With the COVID-19 pandemic living on, and many states considering options for shutting down again, it seems that we’re in the second wave. However,through the period of March through June, there were many business survival lessons learned that carry over to the present time. In a recent Q&A, Gorfine, Schiller&Gardyn’s (GSG) Laura Shuman, Manager of Small Business Services, discusses lessons learned, and what small businesses can do now to help prepare for the second wave of the pandemic.

Q: What are some small business lessons learned from the first wave of the pandemic, even though it’s still very much present?

A: Small businesses quickly learned that shutting down for an extended period of time was not ideal. Fortunately, they were able to profit from the benefits of the government's solution of the PPP loan. Small businesses thrive on people going out and spending money, so the assistance of the PPP loan helped keep small businesses alive while people weren't able to go about their normal routines.

A valuable lesson learned was taking advantage of the assistance that is available and provided, whether it's from the state or federal government.It’s equally as important to learn how to handle the “new normal” which includes caring for employees while also protecting your bottom line.

Q: Do you have any small business success stories when it comes to PPP loans?

A: Overall,many of our clients took advantage of the PPP program. Fortunately, some were able to get the loan and pay employees, even though they weren't working, so employees didn't have to file for unemployment. This allowed small businesses to keep employees hired,even if only part time, and help keep their business running.

In the case of restaurants, for example, several were able to continue to provide carry out and delivery options because they had the necessary funds to pay employees to do these tasks. Other clients simply would not be in business anymore if they weren't able to secure the funds, which allowed small businesses to keep running and have the opportunity to reopen once people are actually out enjoying themselves and spending money.

Q: We've seen a lot of stories about small businesses pivoting in this environment, such as distilleries that make vodka and gin switching over and making hand sanitizer. These stories are not only creative, but also inspirational, showing the survival mentality in small businesses. What have you experienced when it comes to these pivoting stories?

A: It’s interesting to hear about small businesses shifting their business model to provide a product or service that is needed during this time, more so than what was originally offered. For instance, we've seen many restaurants adapt to now offer carry out, delivery, and/or outdoor dining.

Another example is a bike shop that experienced an abrupt increase in sales. With most people staying home,many turned to using bicycles for exercise or to just get out of the house. The bike shop adapted to not only selling more bicycles, but to providing more repair services than they had been previously.

In fact, the bike shop wound up having an issue because they sold their inventory. They were then unable to restock inventory because the global factories used to produce various parts for the bicycles were closed due to the virus. The bike shop is still working to restock inventory, so if you’re in the market to buy a new bicycle, don’t expect to be able to buy one spur of the moment.

Q: What are some of the tax challenges and opportunities for small businesses?

A: Small businesses are challenged with making tax payments. Businesses that have not been generating income are struggling to pay estimated taxes or other tax liabilities. However, the government has launched a number of different opportunities throughout the last few months to aid small businesses. Many of these opportunities are related to payroll.There are tax credits available, as well as a tax deferral.

Regarding the tax deferral, employers can make an election with the selection to defer the employer portion of the Social Security tax through the end of the year starting at the end of March. This is looking to provide a little more cash flow for hurting businesses so that these businesses don't have to worry about trying to pay payroll taxes right now, but instead, focus on paying employees or keeping the business operating.

It’s important to note businesses still owe those taxes, so it's not a freebie.The plan is to pay in half of the amount that's due by December of 2021 and the other half by December of 2022, which is quite a generous repayment plan. There aren’t any penalties or interest on those deferred amounts.

There’s a bit of confusion for businesses looking to take advantage of both the PPP loan and the deferral. Because the PPP loan is forgivable, there’s controversy as to whether businesses can also take advantage of the deferral if the loan has been forgiven. Be sure to always thoroughly review the new regulations and laws being passed because changes are being made frequently.

There are tax credits related to employee retention as well as an extended sick and family leave credit. If a business secured a PPP loan, it can't take the employee retention credit.

There’s the opportunity to take an employee retention credit per employee for a certain amount of payroll. This was designed to help businesses keep their employees instead of having them go on unemployment. Because the business will receive a credit on the payroll tax return for those wages and corresponding payroll taxes, it ultimately means a business pays employees at no expense. It's almost as if the government is paying for those employees.

The Families First Coronavirus Response Act, which covers the extended sick and family leave credit, entitles businesses to a credit for employees who have been out sick, or in the future, will be out sick, either with the virus themselves or if they were caring for somebody.

Once again, in the long run, a business is not responsible for paying an employee who can't work because they're sick or they're caring for someone who is sick with the virus.

In addition, if an employee is unable to work because childcare is not available, there’s also the Extended Family Leave Act, which is 12 weeks that a business pays the employee’s salary, and again, receives a credit, so the business is not compromising its bottom line.

Q: What types of services does GSG offer for small businesses?

A: This is obviously a challenging and confusing time for small businesses navigating through the different regulations and rules from the state and the federal government, but we’re here and able to help businesses get through this trying time. Whether it's advising a business on whether they can take a tax credit, or helping a business determine a plan to try to pivot an offering and provide a product or service that's a bit different, we’re here to support small businessesstayingopen.

Through all these changes, there’s a lot of paperwork and documentation, and we provide bookkeeping services to ensure businesses are organized and the books are in good shape. We also prepare tax returns and report income that's hopefully made during this time.

Laura Shuman is a Manager, Small Business Services, at GSG providing compilation, review and tax services to businesses, as well as support for their general business and financial needs.

About Gorfine, Schiller & Gardyn, P.A.

Gorfine, Schiller & Gardyn, P.A. (GSG) is a Maryland-based full-service certified public accounting firm offering a wide range of accounting and consulting services to clients of all sizes. GSG employs the traditional business practices of a small company, delivering solid advice and solutions, and providing unparalleled client service. One of the greatest assets GSG brings to its clients is a team of experts trained to the highest industry standards. As problem solvers with an entrepreneurial drive, GSG associates are committed to the success of their clients’ businesses. For more information, click here.