What I have done as a small business accounting practice to prepare for PPP round 2
Read how I am taking advantage of the federal grants and how I am advising my clients to take advantage of
As an accountant, I have worked with many clients that have businesses as well as I have opened many businesses myself. I have my accounting practice, a catering business and an online jewelry business. Two of my businesses have taken hit due to the decline of the economy. I have been privy to the knowledge of how I can use the legislation to my advantage.
The first thing that I did when the house was talking about new legislation was fire myself from all of my businesses. This means that I am now eligible to claim unemployment for myself. This means as an employee in the state of Florida with Florida businesses I can claim $275 personally a week with an additional federal aid of $300 for a total of $575 for 11 weeks which means I can be eligible for $6325 in Unemployment personally. I did not do this the first round of unemployment and the funding because funding rules and regulations were up in the air and I was unaware of double dipping.
In 2020, I paid the state of Florida $567 for my Unemployment insurance across my businesses. In 2019, the state of Florida was paid $1,323 in unemployment insurance on my behalf between 7 employers. While I do feel bad that I do have some revenues coming in my businesses, I am going to discontinue my owner draws and let the business accumulate that income and go without a paycheck for the time being.
Secondly, I am preparing for PPP round 2 and EIDL grants round 2. In round 1, I was able to only get funding for one of my businesses. This time, I am going to make sure that I can get funding for all businesses and us the funds to resume salaries for weeks 11-24 for PPP. The EIDL grants are going to be fully based off of lost revenue and percentage of revenue. I will be applying for all three businesses vs just one.
When I file my fourth quarter employers forms I am going to include the employee retained credit that will allow for me to get some of the payroll taxes that I paid on myself back.
This does take a lot of work to make sure that you are compliant and can prove revenues and resources but it is well worth it. To begin, I opened 2 new business bank accounts today with smaller online banks that are SBA approved and offer interest checking accounts. I also prepared my financial statements and got them ready for submission as they show well over the 25% decrease. I will be ready to show both the SBA and the banks my statements and hopefully get approved with funding.
When it comes to the PPP loan, I can opt in to defer my taxes until 2022 for my payroll when I pick it back up on week 12, or I can opt in to the Employee retention credit where I can pay close to 50% of the due taxes.
This all means more money and aid is staying in my pocket after a tough economic hit and amazon and grocery stores have been having the best years ever. This is time in when businesses have to use every resource available to keep afloat especially because business may not resume as normal until July for many individuals.
If at any point I use any of the money that I pay myself from PPP or from Unemployment or from stimulus I will write that to the business as a shareholder loan. This way when the business pays me that back I do not get taxed on it again.
In all, making smart business moves can be very hard and tedious, but it can lead to more money in your pockets and many funds being tax free.