If you’re a small business you know that our country is operating in unprecedented times. The coronavirus pandemic is having a direct impact on economic development for both large and small businesses across the country. While relief efforts seem to be continually changing, we’ve put together a list of things you should be aware of as a Small Business Leader.
TAX UPDATES TO BE AWARE OF
Normally, the federal income tax deadline is April 15th of each year. However, in the wake of the coronavirus pandemic, the IRS is extending the federal income tax filing deadline to July 15 as part of a growing effort to ease the financial pain small businesses are experiencing.
This 90-day extension is an automatic extension to the payment deadline for individuals and businesses; you don’t have to file any extra forms to get it.
If you’re self-employed, your business likely pays taxes four times throughout the year, rather than solely on April 15th of each year. These payments are referred to as estimated tax payments.
While the April 15 deadline for estimated taxes has been pushed to July 15, the remaining deadlines have not yet been adjusted. This means your next estimated tax payment will be June 15, and then on July 15.
What’s the penalty for late payment?
If you miss the tax due date, you are required to pay an additional 0.5% of unpaid taxes every month until you pay your original tax bill (up to a maximum 25% of your total tax amount owed). At this time, there has been no change to penalties for late payments..
The July 15 payment extension applies to all individual returns, including self-employed individuals, and all entities other than C-Corporations, such as trusts or estates.
It also includes estimated tax payments for the 2020 tax year that were due on April 15.
The tax payment deadline for C-Corporations is extended to July 15 for up to $10 million of the 2019 tax due.
Need More Time to File?
As with previous years, you can get a 6-month extension of your filing date from the IRS. You don’t need to give a reason, it is automatically granted after you apply.
Be aware, though, that even with filing an extension, penalties on any unpaid taxes will begin to accrue on July 16.
State Income Tax
The Treasury Department’s tax payment extension only applies to federal taxes, not to each state. Therefore, it’s important to check with local authorities to learn what (if anything) is changing as a result of the COVID-19 crisis.
RESOURCES AND ASSISTANCE AVAILABLE
If you’re a small business that’s felt the fallout of the coronavirus pandemic, there are some resources available to help you get through this time.
Small Business Administration (SBA)
The SBA’s Economic Injury Disaster Loan (EIDL) program provides small businesses with working capital loans of up to $2 million. These loans can provide vital financial support for small businesses that are experiencing a temporary loss of revenue.
Learn more: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources
Leeway from Financial Institutions
During this time, many financial institutions are extending resources and aides to their customers, as many are experiencing hardship during this time. Some banks and credit card companies are waiving late fees or offering assistance with minimum payments for customers directly affected by the pandemic. We encourage you to reach out to your financial institutions directly for information on assistance that may be available.
Assistance from State and Local Governments
Some states and local governments are stepping in and offering economic assistance to businesses within their specific region. Be sure to explore options from your state and local government websites and offices for the latest information on what may be available.
Coronavirus Aid, Relief, and Economic Security (CARES) Act
On March 27th, The US House of Representatives passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This bill will provide economic relief to small businesses to help ease the strain and hardship caused by COVID-19. Guidelines from government agencies and banks implementing the programs are expected over the next days and weeks to clarify the availability of benefits and application requirements under the CARES Act. Here is a more in-depth summary of the CARES Act.
Other COVID-19 FAQs
The National Federation of Independent Business has put together a list of Frequently asked questions regarding businesses and how they should respond to specific questions surrounding these times, such as business closures and workplace safety questions. Check out the list.
As small business specialists, Robert B. Fisher, CPA P.C. is aware of the impacts COVID-19 is having on the finances of both business owners and employees alike. We stand ready to help you through this unprecedented time.