From an Expert: Small Business Questions
As we continue to navigate these uncertain times, we’re seeing daily changes in every industry, especially small businesses. Jeremy Allen, a Certified Public Accountant (CPA) with the Walz Group, provided us with a brief synopsis of what financial experts are seeing on a daily basis.
This information was provided to us as of Wednesday, March 25th at 9:30 am.
All businesses are adjusting on the fly and making tough decisions regarding employee, HR, and business operations. These are decisions that although most business owners feared they would eventually have to make, 2 weeks ago, the possibility of making them was not at the forefront of their minds.
Questions & Answers
Here are just a few of the many questions business owners are asking along with some brief, general advice.
“What do I do with my employees?” and “Do I lay off all employees and send them to unemployment?”
Fortunately, unemployment benefits have been eased and are now available immediately. However, the maximum benefit via unemployment compensation is $573 a week, which is typically below what most employees were earning.
“Do I give my employees the option of taking PTO for a period of time, maybe two weeks, to keep paying them and then see where the things stand in early April?” and “Do I have enough cash to keep the business afloat so that my employees have a job to come back to?”
Congress has provided increased funding to the Family and Medical Leave Act (FMLA) and emergency sick time payments. In order to qualify for these benefits, your employees need to remain employed.
“Does a business have to have significant cash or access to funding to make these payments?”
If a business owner makes these payments for FMLA and emergency sick time pay, there are now tax credits available to help offset those payments. However, the bulk of the cash flow for wages and taxes will go out now and the tax credit relief will not be seen until weeks later or even possibly into mid-July when Q2 payroll reports are due and the credits can be claimed.
We know these questions only begin to scratch the surface for small business owners.
Some of the industries that were hit hardest include restaurants (with no carryout/delivery option), live events and entertainment, real estate, and construction, although we recognize there are many more.
Thankfully, we’re all in this together and relief ideas are being discussed at all levels. Loan programs through the Economic Development Collaborative (EDC) and Small Business Administration (SBA) will continue to provide low-interest funding to keep operations going. However, there are questions as to the application process, approval and funding timelines. Not to mention the idea that most of these loans will need to be paid back at some point. Congress has floated the idea of loans for payroll that will be forgiven as long as it is paid to keep people employed during the economic slowdown.
The recent passage of the CARES Act changes some of the information we once knew. The CARES Act of 2020 is the largest funding legislative measure ever undertaken by the USA. $2 Trillion is an amazing sum of money.
With this legislation, the goal is to help provide the funds and the infrastructure to allow both US businesses and households to weather the storm of this virus and outbreak. Details are still forthcoming on how the various loans, tax provisions and other aspects of the legislation will be administered. Processes are still being developed.
There remain a lot of unanswered questions that will be forthcoming in the next few days. One thing is clear, the legislation is here, and it is important that businesses connect with their professional advisors to determine the best path forward. Step one is to connect with their banker/lending institution if they believe that they will need funding to survive the next month. There is no timetable on when the funds will be dispersed via the loans to businesses. However, they should be looking into the various steps and qualifications needed to receive funding. The sooner they can get in line, the better chance they have at receiving the funds they need.
These truly are unprecedented times. Businesses are facing difficult decisions day after day.
We highly encourage business owners to lean on their advisors for up to date and accurate information. There is a lot of misinformation floating around, and it’s important to stay grounded in facts. As always, CPAs and other business advisors are here to assist with any questions regarding funding options, tax credits, and other financial business advice.
By providing reliable sources of information, the Jeremy Ganse Team is hopeful that we can break through the misinformation for those out there who are seeking answers they can trust. We’ll be updating our FAQs page as we collect more expert information, so be sure to check back in. We’re in this together, Lancaster.