Timely & Relevant News: Assistance for Small Businesses
Whether you own a business or know someone who does, chances are they have been negatively impacted by the coronavirus. Certain segments of businesses have come to a halt in past weeks as governors across the nation issue stay at home orders.
To help alleviate the negative impact for both individuals and businesses, the CARES Act (Coronavirus Aid, Relief and Economic Security Act) has legislation that will assist small businesses including updated tax provisions.
Employee Retention Credit
Certain employers are eligible for a tax credit, specifically, if their operations were suspended in any way due to a shutdown order. A tax credit would also apply if their gross receipts declined by more than 50% since the same quarter in 2019. A fully refundable tax credit will be given to employers equal to 50% of qualified wages (including health insurance expenses) paid to employees. This would apply to waged paid after 3/12/2020 and through 12/31/2020. The maximum of qualified wages is $10,000 per employee (credit of $5,000 per employee).
Deferred Payment of Employer Payroll Taxes
For those employers who don't qualify for the above mentioned retention credit, they can delay payment of their payroll taxes. Payroll taxes cover the employer's share of the Social Security tax. This also applies to those who are self employed. Because this is a deferred payment, it would be required to be paid back, but over a two-year period. Half of it by Dec. 31, 2021, and the remainder by the same time the following year.
For specific tax questions pertaining your situation we recommend that you consult with your tax advisor. Additionally you can explore more using this resource: https://taxfoundation.org/federal-coronavirus-relief-bill-cares-act/
Small Business Loans
In order for companies to ensure their ability to pay their employees through June 2020, the CARES Act offers the Paycheck Protection Program (PPP). The PPP includes $350 billion of government-backed loans to eligible companies. Additionally, the Expanded U.S. Small Business Administration (SBA) Economic Injury Disaster Loan program is a new $10 billion grant program, leveraging SBA’s Office of Disaster Assistance to provide small businesses with quick, much-needed capital.
For a comprehensive breakdown of each loan type, download this helpful graphic from the Committee on Small Business.
If you have any specific questions or would like to discuss your own investment strategy or financial planning needs, we welcome you to call us at 302.234.5655 or email us at firstname.lastname@example.org to set up a mutually convenient date/time to speak.