Six Small Business Aid and Tax Savings Options in Charlotte
My goal for today is to make your choices more straightforward.
I wanted to offer you an authoritative, basic breakdown of what the federal government is making available to you and other Charlotte small company owners because there is so much noise and so many opposing voices regarding all of this.
These kind of programmes are extremely rare occurrences, which makes sense given this year's unusual circumstances, yes?
However, as we saw with the first round of the PPP and the EIDL, there is a window within which a Charlotte business owner should ACT to take advantage of the opportunities available. After all, the first iteration of the first round of the PPP, as well as the EIDL's "emergency grant" component, were both quickly snatched up.
The second round of the PPP, the bigger and more profitable "Employee Retention Credit," and a variety of other choices are all being discussed in corporate social groups, which is excellent.
This is why having someone in your corner who can handle everything for you is a good idea. (Ahem.)
But today's post is all about simplifying and removing the ambiguity, in the hopes of assisting YOU in acting fast and sensibly with the small business assistance and tax savings choices that are available to you.
NOTE: The PPP and other SBA options are not included in this list. This is merely the tax code's benefits, which is why I put it together.
Six Small Business Aid and Tax Savings Options in Charlotte
“15 years ago, the internet was an escape from the real world. Now, the real world is an escape from the internet.” -Noah Smith
You could be paying anywhere from 15-25 percent (or more!) of your business revenue to the IRS and different state revenue authorities, depending on how your business organisation is established.
That is, of course, what we are here to help you with.
That's why the "second stimulus bill," which was signed into law in late December 2020, was a pleasant development for us at Kohari & Gonzalez PLLC – it means we can do even more for our Charlotte business owner clients during what has been a particularly trying year for them. We'd be pleased to go over the various tax savings and small business aid alternatives with you to determine what is best for your specific circumstance.
Because we've gotten so many inquiries regarding them, I'd like to break them down for you as simply as possible so you can make the best decision possible. Because in some circumstances, action will be required.
1) The Employee Retention Tax Credit has been redesigned and expanded.
You must have fewer than 500 employees to qualify for this credit (previously 100). You must also have been compelled to temporarily halt business operations in 2020 or seen a 20% revenue drop in any quarter compared to the same quarter in 2019.
If you meet these criteria, you may be eligible for a tax credit of up to $10,000 per worker per quarter, equal to 70% of each employee's income (which now includes health insurance costs) (for Q1 and Q2 of 2021). In some circumstances, there are even some things we can do retroactively for 2020.
2) Virus-Related Tax Credit for Families
The deadline has been extended to March 31, 2021. Many firms were obligated to pay employees who were unable to work owing to health limitations (for example, remaining at home with children when schools were closed), but they were given a tax credit to assist offset the costs. Employers are no longer required to pay such employees. For those managers who are still doing so, the new bill extends the refundable tax credit through the first quarter.
3) The Earned Income Tax Credit
Depending on your employment processes and the status of your organisation, this is a good benefit. This is a credit for hiring someone from a specific group (veterans, ex-felons, welfare beneficiaries), but it is especially important for those who have been unemployed for more than six months. The credit varies from $1,200 to $9,600 per employee, and we would claim it on your BUSINESS tax return. This can also be used for pass-throughs (i.e. S-Corps, Partnerships).
4) Deferring Employer Social Security Taxes (FICA)
Because it's really a loan, this is a risky proposition. You can defer your employer's Social Security (FICA) taxes for the first quarter of this year regardless of whether your firm has been affected by the pandemic. But take note: this is not a credit or a pardon. It's just a postponement of the inevitable, and you'll still have to pay. The first half will be due by the end of 2021, while the second half will be due by the end of 2022. However, under some instances, it can act as a no-interest loan from Uncle Sam.
5) Assistance for non-profits
Essentially, the above-the-line deduction of $300 ($600 for joint returns) has been extended through the end of 2021 for all taxpayers, whether they itemise or not. Corporations will also be permitted to deduct up to 25% of their taxable revenue for charitable contributions, up from the current 10% limit.
6) New "CarryBack" options for losses
This is rarely highlighted, but it can be extremely beneficial to the proper firm, and it was included in the original CARES Act. Companies that lost money in 2020 (as well as 2019 and 2018 tax years) can carry that loss back for up to five years against their earlier tax returns.
So, if you paid taxes for any of those years... but lately LOST money, we can go back and tie that to earlier years, and you will receive a retroactive refund.
This, however, does not occur automatically.
Actually, none of this works. That is why we have come, and why you should allow us to assist you.
This is what you should do:
I appreciate our collaboration as well as your referrals.
Kohari & Gonzalez PLLC
Please feel free to forward this article to a business associate or client in the Charlotte area (or beyond!) who could benefit from our help. While most of these articles are about company strategy, as you may know, we specialise in tax preparation and planning for families and small businesses.
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