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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

Preface: “Wisdom knows the right path to take. Integrity is taking it.” M.H. McKee

The Coronavirus Stimulus Package Segment II

“Wisdom knows the right path to take. Integrity is taking it.” M.H. McKee. For entrepreneurs, whether newcomers or seasoned executives, the path forward for entrepreneurship has quickly reached perilous terrain more challenging than most could have envisioned a few months earlier. For some, it may seem like this month it is going where there is no path, and blazing the trail, e.g., entrepreneurial trailblazing.

The passage of the new CARES Act in late March brings with it revised tax laws that provide improved trailblazing tools to help navigate the uncharted terrain. In this Segment II, we’ll discuss some more specific individual and business tax features of the Coronavirus Stimulus Package.

CARES Act Provisions for Individual Taxpayer

Firstly, the CARES Act provides individual taxpayer a rebate check of $1,200 per taxpayer, or $2,400 for those married filing jointly, plus $500 for each child. The in-process rebate checks begin to be reduced above $75,000 for individual taxpayers and $150,000 for those married filing jointly benchmarked to 2018 or 2019 adjusted gross income. These rebate checks are from the US Treasury and require a social security number to be eligible for the taxpayer appropriations.

In addition to rebate checks, the CARES Act provides an exclusion from income payments of W-2 recipients for student loans. This legislation offers employees the opportunity to receive tax-free earnings and subsequent payments to be made directly on student loans for either a taxpayer or child up to $5,250.

The CARES Act waives the minimum distribution requirement. It also waives the 10% penalty on early withdraws up to $100,000 from qualified retirement plans for coronavirus reasons for the 2020 tax year.

Therefore, those with retirement savings who experience adverse financial conditions from layoffs, reduced hours, quarantine or employment shutdowns can finance the emergency costs from their retirement account. If these distributions result in taxable income to the account holder, they can recontribute the withdraw, or it is subject to tax over three years.

For those enjoy charitable contributions, the CARES Act provides an increased benefit with a $300 above the line deduction for contributions from individual taxpayers. Therefore, even for those who do not itemize, a $300 cap deduction is now permitted.

Also, enhanced Pandemic Employment Assistance Programs effective immediately will be available through December 31, 2020.

CARES Act Provisions for Businesses

A tax credit is now available for employers who retain their employees and pay them if operations are suspended due to business shutdowns, or from declines in sales revenues. This credit is equal to 50% of the qualified wages paid to employees, including health benefits, and is limited to $10,000 per employee for the quarters. This credit applies to wages paid from March 13th to December 31, 2020 for qualifying purposes.

Secondly, the CARES Act, legislates deferral of payroll taxes to improve employers’ liquidity and help retain employees during adverse conditions and business shutdowns. This feature permits 6.2% of payroll taxes to be deferred for employers and paid 50% on December 31, 2021, and 50% December 31, 2022. Note of caution, with the trust fund features of payroll taxes, employers who apply for this tax benefit, may add operating risks with future liquidity.

The CARES act increases the number of permissible deductions for business interest to 50% of the taxpayer’s adjusted taxable income for 2019 and 2020. The CARES Act also permits a five-year carryback of net operating losses for 2018, 2019, and 2020 tax years. This revises the current NOL carry-back for farmers only. With the revised NOL carryback, businesses will be able to amend back to 2013 to capitalize on the carryback benefits.

So as the entrepreneurial trailblazing begins anew this month, a song can be worth more than million words. We’ll conclude with an especially good word of wisdom in verse from William M. Golden penned in 1918.

“Each day I’ll do a golden deed

By Helping those who are in need

My life on earth is but a span

And so I’ll do the best the I can.”

Thank you for your time to read our blog. If you’d like to be entered to win a $10 Amazon gift card, please participate in our readers survey on the current Coronavirus business climate.

Thank you for reading!  Enter to win a $10 Amazon Gift Card

 

The Coronavirus Stimulus Package (Segment I)

Preface: Although we are accountants and not bankers, the following is provided for informational purposes only from the new CARES ACT. It should not be construed as tax or accounting advice. Contact your trusted advisor before making any loan decision.    

The CARES Act signed into legislation on March 27, 2020 provides two methods of government working capital loan outlets for small-businesses I) Economic Injury Disaster Loan 2) Paycheck Protection Program.

The CARES Act has revised the loan eligibility requirements for Small Business Loans (SBA). The CARES Act firstly with financing conduits, provides for qualifying small-businesses an Economic Injury Disaster Loan (EIDL). For these purposes, a qualifying business for the loan approval must have fewer than 500 employees or say be a sole proprietorship or an independent contractor;

Qualifying small businesses can forward applications directly to the SBA with the CARES Act legislation. The following loan application information will be required to be supplied: A) The applicant’s credit history; B) proof of the financial ability for loan repayment; C) proof of business jurisdiction in a Disaster Area; and D) proof the enterprises working capital losses are due to the COVID-19;

The CARES Act plan is designed for an SBA loan to be quickly approved for a business in a cash shortage. This feature is hinged on cashflow needs of the business and repayment terms with subsidized interest rates for qualifying small businesses. Loan fees are 5% for up to $350,000; from $350,000 to $2.0m of financing the rate is 3%; and from $2.0m and above the rate is 1%.

Loans of more than $25,000 may require collateral. The CARES Act provides a clause, so personal guaranties will not be needed for loans under $200,000.

The CARES Act also lifts the requirement that an applicant must not be able to obtain credit elsewhere. These loans will not be declined due to insufficient collateral or lack of collateral.

These emergency loan proceeds can be used for business working capital, payroll, and other general and necessary expenses that the business would pay if the disaster had not occurred. But loan proceeds are not intended to be used to replace lost profits or to finance business expansion.

Also, the CARES Act provides that during the period from January 31, 2020, through December 31, 2020, the SBA may advance an up-to-$10,000 grant to each applicant, funded within a three day period  after completing the application and forwarding for approval.

The grant is not required to be repaid, even if the business does not obtain a loan under the EIDL program, or say should the company possibly receive a grant under the CARES Act’s Paycheck Protection Program.

But if the applying business does receive approval for a grant under the Paycheck Protection Program, the amount of the advance will be reduced from the forgivable amount of such Paycheck Protection Program loan. The advance may be used to pay allowable costs:

I) providing paid sick leave to employees unable to work due to COVID–19;

II) maintain regular payroll to keep employees on payroll during the emergency payroll timeframe;

III) meeting increased costs to obtain supply chains failures;

IV) paying rents or amortizing mortgage payments;

V) repaying other long-term or current liabilities that cannot be met due to revenue losses.

Certain loan terms and restrictions apply, including retaining 90% of pre-crisis level employment. Loan application paperwork required include at least two years complete company tax returns, 2019 year-end financials and 2020 financials as of the current month-end.

Paycheck Protection Program

With payroll pressures avalanching for the small business community, the Paycheck Protection Program in the CARES Act is designed to infuse cash quickly into the small- business community to keep payroll checks rolling on the presses.

Loans are limited to the lesser of $10.0 million or the sum of 2.5 times the average total monthly payroll costs for the prior twelve months with the CARES Act loan package.

Payments from the CARES Act Paycheck Protection Program loan packages can include:

• • • 1. Employee salaries, vacation pay, and PTO to family, medical, or sickness, severance payments, payments required for retirement, or state and local employment taxes.
      2. Interest payments on any mortgage or debts on the balance sheet before February 15, 2020.
      3. Rent(s)
      4. Utilities

This newly minted Paycheck Protection Program requires no personal guarantees on behalf of borrowers or collateral pledges. These express loans contain non-recourse features for financing if used for qualifying purposes.

Also, even if other credit sources are available, qualifying businesses can still be approved for express funding. Payments of principal, interest, and fees will be deferred for six months, but not more than one year.

Chances are your business can likely qualify for an express loan package.

The Paycheck Protection Program loans qualify for forgiveness with certain conditions, and forgiveness is not taxable. Credits have a ten-year maturity date. Employees funded on these payrolls must have wages less than $100,000 on an annualized basis to qualify.

Immediate cash infusions on loans for payroll up to $1.0M with seven-year terms can be approved or denied in less than 36 hours. Stock buybacks are prohibited during this loan repayment as well as dividends.

While for many it may seem the economic caramel factory machine has been abruptly halted in and around the nation from Covid-19, these CARES Act loan features are designed to help with the task of restarting it; and that will be a unique challenge for everyone likely.

 

Managing Your Cash Flow During the Coronavirus Crisis – A Webinar 

Ami Kassar, is the founder and CEO of MultiFunding LLC, and author of The Growth Dilemma. He is a nationally renowned expert on access to capital for entrepreneurs. He’s committed to ensuring that business owners have the best possible access to the capital structures to help grow and manage their businesses. Kassar is regularly featured in the national press and writes a regular column for Inc.com. He has advised the White House, the Federal Reserve Bank and The Treasury Department on the business credit markets. In addition, Kassar is a regular speaker at universities and business events across the country on topics including entrepreneurship and access to capital.

Managing Your Cash Flow During the Coronavirus Crisis  Webinar Link

Covid-19 Business Update II

Donald J. Sauder, CPA | CVA

The Families First Coronavirus Response (FFCRA) legislated on March 18th, 2020, provides revisions to employment laws for employers who employ fewer than 500 employees, including both full-time and part-time positions. It takes effect on April 2, 2020.

The revised employment laws provide both sick pay with the Emergency Paid Sick Leave Act and paid leave to employees under the Emergency Family and Medical Leave Expansion. Employers are provided an employment tax credit to compensate for the costs of both the paid leave and sick pay.

Benefits of Families First Coronavirus Response include:

• • • • Free coronavirus testing;
      • Nutrition waivers, to allow students who receive meals at school;
      • Emergency paid sick pay;
      • Emergency unemployment insurance stabilization;

Families First Coronavirus Response does not apply if employees are furloughed or with the lay-off of employees before April 2, 2020.

State and local laws may have separate implications. Contact a labor attorney before making any decisions that could subject to employment law risks.

Emergency Paid Sick Leave Act

Emergency Paid Sick Leave requires employers with fewer than 500 employees to provide paid sick leave. Businesses with fewer than 50 employees may claim an exemption from the paid sick leave requirements if it would jeopardize the business. This definition is yet to finalized for what qualifies an employer for the exception.

Except for health care providers and first responders, all employees are eligible to take paid sick leave under the FFCRA regardless of their duration of employment.

Full-time employees are entitled to take up to 80 hours of paid sick leave. Part-time employees also qualify for pay based on the average hours of equal to hours worked over two weeks.

Qualifying reasons for employees to be entitled to paid sick leave include:

• • • • • Advised by a health care provider to self-quarantine due to concerns related to Covid-19;
        • They are subject of a federal, state, or local quarantine or isolation, i.e., business shut-down;
        • Experiencing symptoms of Covid-19 and are seeking medical diagnosis;
        • Caring for an individual who is subject to an isolation order or is quarantined;
        • Caring for a child if the child care provider is unavailable due to a Covid-19 precaution, or the school or place of child care is closed;
        • They are experiencing any other substantially similar conditions outline by the Secretary of Health and Human Services;

Paid sick leave will be paid at the employee’s regular compensation rate capped at 100% of wages up to $511 per day, or a total sum of $5,110 for employee’s subject to reasons one, two, and three above. Then for employees in categories four, five, and six, the wages are up to $200 per day or a total sum of $2,000.

This sick pay is added to any existing sick leave the employer provides. Employers may not require employees to use other sick before the newly legislated Emergency Paid Sick Leave.

Employers will be entitled to a tax credit for the amount of paid sick leave paid

The Emergency Family and Medical Leave Expansion Act

The Emergency Family and Medical Leave Expansion Act require employers with fewer than 500 employees, and exclusions may yet be issued for small businesses with fewer than 50 employers when it would jeopardize the viability of the company.

With this Act Employees are entitled to take up to twelve weeks of job-protected leave.

Reasons employees can take job-protected leave include caring for a child under 18 if the child’s school or place of care is closed or the child care provider is unavailable.

The first ten days of this job-protected leave can be unpaid. An employee can elect, but not be required to use accrued vacation, personal, medical, or sick leave for those days. Paid leave is subject to a limit of $200 per day, and up to a total amount of $10,000.

Today is today, and after all, tomorrow is another day. With the rapidly speeding changes in the business landscape, please talk with a labor attorney before making a labor decision in the current business climate.

DISCLAIMER: The above text does not constitute legal advice and has been prepared for informational purposes only. Please contact your legal advisor with questions about how this relates to your specific situation.