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.
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.
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.
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.
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.