Business owners: Over the last few weeks, you have faced many difficult decisions and undoubtedly, there will be more in the weeks and months to come. You already know that owning a business and being responsible for the welfare and income for employees is not as glamorous as many imagine. Hiring, firing, client negotiations, vendor disputes, and changing regulations are all part of any given day for a business owner—but the coronavirus pandemic brings a unique set of challenges to navigate.
Now you are dealing with daily law changes, executive orders and work-at-home mandates. You are making decisions that are both critical and urgent to the survival of your business, without time to fully consider the pros and cons. Keeping up with federal, state and local responses to the pandemic is time consuming and can be confusing—and every day, you are evaluating whether you can keep staff on payroll and your doors open (if you have not already been ordered to close).
With the deluge of emails from other businesses sharing how they are dealing with the pandemic—and the constant breaking news regarding the number of infections and deaths providing a surreal reality check of the seriousness of our current situation—you may feel a tremendous responsibility to do your part to help keep the economy from crumbling.
Fortunately, federal, state and local governments are responding quickly, and their efforts will be a sorely needed crutch to help businesses survive. Many programs and incentives are still being formulated. So, with all the challenges you are now facing, what is your best course of action? In our work with business owners like you, we are providing the following counsel:
First, remain calm and be a leader to your organization and community. How you react to crisis often dictates how others in your organization manage their anxieties.
Communicate often with your employees, customers and vendors. Be honest and straightforward.
Next, and probably most importantly, be sure you are working with your advisors—your attorney, accountant, insurance agent, advertising and marketing firms, human resources and information technology consultants, to name a few. You have questions and they have answers, or at least they should have insight on your path forward. Depending on your needs, consider working closely with one or two advisors who truly understand your business and can help distill all the available information and apply these new laws and mandates to your business.
While new laws, regulations and executive orders are being issued daily, at the time of writing this article, the following are three major federal programs of which you should be aware:
- Families First Coronavirus Response Act. This bill was signed into law on March 18, and provides historic paid leave rights for employees impacted by COVID-19.
The Emergency Family and Medical Leave Expansion Act amends the Family and Medical Leave Act (FMLA) to require all private employers of fewer than 500 workers to provide leave to workers who need to care for children without schooling or daycare because of COVID-19. These provisions become effective on April 2.
The new law also rolls out an Emergency Paid Sick Leave Act that requires all private employers of fewer than 500 employees to pay emergency sick leave to employees who cannot work or telework because of government quarantine or isolation orders, because they are under medical care for COVID-19 symptoms or diagnosis, because they are caring for someone in quarantine or isolation under governmental or medical provider orders, or because they need to care for children whose schools or daycare centers closed due to COVID-19 precautions. The emergency paid sick leave benefit caps at 80 hours for full-time workers or the average number of hours across a two-week period for part-time employees. These provisions also become effective on April 2, and conclude on December 31.
The Act also provides new tax credits equal to 100% of the emergency paid family medical leave or emergency paid sick leave paid by employers each quarter, and self-employed individuals can take advantage of similar tax credits.
- Small Business Administration (SBA) Disaster Loan Assistance. Small business owners and nonprofits in designated states—including New York—are eligible to apply for low-interest loans due to the financial impact of the coronavirus. The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue being experienced at this time.
- Deferral of Federal Income Tax Payments. On March 18, the Internal Revenue Service and the Treasury Department issued guidance allowing all individual and other non-corporate tax filers to defer up to $1 million of federal income tax (including self-employment tax) payments due on April 15 until July 15 without incurring penalties or interest. As evidence of how fast things continue to evolve, on March 20 Treasury Secretary Mnuchin announced the deadline for April 15 tax filings has been pushed back to July 15 to coincide with the extended payment due date.
The guidance also gives corporate taxpayers a deferment. Federal income tax filings and tax payments that would have been due on April 15 can now be filed or paid up until July 15 without penalties or interest.
These are unprecedented times, and many of us have never before experienced a national crisis that has impacted our daily lives so completely. But the United States economy has long been built by entrepreneurs who have had to manage many different ups and downs. With your courage, fortitude and perseverance, you will survive this economic downturn and you and your business will be stronger for it.
Chris Gamble, CPA, CFP® is Co-Managing Partner at RDG+Partners, an accounting firm based in Pittsford. The firm has established a resource center for updates relative to businesses and COVID-19 at rdgandpartners.com/resourcecenter. /