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Preface: The employee retention credit is available for qualified wages paid from March 13, 2020 through December 31, 2020 for corporations as well as other entities, such as LLCs, partnerships, S corporations, and sole proprietors.

Employee Retention Credit Available for Businesses Impacted by COVID-19

The Treasury Department along with the Internal Revenue Service have launched the Employee Retention Credit, designed to encourage businesses to keep employees on their payroll during the Covid-19 Pandemic. The employee retention refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.

Does my business qualify to receive the Employee Retention Credit?

The tax credit for retaining employees is available to all employers regardless of size, including tax-exempt organizations. There are only two exceptions: State and local governments and their instrumentalities and small businesses who take small business loans.

Qualifying employers must qualify in one of two categories to apply the credit:

1.The employer’s business is fully or partially suspended by government order due to COVID-19 during the calendar quarter.

2.The employer’s gross receipts are below 50% of the comparable quarter in 2019. Once the employer’s gross receipts go above 80% of a comparable quarter in 2019, they no longer qualify after the end of that quarter.

These measures are calculated each calendar quarter.

How is the credit calculated?

The amount of the credit is limited to 50% of qualifying employee wages paid up to $10,000 in total. Employee wages paid after March 12, 2020, and before Jan. 1, 2021, are eligible for the credit. Wages taken into account for the calculation are not limited to cash payments, but also include a portion of the cost of employer provided health care.

How do I know which wages qualify?

Qualifying wages are based on the average number of a business’s employees in 2019.

If the employer had 100 or fewer employees on average in 2019, the credit is based on wages paid to all employees, regardless if they worked or not. If the employees worked full time and were paid for full time work, the employer still receives the credit. If the employer had more than 100 employees on average in 2019, then the credit is allowed only for wages paid to employees who did not work during the calendar quarter.

I am an eligible employer. How do I receive my credit?

Employers can be immediately reimbursed for the credit by reducing their required deposits of payroll taxes that have been withheld from employees’ wages by the amount of the credit.

Eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their quarterly employment tax returns or Form 941 beginning with the second quarter. If the employer’s employment tax deposits are not enough to cover the credit, the employer may receive an advance payment from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.

Pennsylvania Business Reopening Plan (5.1.2020)

Jacob M. Dietz, CPA

In addition to construction reopening statewide like we mentioned earlier, some recreational activities are opening in PA on May 1.  A press release explained that across PA “golf courses, marinas, guided fishing trips and privately owned campgrounds may reopen statewide” on May 1.  “Pennsylvanians have remained resilient throughout this COVID-19 crisis, and as we successfully continue to flatten the curve to protect our physical health, it is critical that we also focus on our physical and mental health during these extraordinary times. As the weather warms and daylight lengthens, enjoying time outdoors is an important way to manage stress,” Governor Wolf explained in the press release.

If you are stressed about the Covid-19 ramifications, consider going camping.  Perhaps the wonders of creation will help you refocus and reenergize.

Business owners and gig workers did not qualify for unemployment under the old pre-Covid-19 rules, however the CARES Act can allow them to apply for Pandemic Unemployment Assistance (PUA).  Some business owners that are not allowed to be open in PA will be collecting PUA, even as businesses in other industries reopen.  Programs like the PUA and the Paycheck Protection Program are part of the government’s plan to sustain people and businesses through the Covid-19 challenges.

PA Food Recovery Infrastructure Grants
Demand for charitable food has increased.  A “wholesale” food bank in Leola indicated that their average output is about 3 semis per day.  Governor Wolf’s administration made various changes to the grants, including “expanding the list of potential partners beyond retailers and wholesalers to also include farms, processors and cooperatives.”

PA Plan to Reopen
PA has been broken into 6 regions. The Wolf administration is targeting a May 8^th switch from red to yellow for the north central and northwest regions, per an April 22 release.  The release explains that “As regions or counties move into the yellow phase, some restrictions on work and social interaction will ease while others, such as closures of schools, gyms, and other indoor recreation centers, as well as limitations around large gatherings, remain in place.”

Lancaster in Southeast Region
Some are unhappy that Lancaster is listed in the Southeast region, which is the same region as hard-hit Philadelphia.

“Lancaster County is south central PA, not the southeast. This would be unacceptable and not based on data and outcomes….  That’s why my Senate Local Government Committee along with the Health & Human Services Committee will be holding a joint hearing on the creation of these regions,” said Scott Martin, PA State Senator.

Fortunately, however, “a county can make the list for consideration to open if they have had fewer than 50 new confirmed cases per 100,000 population reported in the previous 14 days” Governor Wolf tweeted, so there may be some hope for Lancaster County if they can control the new infection rate even though Lancaster is in the same region as Philadelphia.

Some Other States
Missouri Governor Parson’s “Stay Home Missouri” order is set to end after May 3.  Missouri will still have safety guidelines in place as they enter Phase 1 of the recovery plan.

New Jersey’s stay-at-home order is still in effect.  Governor Murphy released some principles as they go forward, including decreases in new cases in a two-week trend.  It is unknown when that will happen.

Maryland Governor Hogan has a Maryland Strong Roadmap to Recovery dated April 24, 2020 that “is designed to get Maryland moving again.”  The document, however, declines to set dates on when reopening will happen.

Kentucky Governor Beshear explained 10 rules to reopening again in Kentucky, including a phased return to work.

Tennessee is ahead of some states in reopening, including allowing dining at restaurants.

The Future
There are plans for reopening, but the exact nature and timing is not certain, and some things may go awry. What can go awry, and what can be done to succeed if some things go awry? Consider grabbing a pen and paper, going to a quiet place, and taking 15-30 minutes to write down what can go wrong. More importantly, write what you can do to manage that risk. Burns concluded his poem with “An’ forward tho’ I canna see, I guess an’ fear!” Perhaps a better path would be to guess and trust.

Preface: The Entrepreneurial Operating System® (EOS®) has helped thousands of entrepreneurs worldwide meet their biggest challenges head-on – and we’re not backing down now. Together with our customers, we’re rewriting the next chapter for small businesses around the world.

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During this time of crisis, change and opportunity, this webinar will help leaders “IDS” their issues—Identify, Discuss and SOLVE them. Make decisions, take actions, and obtain solutions both smarter and faster.

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“Unless a commitment is made, there are only promises and hopes, but no plans.” Peter Drucker

Milton Hershey | Business Commitment Exemplified

Donald J. Sauder, CPA | CVA

What is your level of commitment today to your enterprise?

Please catalog three examples of commitment? What are the common characteristics, themes, and object lessons for your business?

The success of an organization, e.g., a business, is the product of the loyal commitment in the organization to its purpose, values, vision, and mission. 

You need devoted commitment during a business crisis to thrive.

Today’s blog will include a few quotes about the importance of dedication and commitment during a business crisis and a short business story from Lancaster County.

• • • “There is but one degree of commitment; total.” Arnie Sherr
    • “Productivity is never an accident. It is always the result of a commitment to excellence, intelligent planning, and focused effort.” Paul J. Meyer
    • “Commitment in the face of conflict produces character.” Anonymous
    • “Without commitment, nothing happens.” T.D. Jakes
    • “There’s always a way – if you’re committed.” Tony Robbins

If you’ve tasted a Hershey’s Chocolate bar, the dedication and commitment in the development of that product has timeless lessons for entrepreneurs today.

Born on September 13, 1857, and growing up speaking Pennsylvania Dutch on a farm in Dauphin Co. PA, Milton Hershey’s family were members of the Pennsylvania Mennonite community. Milton gained the estate of hard work and persistence in his early years, which provided the resources invested in the Hershey Chocolate Company decades later.

Fired as printer’s apprentice at fourteen years of age for dropping his hat into a machine, Milton obtained another job at a Lancaster, PA candy factory. Even though his boss agreed to rehire him, his Aunt Mattie Snavely and his mother had another idea. They were teaching him to “Watch every penny, son. God gives us all we have.” They had a plan and wanted him to learn the art of candy making, arranging for him to apprentice with confectioner Joseph Royer in Lancaster, PA.

After four years of apprenticeship, Milton decided to start his candy store in Philadelphia, only to soon close the failed business. But Milton was committed.

Traveling to Denver, where he learned how to make caramels, and then onward to New Orleans and Chicago, he was looking for the right opportunity. Milton finally arrived in New York City in 1883 and began working with another candy store named Huyler’s.

After a few year’s he quit to sell candies on the City streets. He soon discovered that was not his forte, and quit. A discouraged but committed Milton Hershey moved back to the home farm where he grew up, and began research and development on chocolates and candies.

At the age of thirty-six, he started Lancaster Carmel Company, which he sold in seven years later in 1900 for $1.0m. The Company’s success was hinged on making candy during the day and peddling confections by night.

The right opportunity arrived with the accumulation of years of well-rounded work experiences, and then an Englishman visiting Lancaster who loved Hershey’s Chocolates placed a large order to be delivered to Britain. The order paid off his debts with money to purchase more equipment and ingredients.

With 1,300 employees in two factories in the late 1890’s, Lancaster Carmel Company exemplified Milton’s level of commitment to opportunity. Using this fortune from his estate of hard work and persistence, e.g., commitment, he invested the $1.0m in thirty acres in Derry Township, PA.

With dedication in candy research and development with trial and error, he produced the first Hershey bar in 1900. Hershey’s kisses followed in 1907.

When the Great Depression hit in 1929, life in Milton’s town seemed even better.

And for the rest of the story, visit Hershey, PA, virtually.

Success wasn’t early or easy for Milton Hershey, but dedication and commitment was everything.

 Summary: “The success of an organization, e.g., a business, is the product of the loyal commitment in the organization to its purpose, values, vision, and mission.”

You need devoted commitment during a business crisis to thrive. What is your level of commitment today to your enterprise?

Covid-19 PA Business Update

Jacob M. Dietz

PA Construction to Resume May 8.

In a press release dated April 20, Pennsylvania Governor Wolf indicated that construction may begin Friday, May 8th.  There is currently some construction that has been considered life-sustaining already, and the administration is not preventing that from continuing.

The Wolf administration will have safety guidance for construction companies to follow after they resume work on May 8th.  When that guidance is available to them, construction owners may want to consider studying it and making plans to implement it so that they are ready to go when May 8th comes.

Here is a quote from the press release:

“Public and private residential and non-residential construction may resume statewide starting Friday, May 8, in accordance with safety guidance that will be issued by the administration shortly. Construction projects already deemed life-sustaining may continue while adhering to social distancing, personnel limits and other guidance as announced by the administration.”

Flexibility for Local Governments

In another press release dated April 20, it was announced that Governor Wolf signed Senate Bill 841.  Among other things, this bill allows taxing districts to avoid collecting fees and penalties for real estate taxes paid by the end of the year.  If you owe real estate taxes in Pennsylvania and cash is tight, you may want to check if your local taxing authority will waive penalties and fees as long as you pay by the end of the year. It might be risky to assume that they will not charge you without first checking what your local taxing jurisdiction is doing.

PA Stay-at-Home Guidance

Governor Wolf and Secretary Levine’s Stay-at-Home orders have been extended until 12:01 AM on May 8th.

PA Worker Safety Press Release

An April 15 press release details worker safety procedures for PA businesses that are allowed to remain open.  Here are some excerpts from it:

“Provide masks for employees to wear during their time at the business, and make it a mandatory requirement while at the work site, except to the extent an employee is using break time to eat or drink, in accordance with the guidance from the Department of Health and the CDC. Employers may approve masks obtained or made by employees in accordance with this guidance;”

“Ensure that all employees who do not speak English as their first language are aware of procedures by communicating the procedures, either orally or in writing, in their native or preferred language.”

There are also steps to take if there is Covid-19 exposure at the business, such as ventilation, disinfection, and notification of employees in close contact with the infected employee.

Although the business landscape keeps changing, continue to move forward wisely, prudently, and courageously.

This article is general in nature, and it does not contain legal advice. Contact your advisors to discuss your specific situation

Preface: Donald Sauder with Sauder & Stoltzfus, LLC is participating in the following Webinar with host Roy Herr at Rosewood Marketing, LLC.

As a friend of the firm, you too are invited to join this Webinar & Phone Conference. Continue reading to sign up for Confidence in Crisis.

Webinar: Confidence in Crisis

In the fear of the LORD is strong confidence: and his children shall have a place of refuge.Proverbs 14:26 KJV

As we announced on Monday, Rosewood is offering another event to business leaders who are struggling to lead through the COVID-19 crisis. We plan to host a 90 minute Confidence in Crisis Webinar and Phone Conference next Tuesday, April 21.

You will hear the best ideas, principles, and information gleaned from the round table discussions this week. A “Question and Answer” time will be included at the end of the session. Registration is free. 

Here are details for the webinar:
Date: Tuesday, April 21
Time: 1:30-3:00 PM EDT
Format: Dial in by phone or join by video
Speakers: Roy Herr from Rosewood Marketing, Donald Sauder from Sauder and Stoltzfus 

Registration Deadline: Monday, April 20 – 12:00 PM EDT (noon)

To register for the Confidence in Crisis webinar, click here or call Rosewood Marketing at 717-866-5000 and ask for Courtney at extension 101. Please register to be guaranteed a seat. We want to make sure we have the resources available to accommodate everyone.

If you’re not already subscribed to the Confidence in Crisis email/fax list, click here or call 717-866-5000 and ask for Courtney at extension 101. This will ensure you get invited to upcoming events and receive short articles on how to get through this crisis.

May God give you much wisdom in your leadership decisions today.

With Courage,
Roy for the Rosewood Team

Register for the Confidence in Crisis webinar by clicking here or call 717-866-5000 and ask for Courtney at extension 101.

To subscribe to the Confidence in Crisis email/fax list, click here or call 717-866-5000 and ask for Courtney at extension 101

Covid-19 Deferral of Tax Payments

Credit: Jacob M. Dietz, CPA

 Income Taxes

In response to the novel Coronavirus (Covid-19) the federal government and various state and local jurisdictions have extended the deadline to pay the 2019 tax balances and the deadline to pay the first and second quarterly estimates for 2020.  Generally business owners should pay the 2019 tax balances on or before the due date.  In most cases, that will be July 15.  If you are unsure of the due date, feel free to give us a call or email.

For the quarterly estimates, however, consider carefully before paying them.  If your income will be reduced for 2020, then you may not need to pay quarterly estimates, or you may not need to pay as much in quarterly estimates.

If you pay more than will be needed for quarterly estimates, you may request a refund when filing your 2020 tax return in 2021.  What if you need the cash later in 2020, however, after you already paid in the quarterly estimates? That could be frustrating to operate your business without enough cash.

If you pay too little in quarterly estimates, then you may find yourself owing interest and penalties in 2021 when you file your 2020 tax return.  You might find it worth it to pay those penalties and interest, however, if the cash helped tide you over during a rough time.

In summary, pay your 2019 taxes on or before the due date.  For 2020 estimates, consider whether you want to pay them, skip them, or pay reduced estimates.  If you want to discuss, please call or email us.

PA Sales Tax

Certain businesses are required to pay Accelerated Sales Tax (AST), which is essentially a payment of sales tax during the month which will be applied against the sales tax due after the month ends. For April 2020, PA is waiving the AST requirement. Businesses still must remit what was collected for March, but they don’t need to make the AST payment towards April’s sales tax. This waiver also applies to May and June.

Employer Social Security Taxes

The CARES act allows employers to defer their portion of social security tax. Please note that this particular deferral does not apply to other payroll taxes. There are, however, credits which may allow an employer to take a credit against other employment taxes, but those credits are beyond the scope of this blog. Please also note that an employer that has a Paycheck Protection Program loan forgiven no longer qualifies for this deferral.

Self-employed taxpayers, that are not 4029 exempt, may defer payment of 50% of the social security tax on their earnings. They could therefore pay less in estimated taxes.

If an employer defers their portion of social security tax, then half of it is due 12/31/2021, and the other half is due 12/31/2022. Before taking advantage of this deferral, ask yourself what will happen if 12/31/2021 arrives, and you are unable to pay at that time?

Options

This blog only mentions some of the various options available as you navigate these times. These deferral options allow businesses to delay making payments, which may help cash flow, but do not involve accepting free money. Before making big decisions, seek information, talk with your advisors, and weigh the options. “In the multitude of counsellors there is safety.”

This article is general in nature, and it does not contain legal advice. Contact your advisors to discuss your specific situation.

 

Great By Choice | How to Manage Through Chaos

Jim Collins and Morten T. Hansen | October 2011

“None of us can predict with certainty the twists and turns our lives will take. Life is uncertain, the future unknown.”

Preface: Great By Choice | How to Manage Through Chaos is a invaluable book that gifts readers with clarity and effective business guidance amidst future unknowns, while abetting faith in and achievement of the vision and energizing purpose of your enterprise.

“We cannot predict the future. But we can create it.

Think back to 15 years ago, and consider what’s happened since, the destabilizing events — in the world, in your country, in the markets, in your work, in your life — that defied all expectations. We can be astonished, confounded, shocked, stunned, delighted, or terrified, but rarely prescient. None of us can predict with certainty the twists and turns our lives will take. Life is uncertain, the future unknown.”

 “But when you 20-Mile March, you have a tangible point of focus that keeps you and your team moving forward, despite confusion, uncertainty, and even chaos.”

“In contrast, Scott would sometimes drive his team to exhaustion on good days and then sit in his tent and complain about the weather on bad days. In early December, Scott wrote in his journal about being stopped by a blizzard: “I doubt if any party could travel in such weather.”

But when Amundsen faced conditions comparable to Scott’s, he wrote in his journal, “It has been an unpleasant day — storm, drift, and frostbite, but we have advanced 13 miles closer to our goal.” Amundsen clocked in at the South Pole right on pace, having averaged 15½ miles per day.”

“…….Financial markets are out of your control. Customers are out of your control. Earthquakes are out of your control. Global competition is out of your control. Technological change is out of your control. Most everything is ultimately out of your control. But when you 20-Mile March, you have a tangible point of focus that keeps you and your team moving forward, despite confusion, uncertainty, and even chaos.”

Easter Greetings Clients and Friends

May this Season of Easter bring a time to reflect joyously with the significance of the New Hope, New Beginnings, and New Life, from our risen Savior.

Wishing you an Easter with an abundance of peace; and the Blessings of a Triumphant Resurrection.

God Bless you and yours,

Sauder & Stoltzfus, LLC