The coronavirus has left employers as well as employees feeling a financial pinch. With mandatory closings of businesses, employers are working with a limited budget and are streamlining staff to reduce overhead. However, there are cost effective ways to keep your employees.
Employee Retention Credits
The government offers a new tax credit to businesses financially impacted by the mandatory closings imposed as a result of COVID19 who retain employees on their payroll. This credit is available to most businesses except state and local governments and their instrumentalities and small businesses who take out small business loans. The credit is based upon the amount of wages paid during the period of March 12, 2020 and January 1, 2021. For additional information and eligibility requirements, visit the IRS website.
Refundable Payroll Tax Credits
Small to midsize businesses will now be able to claim payroll tax credits under the newly enacted Families First Coronavirus Response Act. Eligible employers who provide paid sick leave and benefits to employees can claim credit for payroll tax dues on those sums. The credits will be available immediately and are refundable. For details, please visit the IRS website.
Paycheck Protection Program (PPP)
The Small Business Administration (SBA) is offering a loan to small businesses to cover the cost of their payroll. The loan will be forgiven provided that all employees are retained and the remaining amounts borrowed are used to pay for mortgage, rent, utilities, or mortgage interest. It is important to remember to apply for loan forgiveness 8 weeks after the date of loan origination. For more information, please visit the SBA website.
Employee Emergency Relief Funds
Employers can further assist employees who are struggling financially during this time by creating an employee emergency relief fund. Employees can make tax-deductible contributions to help fellow employees who face hardship. For more information on how to implement an employee emergency relief fund please visit the Emergency Assistance Foundation website and look at IRS publication 3833.
This information is provided for general informational purposes only. No information contained in this article should be construed as legal advice and does not establish an attorney-client relationship.
Jane Cowles is an attorney focusing on contract law, business law (start-up, planning and restructuring), tax law and art law. She has over 10 years experience working with business transactions at boutique law firms and as a tax advisor for Ernst & Young. She has a solo practice in Rockland County and advises creative professionals, small businesses, and entrepreneurs. She is available to help with all the challenges individuals and business currently face with the COVID19 pandemic. For more information, visit her website www.janecowlesattorney.com or email her at firstname.lastname@example.org. She is offering 30 minute FREE consultations by telephone or video conference.