fbpx
Connect with us

Business

Staying On Top of Tax Changes is Crucial for Small Business

The challenges associated with COVID-19 just keep coming. Deep in the heart of tax season, many business owners and tax preparers find themselves checking and double-checking that all their ducks are in a row. Some of the policy changes that affect a small business’s taxes are relatively new and may trip up a small business owner.  Gena Jones, a tax attorney, business coach, and founder of Business Boss, helps business owners avoid tiny mistakes that could cost them big bucks.

Employee Retention Credit

According to Jones, small businesses that didn’t receive forgiveness on PPP loans in 2020 can claim the Employee Retention Credit (ERC) instead. This credit is available for the final quarter of 2020 and the first two quarters of 2021. These changes are part of last month’s COVID-19 stimulus package—the Families First Coronavirus Response Act (FFCRA).

Jones adds that money from the ERC could total up to $7000 per employee per quarter. “That’s more than $200,000 for a business with ten employees. Across all businesses that fail to claim the ERC, it could add up to hundreds of millions.”

Local COVID Grants

However, Jones warns that 2020 and even 2021 will be incredibly complicated tax years. Although there are many reasons for this fact, one such reason is several cities implemented grants to assist small businesses. Jones says this money must be accounted for as income on taxes. “Business owners need to make sure that their accountant has booked any local COVID relief grants or loans as income like PPP,” says Jones. 

COVID Paid Sick Leave

COVID paid sick leave is another area businesses must give attention to when preparing their taxes. Jones encourages small businesses to take advantage of the payroll tax credits created by COVID paid sick leave. Jones says the paid sick and family leave credits were initially only available until the end of 2020. However, according to the IRS website, these credits have been extended for periods of leave taken through March 31, 2021. Under this new extension, business owners can count up to 10 weeks of qualifying leave towards the family leave credit. 

This paid sick leave credit allows businesses with fewer than 500 employees and who pay “qualified sick leave wages” to get credit for wages or compensation paid. Salaries and compensation must be to employees who cannot work because of coronavirus quarantine, self-quarantine, or who have coronavirus symptoms and are seeking a medical diagnosis. Eligible employers may claim credit for up to 2-weeks (80 hours) of paid sick leave at employees’ regular pay rate– no more than $511 per day and $5,110  total.

PPP Funded Expenses

Finally, Jones reminds business owners that expenses funded by PPP are now deductible. Initially, the IRS said that deductible expenses, such as payroll costs, would not be tax-deductible if they were PPP funded. However, the Consolidated Appropriations Act of 2021 was passed and included the COVID-Related Tax Relief Act of 2020. This act provides full deductibility of ordinary and necessary business expenses paid with a forgiven or forgivable PPP loan. 

Jones’s best advice to all small business owners is to be aware that policy changes keep coming. Even though we are well into tax season, there might be more policy changes that can alter your business taxes. Although these changes have a pattern of being advantageous, the constant alterations have many scratching their heads and wondering when the uncertainty will end. More importantly, business owners are looking for assurance that they are making every change in tax law work to their advantage.

I am a physician and career entrepreneur. After studying medicine, I founded a social media marketing agency and a fitness equipment company as well as direct a non profit. My goal is to inspire others to achieve their dreams and create the freedom in their life that they know is within reach. I host a podcast Mentors Collective to interview some of my favorite business minds.

Advertisement defi

Join Disrupt Magazine

defi
Become A Disrupt Contributor

Most Disruptive

Real Estate Disruptors3 days ago

From Nothing To The Top 7% Percent In Real Estate With Joe And Lety Torres

What’s your backstory?    (Lety) We both have parents who immigrated to the US from Mexico. We were fortunate to...

Social Media1 week ago

Khaby Lame Becomes The Most Followed TikToker in The World

Khabane Lame was a machine operator but now trending and just became a star from an account he created on...

Tiger_Shroff Tiger_Shroff
Entertainment1 week ago

Meet Bollywood Star Tiger Shroff

Tiger Shroff has a long history in the film industry, starting before his birth. With prominent parents in the industry...

Amanda Bernardo Amanda Bernardo
Women Who Disrupt1 week ago

Meet “The Pizza Princess” Amanda Bernardo

If you live in or near New Haven, Connecticut, you may be familiar with the hidden gem that is “New...

Shirley_Setia Shirley_Setia
Women Who Disrupt1 week ago

Meet Upcoming Bollywood Star Shirley Setia

Shirley Setia is the little Kiwi that could. Coming out of seemingly nowhere with a hit cover on YouTube, she...

two people shaking hands two people shaking hands
Diversity in Tech2 weeks ago

How the Best Leaders Create and Build Trust in a Modern Workplace

Being a leader in any setting can be challenging but within professional settings, you really are juggling a lot at...

Jay Majors Jay Majors
Executive Voice3 weeks ago

How Jay Majors Is Disrupting The Barber Industry

When we see a successful figure in any industry, learning their story, where they came from, and how they’ve struggled...

Daymond JOhn Daymond JOhn
Executive Voice3 weeks ago

Daymond John Can’t be Stopped

Perhaps you know Daymond John from the wildly popular show Shark Tank. Or maybe you’re familiar with his revolutionary clothing...

Finance4 weeks ago

Ryan Carroll Establishes Wealth Assistants to Serve as a Launching Pad for Hopefuls Worldwide

Countless highly accomplished personalities and established authorities have proven that the pursuit of one’s passion can be a way to...

Business4 weeks ago

Social Media Star, TheBlondeJon’s Journey from Homelessness to Multimillionaire Status

A strong self-belief in oneself is a powerful enabler no matter the obstacles or challenges one faces on a journey....

Trending

Copyright © 2020 Disrupt ™ Magazine - Disrupt is a Minority Owned Privately Held Company

Disrupt ™ is the voice of Latino entrepreneurs around the world. We are part of a global movement to increase diversity in the technology industry and we are focused on using entrepreneurship to grow new economies in underserved communities around the world. We enable millennials to become what they want to become in life by learning new skills and leveraging the power of the digital economy. We are living proof that all you need to succeed in this new economy is a landing page and a dream. Disrupt tells the stories of the world top entrepreneurs, developers, creators, and digital marketers and help empower them to teach others the skills they used to grow their careers, chase their passions and create financial freedom for themselves, their families, and their lives, all while living out their true purpose. We recognize the fact that most young people are opting to skip college in exchange for entrepreneurship and real-life experience. This Podcast was designed to give them a taste of that.