A small business CPA is a valuable asset for any business. Not only will they save you valuable time that you can redirect to expanding your business, but a CPA for small businesses can ensure that your enterprise remains on sound financial footing by monitoring profits and expenses and helping you navigate the ever-changing tax code. With the economic downturn brought about by the coronavirus pandemic, having a small business CPA on your side is more important than ever.
First and foremost, a knowledgeable accountant and small business tax advisor will provide you with the necessary analysis to make the tough operational, strategic, and tactical decisions that may lie ahead. If it becomes necessary to cut expenses by reducing your workforce, a CPA for small businesses can walk you through various options, such as furloughs and layoffs. Although the two terms are often used interchangeably, they do mean different things. During a leave, an employee is suspended without pay for a finite period of time. Layoffs, on the other hand, may be indefinite or even permanent. A CPA can help you understand the impact of each on you and your employees in terms of pay, continued access to benefits, and access to unemployment benefits.
The federal government has implemented programs to provide financial assistance to businesses impacted by the coronavirus pandemic. For example:
- In lieu of furloughs or layoffs, it may be possible to get a 7(a) loan through the Small Business Administration. These loans can help you cover up to eight weeks of payroll, interest on debt, utilities, and rent. The loans are forgiven tax-free if specific criteria are met.
- The coronavirus relief act passed by Congress created a new type of SBA 7(a) loan program known as the Payroll Protection Program. The program allows small businesses to receive loans from approved SBA lenders to offset payroll and other expenses during the COVID-19 pandemic.
- Certain business owners may be eligible for assistance in the form of an economic injury disaster loan advance through the SBA. The program provides up to $10,000 for businesses that are experiencing a temporary loss of revenue because of the coronavirus pandemic. Although available in all 50 states, Washington, D.C., and the U.S. territories, it is currently only available to farming and agriculture-related businesses.
The deadline for some of these programs, such as the Payroll Protection Program, is June 30, 2020, so you should contact an accountant or tax advisor as quickly as possible to see if your business qualifies.
Tax laws, especially those that pertain to businesses, can be complicated under the best of circumstances. Perhaps the biggest change for this year is that the deadline for filing and paying 2019 taxes and for making 2020 estimated payments has been extended to July 15, 2020. The various coronavirus relief measures implemented by Congress and the IRS have added yet another layer of complexity. A small business tax advisor can help you find all of the deductions and credits to which you are entitled. For instance:
- Businesses that have closed or partially closed because of COVID-19 or have seen a 50% drop in revenue compared to the same quarter of 2019 may be eligible for the employee retention tax credit. This is a refundable credit that businesses can claim against the payroll taxes for a portion of the wages and benefits paid to employees, including those that are furloughed.
- Employers can also defer paying their portion of individual payroll taxes through the end of the year. The deferred amounts can be paid in two equal payments. The first installment must be paid by the end of 2021. The second installment is due by the end of 2022.
It should be noted that neither of these options is available to businesses that take out loans through the Payroll Protection Program.
Scott Boyar is a Charlotte CPA and small business tax advisor. If the COVID-19 pandemic has impacted your business, let Scott put his years of experience to work. From guidance on loans and grants available to struggling businesses to the latest tax credits and deductions for impacted businesses, Scott is ready to help you and your business weather this economic storm. Contact us today for a consultation.