Covid-19 Tax Tips and SBA Payroll Options
Covid-19 has put the entire nation on the edge of its seat, as we wait for developments, scale back business, and try to weather the storm. Lake Mary businesses are feeling the pinch right now, as is most of Central Florida.
Luckily, the government has come to the table with several options for managing, deferring, and lowering business tax and other expenses for the betterment of both businesses and their employees.
Not sure where your payroll is going to come from during a national lockdown? Worried about paying extended sick leave to employees who contract the virus? Join us today as we break down three ways you can mitigate these costs and take care of your employees with these Covid-19 tax tips for relief during this difficult time.
SBA-Guaranteed Low-Interest Loans
To call Covid-19 a stressful time for business owners isn’t saying anything new. You may not have enough income coming in, right now, to cover your most important expenses. Payroll, among many other things, has become a source of stress for many businesses. It’s for these reasons that bank loans have become such a talking point. Specifically, Small Business Administration (SBA) loans, or Economic Injury Disaster Loans.
In response to the outbreak, President Trump recently announced that the American government would provide millions in funding for these federal disaster loans. These loans apply to qualifying businesses, providing coverage in the form of:
- Low interest rates for companies and non-profits, at 3.75% and 2.75%, respectively
- Long-term options for repayment, for up to 30 years
It’s worth noting, to all the Lake Mary companies with outstanding credit somewhere else, that you will not be eligible for these loans in this situation. The SBA allows businesses to apply for these loans to cover bills they can’t pay, due to Covid-19, making it well suited to payroll expenses.
Employer Tax Credits
The American Senate’s March 18th bill proposes paid sick leave and leave benefits, mandated by the federal government. With the aid of the relief package, eligible employees must receive paid sick leave for up to 14 days, at the standard rate of pay. This caps out at $511-per-day, in addition to any paid sick leave those employees still have due to them.
It’s important to note that employers cannot change their sick leave policies at this time, or retaliate against employees who make use of them. The new legislation provides business tax credits to help offset these costs, equivalent to 100% of the benefits distributed during this time. This directly reduces your company’s tax liability, making it a much more clear cut choice for both you and your employees.
Lastly, Lake Mary employers who don’t actually have enough payroll taxes in place to cover paid sick leave request an expedited payment from the IRS. More information will be made available by the IRS, soon.
Government Cash Payouts
One of the more talked-about safety measures for businesses, right now, is the government’s groundbreaking stimulus package. The CARES Act provides checks as a means of direct assistance to US adults on both sides of the employment spectrum.
Enacted on March 27th, the CARES act provides cash payments of up to $1,200, per person, as a means of helping residents pull through in this difficult time. People who earn more than $75,000 in gross income, as confirmed by their 2018 tax returns, receive less, while anybody without a federal tax liability will receive $600.
Tax Deferrals
As a final note, companies are making use of tax deferments during this time as a cost cutting method. Deferral of federal income tax for employers and Social Security payroll are on the table for businesses across the country.
The following operations are eligible for a business tax refund deadline of October 15th:
- sole proprietors
- single-member LLCs
- corporations ending their year on December 31
Across various states, tax and payment filing guidelines are also available, and you can view those here.
Covid-19 Tax Tips
At Vision HR, we understand that many of our clients are experiencing slowdowns related to the COVID-19 outbreak. This obviously makes it much harder to manage additional expenses and facilitate regular business operations. During this time, we encourage you to reach out with any business requests, Covid-19 tax tips, and to encourage safety in the workplace if you are remaining open.
