The coronavirus (COVID-19) has affected all aspects of our lives including our financial well-being. To combat this pandemic, various relief measures are available to our clients.
Different parts of the United States are seeing different levels of COVID-19 activity. The United States nationally is in the acceleration phase of the pandemic. The duration and severity of each pandemic phase can vary depending on the characteristics of the virus and the public health response.
Make sure to join us for our webinar "COVID-19 Financial Relief for Businesses and Individuals" on April 7, 2020 at 2:00 p.m. Eastern Time. Register here.
Not only is this a public health disaster, it is also an economic disaster.
The previous record for people that lost their job in a week was in the Great Recession with peak of 665,000 in March 2009.
In the seven-day span that ended on March 21, the Labor Department reported about 3.3 million people filed for unemployment, breaking the previous record of 700,000. The following week eclipsed that with 6.65 million people filing for unemployment!
We are all VERY FORTUNATE to still be employed and we need to FIGHT every single HOUR to SURVIVE!
NOTHING is guaranteed and you have to FIGHT!
And how do you FIGHT for your clients?
You need to help them STRENGTHEN their balance sheet.
Cash Position is EVERYTHING.
In these troubled times, clients depend on us to help them NAVIGATE through this mess.
On March 27, the Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law, becoming the largest stimulus package in U.S. history and providing $2.2 trillion in much needed relief to individuals and businesses grappling with the fallout of the COVID-19 epidemic.
Here what you and your clients get:
- SBA Forgivable Loans Up to $10,000,000
- SBA Emergency Grant Up To $10,000
- Withdraw Retirement Penalty Free Up to $100,000
- SBA Disaster Loans Up To $2,000,000
- Defer Payroll Taxes To 2021/2022
- Recovery Rebates $2,400 MFJ/$1,200 Single/$500 per child
- Get Cash for NOLs in '18, '19, '20
- Employee Retention Credit Up To $10,000/employee
- Sick Employee Payroll Tax Credit Up To $2,000/employee/qtr
And there is SO MUCH to consider. And there is A LOT of misinformation out there. Here’s what a lot of people don’t understand…
1) Not everyone will get it.
- The funds are expected to run out in 6 weeks.
- We’re already hearing stories of many banks not offering this service.
- And then other banks are not working with new customers at all.
So what do you do? You must stay abreast of the ever-changing SBA Guidelines to:
2) Make sure your clients get the maximum amount possible
The calculation of how much you can borrow sounds simple… 2.5x your average monthly payroll. But there’s more to it than that. 1099 contractors, should they be added? What if you didn’t issue 1099’s? Should you issue them now and pay the penalty? People making over 100k? Are you excluding them? Are there any other payroll-related costs that go into the payroll calculation?
It is imperative that your calculation include all expenses allowed and be aligned with the most recent SBA Guidelines.
The lenders may have their own calculation and they may ask you for more details on your calculation.
3) Making sure your clients qualify for forgiveness so they don’t have to pay it back
You need documentation...
- Verify and document the number of full-time equivalent employees on payroll
- Verify and document the dollar amounts of payroll and payroll-related costs
- Verify and document mortgage interest payments
- Verify and document rent payments
- Verify and document payments for covered utilities
- AND, all funds must be disbursed within 8 weeks
And if anything goes wrong, it turns into a REAL LOAN that has to be paid back. And if the loan calculation is wrong, the entire loan may have to be paid back IMMEDIATELY!
Make sure to join us for our webinar "COVID-19 Financial Relief for Businesses and Individuals" on April 7, 2020 at 2:00 p.m. Eastern Time. Register here.
Author Bio: William Kinsey, MTx, CPA is the Managing Partner of Kinsey CPA. He has more than 20 years of experience in providing top-quality accounting, tax, and business consulting services to his clients. His experience ranges from simple tax preparation and filing for individuals to working with multi-billion dollar Fortune 500 corporations.
Disclaimer: Kinsey CPA is closely monitoring the ongoing CARES Act guidance issued by Congress, the White House, and the Small Business Association. We are learning more every single hour about how this bill will be implemented and the interpretations of each component. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.