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How Will Your Business Respond To COVID-19? Practical Information & Financial Solutions.

Be Realistic & Plan to Thrive

As with a any “black swan” event, COVID-19 took the us all by complete surprise.

Your focus as a business owner now has to be on protecting your employees, managing your business risk, and positioning your company to survive and thrive.

The U.S. lockdown to stem the spread of the coronavirus will likely last at least 10 to 12 weeks, or until early June, Treasury Secretary Steve Mnuchin said Sunday.

What would that mean for your business and employees?

This is going to last long. Despite what anyone says, the future is uncertain.

Do not get demoralized. Prepare to thrive. But be realistic.

This eventually will end and businesses that can survive will be positioned to thrive for years to come.

Treasury Secretary Steven Mnuchin also told CNBC on last Monday there will be a surge in demand for stocks once the coronavirus threat abates.

I believe this pent-up demand will extend to small businesses since everyone currently is stuck at home or panic buying all goods and supplies.

The problem is that if your business is impacted by COVID-19 shutdowns you have to start realistically thinking about how to survive for 3 months or more with no cash flow.

Most businesses can’t survive 3 months with no sales.

As always, there will be opportunities.

We’ve seen many company’s capitalizing on opportunities from Coronavirus related contracts and other services that help people with working remote.

Inevitably, there will be some losses.

However, an appropriate response can massively lessen the downside.

Our team is there to support you every step of the way.

 If you have an opportunity or risk on the horizon and want to discuss, set up a time here or email me directly to set a time to speak.

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Properly Forecast & Manage Your Cash Flow

During good times most companies focus on the profit and loss statement.

Growing revenue and reducing costs.

During economic times like this it is crucial to focus on your balance sheet.

Cash flow is king.

Properly forecasting and managing your cash flow are skills required in our new economy.

The healthcare community is being very aggressive in fighting the Coronavirus.

Similarly, you need to be just as aggressive in managing your cash flow. 

Managing payables, receivables and other cash flow related issues is key to financial survival.

If you would like to work on cash flow forecasintg and management for your business contact our team here.

Be Ready To Pivot Your Businesses Services, Industries and Workflows

You should do is start getting creative with your business.

How can you restructure your services to function remotely?

 What new relevant services can you offer to ensure that your revenue is not impacted by COVID-19?

What industries can you help who are either are experiencing significant revenue growth or reduction?

Small Business Administration COVID-19 Disaster Assistance Loans for Economic Injury

The Small Business Administration is giving loans businesses affected by COVID-19 at a maximum for $2,000,000 per company.

The interest rate is 3.75% for small businesses.

The Federal Government has now approved small business loans in almost States.

These loans will be competitive, strict regarding financial information quality, in high demand and harder to get as funds become allocated to businesses.

How does it work?

There are significant documentation requirements including:

·        Most recent Federal income tax returns

·        Personal Financial Statement

·        Schedule of Liabilities listing all fixed debts

·        All SBA Paperwork

·        Year-end profit-and-loss statement and balance sheet

·        A current year-to-date profit-and-loss statement

·        Monthly sales figures for increases in the amount of economic injury

We are actively assisting businesses with the filing process and financial documentation. 

If your business has been financially impacted for COVID-19, including impacting sales figures, contact me and my team today to discuss the filing process and next steps.

Payroll Tax Credits

The U.S. Treasury Department, Internal Revenue Service and the U.S. Department of Labor announced that small and midsize employers can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees.

These credits allow for paid sick leave for workers.

Family and Medical Leave

There is a credit for an employer whose employees cannot work because they are carding for a child.

The credit up to $200 per employee at a maximum of $10,000 per employee. This credit is refundable.

Emergency Paid Sick Leave

There is a credit for an employer whose employee quarantined due to COVID-19

The credit is up to $511 a day up to 10 days at a maximum of $5,110 per employee

Additionally, there is a credit for an employee that is caring for someone who quarantined due to COVID-19.

The credit up to $200 a day up to 10 days at a maximum of $2,000 per employee.

These credits generally may not exceed your quarterly payroll tax liability.

Are you ready to take this credit in the upcoming payroll tax filing deadline?

We are actively assisting businesses with the planning and compliance related to these credits. 

If your business has been financially impacted for COVID-19 related to sick employees, contact me and my team today to discuss the planning, filing process and next steps.

Future Legislation

More assistance for business owners will be announced shortly including more loans and possible cash support.

We are updating our clients weekly and often daily. Follow me here on LinkedIn for future updates.

I will continue to keep you updated on the most important tax and financial information as we get through these times together. 

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What To Do If You Have Not Reported Your Real Estate Investments On Last Year’s Tax Return

Here at Camuso CPA, we offer a wide array of tax services for real estate investors including tax preparation and tax planning. If you are interested in how this might specifically benefit your business or portfolio, please don’t hesitate to reach out in detail today to schedule a free initial consultation regarding your specific facts and circumstances.

The IRS can go back up to three years to prosecute cases of tax evasion, and in cases where they find substantial error, they can decide to go back up to six years or more. If you did not report your real estate transactions properly in prior years the best course of action is to file an amended tax return.

Step 1: Calculate Your Tax Liability

When preparing your tax return, you are going to have to figure out your taxable income from your real estate investments for the year. This involves figuring out how much of your assets were sold for capital gains. Additionally, if you own rental properties you will have to determine the amount of taxable income to report from your portfolio.

If doing real estate tax is proving to be a challenging feat, you should consider enlisting the services of a qualified CPA at a professional tax firm such as Camuso CPA.

Step 2: Amend your return

Once you have determined your capital gains and tax liabilities, you should download a current IRS Form 1040X, Amended U.S. Individual Income Tax Return

Step 3: Mail in your amended return

After preparing your amended tax return to reflect your real estate transactions they will be mailed to the IRS along with all applicable tax payments.

While paying taxes can at times be painful, it is very important that you include your real estate businesses and portfolio properly on your tax return. Ultimately, if you choose not to file your gains/losses and/or income, you will be committing blatant tax fraud to which the IRS can enforce a number of penalties, including criminal prosecution, five years in prison, along with a fine of up to $250,000.

Here at Camuso CPA, we do have the ability to offer tax preparation and planning services to our real estate clients. If you are interested into how this might benefit your business or portfolio, please don’t hesitate to give us a call today. One of our friendly and knowledgeable representatives will be happy to answers any questions you have.

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How To Calculate Depreciation On Rental Portfolios

Here at Camuso CPA, we offer a wide array of tax services for real estate investors including tax preparation and tax planning. If you are interested in how this might specifically benefit your business or portfolio, please don’t hesitate to reach out in detail today to schedule a free initial consultation regarding your specific facts and circumstances.

How To Calculate Depreciation On Rental Portfolios

If you own a rental property and want to take advantage of the tax breaks one of the most useful tax tools at your disposal is depreciation. Rental property depreciation allows investors to write off the structure and improvements to the property over a period of time. This is non-cash expense that you can use as a write-off on your taxes. Depreciation is one of the biggest benefits to real estate investing because it can reduce reportable net income and therefore, your taxes

Depreciation is the loss in value to a building over time due to age, wear and tear, and deterioration. You can also include land improvements you’ve made and items inside the property that are not part of the building like appliance and carpeting. You can only depreciate the improvements to the structure itself – not the land.

Depreciation deductions are spread out over the useful life of a property. The IRS allows an owner to depreciate the value of the home over a 27.5 year period. The time periods of depreciation can be adjusted based on the components of the property which can offer even larger tax planning opportunities. We cover this in other articles here.

It is important for all real estate investors to deeply understand depreciation and how it applies to their portfolio. There are many tax planning opportunities available related to depreciation.

Here at Camuso CPA, we do have the ability to offer tax preparation and planning services to our real estate clients. If you are interested into how this might benefit your business or portfolio, please don’t hesitate to give us a call today. One of our friendly and knowledgeable representatives will be happy to answers any questions you have.

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Items Required for Filing Income Tax Return

Below is a comprehensive list of the items that you will need to provide your CPA to file your income tax return. Best practice is to compile a file of these items throughout the year as applicable so they are available to send to your CPA as early as possible.

·         Basic Information

o   Full names, Social Security Numbers, Birthdays, and Addresses of self and all family members

o   Filing status election (Consult CPA)

·         Financial Information

o   All W-2s’s

o   All K-1’s

o   All 1099’s

o   Alimony

o   Business Income documentations

o   Rental Property Income documentation

o   Documentation for all income not included elsewhere

o   State tax refunds

o   IRA Contributions/Withdrawals

o   Mortgage Interest

o   Real Estate Taxes Paid

o   Any other taxes paid

o   All charitable contributions documentation

o   Medical expenses documentation

 

Be sure to consult your CPA about any expenses which you are not clear on in terms of qualification for deductions or exemptions. We are the Charlotte CPA to call for help with income taxes. Feel free to reach out to us at your convenience!

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