Host Jeana Goosmann and guest Lynette Meyer, CPA at Nichols Rise & Company, talk about how business owners have been impacted during COVID-19 and how their CPA can help. Jeana and Lynette talk about various tax credits, loan forgiveness, the CARES Act, and other ways businesses can continue to operate during COVID-19 and post quarantine. During this episode you will learn:
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Do complex legal issues hold you back? Let's get energized and bring clarity to your top legal questions. This is Law Talk with the Flock by Goosmann Law Firm.Jeana Goosmann:
I'm Jeana Goosmann. Your host of Law Talk with the Flock. CEO , lawyer, author and woman business leader here to help navigate you and your way through business in your life as a leader and these current laws that we're dealing with and all the issues and business related to COVID-19. I am so excited to have with me today, my guest, Lynette Meyer , a Sioux City CPA and a Partner with Nichols Rise and Company. And she has been my personal CPA for a couple of decades now. Lynette, thanks for joining me today.Lynette Meyer:
Thanks for having me, Jeana.Jeana Goosmann:
Yeah, I'm super excited. We're going to talk about some of the hot topics that people are asking you. I've probably been asking you all kinds of people about what's going on with COVID-19 and all these different issues, especially as it relates to their tax landscape. So Lynette, what kind of things are people asking you about and what are you seeing right now?Lynette Meyer:
Well it's been challenging. Right. And we've been, the good thing is we've been forced to be resilient. We've been forced to think outside the box. Lots of good leadership going on. Lots of resources. By far the biggest challenge is that the resources are just coming out of the box like this without a lot of guidance. I think we all know when there's a new tax law, it can take months to get guidance on how it really applies in real life. And in this situation, the businesses just needed the help. The resources were all done a quick, the guidance was not, and it was very challenging. The bank, you know, as far as the PPP loans, for example, the banks weren't given a lot of guidance as far as how to write these loans. The business owners weren't given a lot of guidance as far as what applies and that sort of thing. They change the application process halfway through. So that's really been the biggest challenge. The Cares Act I think is wonderful. The spirit of the cares act is to keep our employees employed . And I really think that's the biggest focus of all business owners to , to keep your employees healthy and safe and comfortable and employed. Right?Jeana Goosmann:
They do. And I read the Cares Act. All 1200 pages of it and there was a lot in there and yet even when you read it and then when you're referencing back to the fact they wrote this application and then they revised it. And I know some people had their application all done and then they had to resubmit a new one and now loans have been funded. And I think we're still seeing new changes come out. I know just recently in theorists say something about, well, while you're not going to be taxed on their forgiveness, we aren't going to allow these expenses. And then now that's a controversy.Lynette Meyer:
Right? Which is ultimately the same thing, right. You understand that Jeana. If you can't deduct the expenses, then essentially it's taxable. Obviously you're still ahead. We don't let the tax court drive the horse sell ahead. But there are FAQ sell coming out every day and it'll be interesting once we get to the forgiveness period because that landscape is changing as well every day. And so , we'll just have to see how that plays out. It's been a challenge to stay on top of it, but everybody's doing their best.Jeana Goosmann:
Well , I actually saw Senator Grassley has a joint bill with some other people to try and reverse that so that they do allow it expenses for the Cares Act, which I personally hope that they do. I've never gotten too involved in politics as it relates to those things. But at right now I'm like, okay, go, let's make that law pass because it'd make a huge impact for people. And I think being in line with the original meaning of the law when they said that it won't be taxed when you're forgiven. Well then they should let people deduct those expenses too . I feel pretty strongly on that.Lynette Meyer:
Right. And we'll just have to see where that, where that ends up. This has all been a learning process for everybody as we go. There are a couple of really important things if businesses did get PPP funding. Yes , very important right now to first of all be keeping track of those expenses that apply for the forgiveness. And then maybe we'll rent mortgage interest utilities basically. So it's very important to track those very closely. And also is very important to watch your head count because there will be a reduction if your head count decreases. And there's a couple of different ways to check your head count, but it's as of June 30. If employees had to lay people off or for low employees, that's okay, but they have to be brought back, right? June 30 or your forgiveness could get reduced a little bit. So if you're going to hire people back in July, you need to hire them back in June.Jeana Goosmann:
Good tip. Good tip. And do they have to be full time employees too, don't they?Lynette Meyer:
Yep. Full time equivalents (FTE). So they don't necessarily have to be full time equivalent or full time employees because what they allow you to do is count the hours of your part time employees and combine them. So if you have two people working part time that are working 20 hours a week, that's an FTE. Okay. You can add them up, that you can combine them.Jeana Goosmann:
There are a lot of questions on what's going to be able to be forgiven at the end of this. Right. People got their money and they're still writing their rules and new guidances coming out all the time. I've never seen such rapid change so quickly in my whole career.Lynette Meyer:
Absolutely. I have not either. And, in fact, quite frankly sometimes that's been frustrating is because the change has not been rapid. But it is changing every day. Like I said, the IRS is still issuing FAQ and so we'll just have to keep our eye on it. I know that SBA has come out and said, anybody who got over $2 million will be audited by the SBA. So those larger companies will be audited. As far as the forgiveness piece, they haven't come out and made any statements about the smaller pieces as far as audits and that sort of thing. So we'll have to see where that ends up.Jeana Goosmann:
Well you're comfortable with audits so you'll be able to give people some good guidance on what does it mean to get audited. It will be , no, it won't be your first audit. So whenever things like that come, you've been really helpful. So I think as people are looking to the future too on their taxes, I know a lot of folks are still working on their 2019 taxes because there was a nice extension there.Lynette Meyer:
Yes, it was a very strange tax season because there was a lot more PPP work than 1040 work there at the end with the timing of it all. And a tax returns became a smaller , lower priority , as businesses were trying to navigate.Jeana Goosmann:
And now those 2019 returns are actually due in July.Lynette Meyer:
So they've extended everything to July, including the first and second quarter payments as of now.Jeana Goosmann:
Oh, the first and second estimates are also extended. Yep . Oh that's great. That's a good for people to know because it's hard to know what to estimate if you haven't gotten your taxes done yet. Right. That's right in there.Lynette Meyer:
Obviously there are big differences. A lot of times clients base their estimates on last year and that's not valid for hardly anybody this year. And so it is nice that we have that extra time to see where the first two quarters are really going to fall before you have to make any payments.Jeana Goosmann:
You bet. So what other kind of issues are people trying to address right now as they're planning for their business in the future? It's just a lot of uncertainty, a lot of them uncertainty .Lynette Meyer:
Certainly businesses have been affected all across the board. We've all heard the analogy though, same storm, different boat, right? The restaurants and bars and salons are certainly impacted differently than service industries and that sort of thing or essential type of industries are labeled essential. It is important to know that even if you know, the PPP money did run out. So it is important to note that if you didn't get funded for PPP, there are other resources. FMLA has expanded some of their rules as far as if you have an employee who either is showing symptoms that have some different rules as far as levels, but if they're showing symptoms, or if they have to stay home to take care of somebody with symptoms, or even if they have a child who can't go to childcare or school. And so they need some time off for that. FMLA has expanded and employers can get almost instant credit for paying those employees. You know , a certain amount, most of it's up to 80 hours. But I think that's really great if you have an employee who has a child at home and has to stay home. What the employer can do is pay them and then take a credit on their payroll tax deposit. And so it is almost an instant you get reimbursed for paying that employee to do what's needed at this time. So I think there's some things like that that are really great. There's also a credit that you can take a reimbursable credit that's along those same lines. So there are resources out there if you didn't get the PPP funding , don't just give up. There are resources to help us help our employees. So it's been a great time of seeing a lot of great leadership and thinking outside the box.Jeana Goosmann:
I love your comment too. Don't just give up. Right. I mean, that's what you have to do right now as business leaders just keep showing up and keep doing our best every day to lead these businesses and helping our clients even when there's some uncertainty. So I think that you're doing a great job at that, and I love that you brought up that there's some tax credits available in the payroll process and that doesn't take a long time for company , but needs to get that money back. Does it?Lynette Meyer:
No, no. A lot of companies deposit, you know, biweekly or at least monthly. And so when you normally would make your payroll tax deposit , which a lot of times is right when you pay the payroll, you get to just take a credit and offset it so you do get reimbursed quickly. It is important that you can't use, it seems obvious, but you can't use the same wages for like for PPP and these payroll tax credits. It's the payroll tax credits are designed for money that you didn't get from PPP. You bet they won't let you double dip. In other words, you're not supposed to double dip.Jeana Goosmann:
Very good. Well, thank you so much for all your guidance today and for having this discussion with me. I know that you're super busy helping businesses in this crazy time, and I really appreciate you joining me on Law Talk with the Flock. I want everyone to stay healthy and have a great day and go make it worth it. Thanks Lynette.Goosmann Law Firm:
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