While the amount of business relief loans that will be deployed for small business owners is massive—it’s both a record sum nationally and internationally—many business owners will not be able to receive those loans (for a myriad of reasons).
If that’s your case, don’t worry, you can still get assistance through the following small business tax provisions.
Employee Retention Credit for Employers Subject to Closure or Experiencing Economic Hardship
This tax provision provides a refundable payroll tax credit for 50% of wages paid during the COVID-19 crisis.
If you are an employer or a non-profit organization and your operations were suspended totally or partially due to quarantine or a government order, you can access this tax provision. You can also access it you’re an employer and your quarterly earnings were reduced more than 50%, measured year-over-year.
Furloughed employees or who suffer reduced hours are eligible too.
If you are a business owner with 100 or less full-time employees, all the wages are eligible.
This provision is for wages, health benefits, and compensation, only for the first $10,000 paid by the employer.
Required paid sick leave or required paid family leave are not included in the wages, neither employer credit for paid family and medical leave (IRC sec. 45S).
It is not available to business owners that have applied to the PPP program. The credit is provided until December 31, 2020.
Delay of Payment of Employer Payroll Taxes
This tax provision lets you defer the payment of certain payroll taxes until the end of 2020. This means that it is deferred in two installments, one for the end of 2021 and the other at the end of 2022.
What payroll taxes can be deferred?
- the employer part of FICA taxes
- the Railroad Retirement taxes
- half of the SECA tax liability
If you are part of the PPP program, you cannot apply for a deferral.
The bottom line
We’re living an unprecedented situation, but there are ways to help your business weather the storm.
If you can apply for PPP or EIDL, we recommend you to do it. If, for any reason, you can’t, remember that we are here to help you.
Read more articles and find some more helpful resources to help you during this crisis: