it’s really never been easier to invest in the specific platform you feel most comfortable with.  Just as critically, I HAVE to strongly suggest that 2020 should have proven to you how little many companies’ care for employees. 

If there was ever a situation that required employees to become smarter about how they can control their own destinies, this is it!

There are dozens of ways to create the retirement you want, but they all begin with one thing – the capital to enjoy it. 

Having that capital begins with understanding who you have investing those funds and having faith they are truly acting in your best interests and growing YOUR money, not just their bank accounts. 

There are loads of ways to do this and when you’re ready to get started, my team and I are here to help you get pointed in the right direction. 

Let’s make this a GREAT 2021!

IMPORTANT: Our firm specializes in tax resolution. We also serve clients virtually so don’t hesitate to reach out.  If you want an expert tax resolution specialist who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem.  Make an appointment here!  Or, call Toll-free 1-855-254-1892. 

This month, I’ve been concentrating on more intangibles within the ideas of busines success, but before you get toooo critical of me, let me explain my logic:

2020 has changed a lot of things for a lot of people.

If you’re still trying to do “business as usual” with an unchanged model – maybe the same one you opened up with in 2020, then your days are numbered, and that’s the point of this email. 

It’s to point out that the companies and individuals who have thrived in this year are those who have critically analyzed how they do business or how they approach the operations of their business to ensure its survival.

In many cases, as I’ve learned from talking to scores of them, they di that by rethinking how they spend time. 

An “easy” example is this one:  do you mindlessly scroll through your social media feeds each day, or do you actively target other “scrollers” through your marketing plans and advertisements?

In other words, are you creating things for others to consume or are you consuming things others have created? 

One will bring leads into your business, the other will keep you from making money. 

…And it’s not just social media, either, it’s how you show up in your hometown.  Do people know what you do?  Have you boiled down the core of your business into something that can be easily consumed by a public that has a shorter and shorter attention span? 

“I move entrepreneurs from frustration to freedom,” is one I saw and liked from a digital marketing agency recently, and – obviously – it stuck with me. 

Do you have that “blurb” that captures a potential lead when they see it or hear it?  Do you believe it, too?   

A month or so ago, I shared in my emails about being clear on your dream – the founding idea of your company – and this sort of statement is very much a part of that.  The two ideas are linked, and they are critical for you as an entrepreneur. 

…But do you feel them? 

After all the craziness of 2020, do you still feel that burning desire to change lives? 

To make an impact? 

To create and live your life on your terms, not those dictated to you by the government, or a boss, or a mindless career job buried in some kind of cubicle Hell?

If you do, then I suggest you continue to monitor how you let minutes slip away and always focus on creating, not consuming. 

Create a family that’s a team, create a business that’s a family, a marriage that’s unbreakable, friendships that will be lifelong. 

Be better, and refuse to allow yourself to get sidetracked from your goals by living vicariously through what social media tells you is relevant. 

All the best-

P. S. …And if you find yourself wondering how to “jump start” this whole process because you need to sort out advertising, take heart!  There are a lot of ways to find that money, and if you’re struggling with it, let’s sit down and talk about budgets for your business and the potential tax benefits and rewards of a properly built marketing plan. 

IMPORTANT: Our firm specializes in tax resolution. We also serve clients virtually so don’t hesitate to reach out.  If you want an expert tax resolution specialist who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem.  Make an appointment here!  Or, call Toll-free 1-855-254-1892. 

Going out (of 2021) with a bang!

 

First of all, I completely understand how the holidays and the end of a year like this one can lead to boatloads of stress and overwhelm, but just stick with me for a few minutes…

2021 is coming, and the rules, even though they seem to be in flux in a lot of places, still apply. 

Right now, you’ve got to make time to ensure that things like any charitable contributions, retirement accounts, and maybe even basic bookkeeping are all sorted out and caught up. 

Plenty of times, as the calendar begins to push into the last few weeks of the year, shrewd operators are looking and calculating when some work needs to be fulfilled – do you ship in the last week of December or wait until the first week of the New Year?

Of course, some of this comes down to how you have your accounting set up – cash or accruals – but, since we’re operating in an unstable environment (and likely will be for some time), it might be a great idea to sit down and discuss how your business handles and documents income. 

I’ve given this kind of advice several times this year to business owners with a wide range of profits and I stand by it:  our economy is in flux and a lot of money is “out there” so how your business holds on to it will impact your success.

This isn’t just “tax” advice, either!  Companies who can act quickly because they have cash reserves are going to be able to negotiate better deals for themselves. 

Companies who are forced to rely on credit for capital purchases are going to be in trouble. 

There’s a third category here, too, and that’s those savvy business owners who are flush with cash and have the negotiating power to use that capital to secure expansion, not just spend it. 

Case in point?  I know of one business owner in southern California who was able to personally secure his business expansion, but to do so by bringing in investors with their own capital who knew his plan would work.  ‘

Those investors put up money, but he didn’t – he simply shared his systems with the investors in a careful, well documented way that expand his potential profits while avoiding many of the pitfalls of traditional franchising. 

As the world and the economy moves int o2021, I think this is something we’ll see a lot more of, and that brings me to my message in this email:

You can grow your business, and you can do it easily, but it’s going to take creativity to do it now and for the foreseeable future. 

It’s also going to take a partner with a sound knowledge of how your expansion will impact – and be impacted – by the tax laws (both those we have now and the ones that are sure to be enacted in the coming months by our new administration.)

Pick up the phone and let’s schedule a call to dig in to those plans and goals and see exactly what you can and cannot do – and how easily you can set yourself up for success.

IMPORTANT: Our firm specializes in tax resolution. We also serve clients virtually so don’t hesitate to reach out.  If you want an expert tax resolution specialist who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem.  Make an appointment here!  Or, call Toll-free 1-855-254-1892. 

Don’t Let it Overwhelm You

We’re in the holiday season, and I hope it’s finding you well!

As you know, though, my team and I meet and discuss all manner of things, both personal and professional, with clients simply in the course of doing business, and more and more often, as 2020 grinds on, the biggest challenges we’re seeing is the hardest to deal with:  fatigue.

A “two week” lockdown to flatten the curve has become a seemingly never-ending process, and even the most astute business owners I work with are simply exhausted from the sheer willpower that has been needed to “make it through” 2020.

So while this email isn’t necessarily about “tactics” you can use, it is about one thing I want every one of my clients to do:

Keep going!

As we begin the last few hurdles to 2021, I’ve got one message:   Just. Keep. Going.

I get it – We’re all exhausted from “pivoting” and “falling forward,” talk of the “new normal,” and a drawn out and contentious presidential campaign, but if you think of the incredible amount of work you’ve done this year, the simple fact is you’ve done years’ worth of evolving as a business owner in less than 8 months. 

I’m proud of what my team has done and you should be proud of what yours had accomplished, too. 

So let’s talk about a couple things really quickly…

First of all, no matter how “pooped” you are about the pandemic, it’s not going away anytime soon, AND you’ve adapted a lot in these last months. 

Now what? 

Well, now, at the end of the year, you need to think about what you want from your business in 2021.  Not to worry, I’m not going to push you for a lot of goals and numbers and percentages, but I am going to ask you to think about things that you really didn’t like this year in your business, because right now, you have the chance to change how those impact you in 2021.

Was it hard to find good people this year?  Yes it was!  On the other hand, one of the most astute observations one of my clients made was that he had focused on “good people” for too long to do jobs in his business that “average people” could do … with great training.

He’s redesigned his hiring and training processes to do just that.

We’ve seen similar creativity being used by nearly all of our clients this year, whether it was about finding new markets, maximizing returns, minimizing contact, or simply fighting to stay open for business. 

You can make it.

You already have made it. 

2021 isn’t going to be easy, but it’s nothing we already haven’t handled.  

Just. Keep. Going.  

IMPORTANT: Our firm specializes in tax resolution. We also serve clients virtually so don’t hesitate to reach out.  If you want an expert tax resolution specialist who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem.  Make an appointment here!  Or, call Toll-free 1-855-254-1892. 

Do This Before the End of the Year!

It’s easy to get lost in the holiday spirit – and with the year we’ve all had, many of us are just glad that 2020 is nearly over. 

Nevertheless, now is the time to make sure you’ve done all you can to maximize (or minimize) a few things for your savings and your tax bill.

First things first…

Charitable giving.  This is the time of year when charities “seem” more visible, but most donations must be dated before December 31^st to count on your 2020 taxes.  It’s also not a bad time to try to spend a few minutes tracking down ALL of your receipts for donations and such before the end of the year.  If you can’t find a specific receipt, it’s worth contacting the charity in question to see if they can share their copy.  Do it now, though, because it’s often harder for charitable organizations and non-profits to find this material at the local level, especially when they staff with volunteers. 

Retirement contributions.  I harp on your guys ALL the time about this, and while you have until April 15^th in some cases, MOST retirement funds require annual contributions before December 31^st.  Have you done it?  If, like some folks, you’re waiting on an annual bonus, it might be worth it to go ahead and make the contribution and be assured it’s logged before year’s end.  You can always go pay yourself back. 

Sometimes you have to spend money to save money…

Another contribution that many overlook is college funds and the various healthcare accounts.  Some, like HSAs (Health Savings Accounts) have stricter rules and guidelines than others, so BEFORE we get to the end of the year, it’s smart to review and see what you either need to use, save, or how much might roll over.

This year, more than many in recent memory, has seen a lot of financial impacts on families, and if you’re one of them, it’s also a smart strategy to do some calculating to see where your potential tax liability is, then reverse-engineer some solutions.  We’ve fielded a lot of calls from customers who have seen a dramatic change in incomes, and they will subsequently be in a different bracket this. 

Perhaps you qualify for tax breaks you couldn’t claim in previous years, perhaps you took money from a retirement account, or maybe you changed jobs. 

All these can have a dramatic effect on your taxes, so if that sounds like you, it’s not a bad thing for us to jump on a call to make sure you have your financial act together and prevent any “surprises” in 2021.

IMPORTANT: Our firm specializes in tax resolution. We also serve clients virtually so don’t hesitate to reach out.  If you want an expert tax resolution specialist who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem.  Make an appointment here!  Or, call Toll-free 1-855-254-1892.