the white house | Paycheck Protection Flexibility Act

New PPP Terms: Senate Has Approved More Flexibility for the Paycheck Protection Program

Paycheck Protection Flexibility Act

The COVID-19 pandemic sent shock waves of financial hardship across the country. Many Americans were left unemployed as businesses experienced operational interruptions. Fortunately, in late March 2020, the CARES Act was signed which included $2 trillion in relief aid for Americans. Relief came in various forms such as a stimulus check for qualified Americans, federal unemployment benefits, and the Paycheck Protection Program (PPP).

While much of the CARES Act was straightforward, many businesses began to question the PPP. The Paycheck Protection Program originally allowed businesses to apply for aid and have their loan forgiven if certain criteria were met. For instance, 75% of funding had to go toward paying employees up to 8 weeks. The PPP Loan was created with the intention of putting Americans back to work and pushing the economy forward. However, many businesses struggled with meeting this stipulation due to their overwhelming expenses such as rent, utilities, inventory, etc. In other words, the remaining 25% simply wasn’t enough to cover expenses and still qualify for loan forgiveness. 

congress podium and flags | Paycheck Protection Flexibility Act

Business owners were left with one of three choices. 

  1. Accept the PPP Loan and follow the stipulations for loan forgiveness, knowing the potential financial risks. 
  2. Accept the PPP Loan, use it as needed, and face the possibility of paying it back. 
  3. Not accept the PPP Loan and hope that the business will survive.

Fortunately, Congress was made aware of the challenge surrounding the current PPP terms and created the Paycheck Protection Flexibility Act.

What is the Paycheck Protection Flexibility Act?

In brief, the new bill offers business owners more flexibility to allow for loan forgiveness. The new terms include the following:

  • Use of funding has been extended from 8 weeks to 24 weeks.
  • The 75% payroll spending stipulation has decreased to 60%, offering 40% for business expenses.
  • The June 30th deadline to rehire workers has been extended.
  • Loan repayment will start later than originally anticipated, which offers businesses more time to prep for repayment
  • Those who qualify for loan forgiveness will be able to defer payroll taxes

The Paycheck Protection Flexibility Act has been passed to President Donald Trump to sign. Hopefully, this final step will occur this week as many businesses are in much need. As an experienced CPA, my firm is ready to assist businesses of all sizes to apply for a PPP loan, or better structure their current one. Request a consultation today. Call (617) 462-6651 or book online here

 

july 15 tax dead line

Tax Deductions to Consider

Many Americans have not filed their taxes yet due to this year’s new deadline on July 15th. If you haven’t filed yet, double-check your deductions with a professional tax accountant. You may have missed one! Did you know that there are items you purchase or services you take part in that are tax deductions? Learn more below and contact Ash CPA for a virtual consultation today.

Income Tax and State Sales Tax 

Sales tax is one of those things you can use as a tax deduction as a tradeoff with your state income taxes. If you’ve made luxury purchases or major home improvements and the cost was greater than your state income taxes, you can claim them as a tax deduction. You can strategically make your purchases so they work to your advantage. Be sure to consult with a tax accountant to learn about tax-saving strategies.

Green Upgrades to your Home

If you have a primary residence that you own, invest in green upgrades. Some are tax-deductible! However, there are requirements for what you intend to do as well as for what state you’re in. The spectrum of upgrades you can make may range from heating and cooling HVAC systems to solar panels and wind turbines. Always consult with your tax accountant to assure you are making smart green upgrades.

Electric Cars

Don’t have a primary residence? Invest in an electric or Hybrid-Electric car. You could get a tax credit. The stipulations include the following.

  • Car must be purchased new
  • Car must not be leased

Be sure to double-check with your accountant as some car models may not qualify for one or reason or another.

Medical Expenses for Dependents

If you are north of 65 years old and your medical expenses, excluding elective and cosmetic surgery, exceed 7.5% of your gross adjusted income, you can deduct the expense. If you have dependent people that have incurred medical bills that exceed your gross adjusted income, you can deduct the expenses as well. This includes dental as long as it’s not cosmetic. 

Medical Tax Shelters

Medical savings accounts are a great tax shelter. A lot of companies offer these as a benefit. They aren’t the most popular for consumers because of the policies attached to them. However, you can claim the amount you personally contribute to it.

Service Animals

Service animals are a blessing to the lives of many people with disabilities. They’re a source of safety and comfort to those who care for them. The animal must be trained in some cases. They also have to be fed and medically kept up to par. So dog food, health checks, and training are deductible. 

Gambling Losses

If your losses offset the gains of your gambling, you can deduct them. Yes, the flight and hotel and what it cost you to have fun! So what’s included?

  • Trips and prizes won deducted at fair market value.
  • Raffles
  • Casino Gaming
  • Horse and dog racing
  • And of course Lotto

Learn More

Schedule a virtual consultation with Ash CPA to learn more about this year’s upcoming Tax deadline.  Our team can also prepare and file your taxes virtually! Call (617) 462-6651 or schedule an appointment here. We look forward to meeting you.

 

cares act - worker

Protecting Your Business with the CARES Act

It’s no question that America is suffering greatly from the effects of COVID-19. Infection and economical impacts are at large. Until a vaccine is created, America is likely to continue a health and financial impact. Fortunately, the CARES Act was created to offer relief to Americans including businesses. If your business has been impacted, we’ve summarized how the CARES Act can help protect your investment. Read more below and contact Ash CPA for further guidance.

What is the CARES Act?

The CARES Act stands for Coronavirus Aid, Relief, Economic Security. In brief, it is a $2 trillion dollar aid to help individuals and businesses that have been affected by the coronavirus. The aid is designed to stimulate the economy by relieving some of the financial hardship that many Americans are experiencing. More information is found below.

Individuals and Families

In this package, individuals making $75,000 or less are eligible to receive a stimulus payment up to $1200. Those with children can also receive an additional $500 per child. However, those who make more than $75,000 will receive less and those who make $99,000 will not receive the payment. In addition, married couples making $198,000 or more are also not eligible.

Federal student loans are also included in the relief package. From now until the end of September 2020, federal student loans are suspended. This includes garnishments. Borrowers can still make payments. However, interest will not accrue during this period.

CARES act - warehouse worker

Unemployment Benefits

Unemployment is also included in the CARES Act. Individuals who are eligible for regular unemployment benefits can earn an additional $600 per week and extend the payments up to 13 weeks. Also, independent contractors, gig workers, and freelancers are eligible for unemployment benefits. Ultimately, the amounts and total weeks will vary between states.

Business Protection with SBA Loans

Businesses can apply for payroll tax relief. This option helps keep businesses operating and pay their employees. Essentially, the relief offers tax credits and defers payroll taxes until the end of the year. It is important to note that businesses that apply for SBA loans will not qualify for the payroll tax relief. Also, business owners will have to repay the payroll taxes over the next two years.

Another option for businesses are Small Business Association (SBA) loans. SBA loans can assist businesses with 500 or less employees. They are meant to prevent layoffs and pay working employees. In summary, the loan will cover up to 6 weeks of payroll. This includes a weekly maximum of $1540 per employee. The total amount of the loan is calculated using last year’s total payroll cost and then multiplying that number by 2.5. Businesses that were not established in 2019, will need to represent 2020’s total payroll cost for January and February.

The SBA will require verification of payroll before and after receiving the loan. Specific details regarding the application and loan terms vary between applicants. Therefore, we highly recommend assuring that your financial documents are up to date to avoid delay. 

Owners can also apply for an SBA loan to cover other business expenses. This includes rent, equipment, utilities, etc. In addition, the loan can be fully or partially forgiven if the owner only uses it for business purposes and at least ¾ is used for payroll. For businesses that have laid off workers, you may still be eligible as long as the employees are rehired by June 30th. More information regarding criteria can be found here.

Learn More

Protect your business by learning more about the CARES Act and SBA loans. At Ash CPA, we can guide you through the SBA application process and make sure your financial records are up to date and accurate. Our team has over 20 years of experience providing accounting and bookkeeping services. Call (617) 462-6651 or book a consultation online. New clients are always welcome.

 

best bookkeeping framingham ma

Best Bookkeeping Practices for Small Businesses

Best Bookkeeping Practices

Successful business owners need to maintain their bookkeeping. Proper bookkeeping is an integral part of ensuring the business remains successful. Without it, you may not know how much profit you are gaining and how many expenses you incur. Plus, poor bookkeeping makes it difficult to accurately file taxes and can lead to business failure. Many small businesses prefer a professional bookkeeper, such as Ash CPA. Our firm is staffed with knowledgeable professionals and has over 20 years of experience. Nevertheless, if you decide to go at it alone, below are the best bookkeeping practices for small businesses.

Maintain Routine Inventory Audits

With regular inventory audits, you will be able to determine the exact amount of products. This is because some of the products may be missing due to theft by employees or vendors not delivering the correct amount of goods. Regular inventory audits will be able to highlight all the products that you have in your store. It will also enable you to keep the right amount of product in the store, creating more space for you in the process. Regular inventory audits will also allow you to analyze your sales and prevent overstocking of nonperforming products.

best bookkeeping framingham ma

Follow-Up on Your Invoices

Always follow-up on all of your invoices. Some clients are quick to make their payments, but others are not. The invoice could have been sent to an incorrect email or address. Other times, the client may not have read the invoice or marked it for payment. Therefore, keep track. Always follow-up on all the invoices sent, especially those that are over 30 days due.

Separate Business and Personal Expenses

You should not only keep track of your business expenses, but you should also have a separate account for the expenses incurred by the business. In addition to that, have a separate credit card for your business as this will significantly make it easier to file your taxes and be eligible for all business deductions.

Avoid Tax Penalties

By not paying the quarterly taxes on time, the government charges a penalty for all late remittances. You will pay more with the option of waiting till fall to remit your taxes as it will accrue penalties. All these can be avoided by saving a certain amount every month and paying the taxes quarterly. This will help you avoid evading or accumulating taxes while at the same time stabilizing your finances all year long.

Save Money

You may be faced with a situation where a piece of equipment that is vital to your business breaks down or requires repair or maintenance, yet you may not have the necessary funds to fix it. This may slow down business for you and lead to losses that could have been avoided if you saved some money for such situations. 

You may take a loan for such; however, setting some money aside will be more viable as it will come in handy without extra charges. Another workable solution is opening credit lines that can be used for operating expenses and act as an emergency fund source.

Create End-Of-Year Accounting Checklist

Having an end-of-year accounting checklist helps not only to prepare for taxes, but it is also critical to the long-term growth and success of the business. It will also give an insight into the business performance at the end of the year and will help you make more informed decisions to be more profitable in the coming year.

Contact Us

Ash CPA offers a wide range of solutions to help businesses of all sizes and dynamics succeed. Speak to us today to learn about the best bookkeeping practices. Call  (617) 462-6651 or book an appointment online. We proudly serve Framingham MA and surrounding towns.

tax audit framingham ma

How to Handle a Tax Audit

Tax Audit Framingham MA

Individuals and private business entities are required by law to complete their tax returns. Some people and business owners are not aware of their tax obligations, resulting in tax issues and audits. Therefore, it is important to know how to handle a tax audit and why a tax audit representative is essential. Learn more below and contact us today.

What is a tax audit representation?

Tax audit representation, also known as audit defense, refers to any service where tax or legal professionals defend the taxpayer for state or IRS tax audits. The law allows the taxpayer to have legal representation during an income tax verification. The legal representative should be registered and licensed by the IRS to practice within the specified region or state. The representatives are usually CPAs, attorneys, and enrolled agents. The audit representative serves on the interests of the taxpayer during the process. They ensure that all the required paperwork is updated and available, attends meetings, and serves as a link between the taxpayer and the tax authorities.

tax audit framingham ma

What is the tax audit process?

Audits occur at random or when suspicious items appear in tax returns, such as unusual deductions or stated income amounts. The state or IRS will notify the individual or entity via letter. The letter usually states that an audit will be conducted on a specific date. Usually, the letter will also require that certain documents be made available for the audit.  Depending on the audit, the taxpayer may need to simply submit the documents or formally meet with the auditor. Both of these instances should include a tax audit representative to assure the audit is properly handled.

It is prudent to reply to the letter from the tax authorities promptly. Ignoring the letter is not advisable. If you need extra time, you can ask to extend the date. When called upon to present yourself to the tax authorities, assess whether you need legal representation. Sometimes all is needed is clarity on the information provided in the tax forms. When not sure about what they require from you, it is essential to seek professional advice and guidance for a tax audit representative.

On the completion of the audit, the agent will assess the documents you provided. Next, the results of the case will be discussed. In other words, you may or may not be charged a penalty. If so, you can appeal. Having a competent, qualified, and experienced attorney, agent, or CPAs representative will help during this process. 

Learn More

Learn more about proper tax audit representation with Ash Wasilidas, CPA. He has over 20 years of experience assisting individual and business tax audits. Schedule a complimentary consultation today. Call  (617) 462-6651 or book an appointment online. New clients are always welcome!