As the coronavirus pandemic continues, more and more families are being placed in quarantine to effectively practice “social distancing” and help “flatten the curve”. This means more and more small businesses are temporarily shutting down due to state and federal regulations.
If you are a small business owner, you know that you can only plan for so much. Sometimes, situations arise that are out of your control whether it is a weather-related problem or a global pandemic. When these situations arise, it is important to know that you are not alone. The small business accountants at Follin and Associates, PLLC are ready to help.
Funds are set aside to help small business owners and their employees get through hard times. Currently, as we deal with Covid-19 and its effects, many small business owners are seeking help.
The federal government has provided a relief bill, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which will provide $2.2 trillion in support to individuals and businesses affected by the pandemic. Under the CARES Act, there are a few options you could choose based on your needs including:
Paycheck Protection Program (PPP) - Unfortunately, this program was suspended due to funding, but may be updated if additional funding is approved. This loan from the government is designed for small businesses to keep their workers on the payroll. As long as your business has 500 or fewer employees, you are able to borrow up to 2.5 times your average monthly payroll. A nice bonus of this loan is some or all of the loan balance is forgivable, depending on what you used it on. We suggest using this loan to continue to pay your employees, cover health benefits, pay mortgage or rent as well as utilities, and cover the interest on other debts.
Employee Retention Credit - This program helps you keep your employees on the payroll if you've stopped your business or have taken a financial hit. Eligibility depends on the following factors - you had to fully or partially shut down due to a coronavirus shutdown order OR your business decreased by more than 50% compared to last year. Under this program, you can claim a refundable tax credit of 50% on qualifying wages and should be used to pay your employees from March 13 to December 31, 2020.
Payroll Tax Postponement - This program allows you to delay paying your share of your employee's Social Security contributions. However, you will owe half of the payment by December 31, 2021, and the rest by December 31, 2022.
Economic Injury Disaster Loan - Historically, this loan has been used in federally declared disaster areas but is now available to small business owners considering the global pandemic and as a part of the CARES Act. This loan should be used to pay sick leave for employees, maintain payroll, cover rent or mortgage payments, operating costs, and repaying other obligations.
There is also more assistance through the Small Business Administration (SBA) to provide businesses with the economic support they need as well as continued guidance.
At Follin and Associates, PLLC, our small business accountants are ready to help you get the information you are looking for and guide you through filing the necessary paperwork. If you have a small business in the High Point, Kernersville, or Greensboro, NC areas, we can help you determine which program is the best fit for you and your business’ needs. Contact our certified public accountants today!