RENO, Nev. — Business owners are scrambling to come up with a gameplan to keep their businesses afloat during the current COVID-related business shutdown.
I am finding that many business owners are unaware of the options that are available to them. An abbreviated list follows:
Governor Sisolak has declared Nevada an Emergency disaster zone. That immediately freed up access to emergency SBA funds. These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can't be paid because of the disaster's impact.
The interest rate is 3.75% for small businesses without credit available elsewhere; businesses with credit available elsewhere are not eligible. The interest rate for nonprofits is 2.75%. Information can be found at SBA.gov/disaster.
Essential businesses
“The most effective course of action is for all Nevadans to stay home and for all nonessential businesses to temporarily close to the public for 30 days,” Sisolak said on March 17.
Many clients wanted to know if their business is “essential.” A list was provided, but you can go here for the real details.
On page four, there is a section that reads, ”Other businesses, including but not limited to legal services, business and management consulting, professional services and insurance services are encouraged to have employees work remotely or telecommute.”
This gives service providers some latitude to continue to operate their business and serve their customers
With the governor's declaration that all non-essential businesses shut down for 30 days by noon on March 18, tens of thousands of Nevadans found themselves unemployed. Many employers gave their employees written notice that they were laid off for 30 days, coinciding with the governor's proclamation.
If your employees are eligible to receive unemployment, their weekly benefit rate (WBR) will be 4% of your total earnings during the highest paid quarter of the base period, subject to a minimum of $16 per week and a maximum of $407 per week (as of July 1, 2014).
The maximum weekly benefit amount is 50% of the average weekly wage in Nevada, which is adjusted each July 1. You may receive benefits for a maximum of 26 weeks (courtesy of nolo.com).
Although the open enrollment period had passed, displaced employees have the ability to get subsidized healthcare through Nevada Health Link at www.nevadahealthlink.com.
This is especially important for business owners, since their income will be significantly reduced due to the business being shuttered.
The ability to get subsidized healthcare is dependent on the income that you will report in 2020. If it is under 4 times the poverty level, you will not have to repay all of the subsidy come tax time next year.
Business owners who had to infuse cash into their business may consider reducing their reported wages for the first quarter of 2020. Effectively giving your salary back to the business should reduce the amount reported on Form W-2, and ensure that you qualify for the subsidy.
IRS Notice 2020-17 extends the date of payment for income tax (and self-employment tax) payments due on April 15. This covers the balance due on 2019 calendar and the first quarter of 2020. It does not cover the June 15 estimate.
It still requires the filing of an extension form, however. Chris Hess from our National Tax Office signed a letter, as Chair of the AICPA Tax Executive Committee, to the Congressional leadership (Chairs of Senate Finance Committee and House Ways & Means Committee, the ranking members of the committees, and the majority and minority leaders of both houses), urging Congress to pass legislation which would, if enacted, create a statutory automatic delay of at least 90 days for certain federal income tax and information returns originally due between March 31 and May 15, 2020.
In the meantime, it is tax season, which means business as usual. Assume that a reasonable estimate is necessary for the filing of the extension forms, and assume that IRA contributions must be made by April 15 for the 2019 year.
Assume that any election required to be made by the original (unextended) due date needs to be done.
Please note that this discussion is general in nature, and not intended to be tax advice. Please consult with a CPA to get answers to your specific fact pattern.
Michael Bosma, CPA, is Principal-in-Charge of the Reno office of CliftonLarsonAllen LLP. His NNBW column, “Covering Your Assets,” focuses on effective planning strategies for every business owner. Reach him for comment at mike.bosma@claconnect.com.
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