With only a few days to go before the end of a difficult year, some accountants and tax professionals are still hoping to finish up some perplexing issues for their clients before New Year’s Day.
One of those involves the Paycheck Protection Program, which has now been extended by the latest round of coronavirus relief legislation that President Trump signed into law on Sunday. Thanks to the new legislation, businesses will now be able to deduct business expenses for forgiven PPP loans.
“I do a lot with professional services firms — law firms, doctors’ offices — and everybody was really, really nervous about the Paycheck Protection loans, and whether the expenses were going to be deductible,” said Evan Morgan, director of tax services at Kaufman Rossin, a Top 100 Firm based in Miami. “I can tell you that this law uncategorically says that all expenses that were paid to meet the requirements of having the PPP loans forgiven are now deductible. That’s a very big deal, particularly because they weren’t sure how to plan for this. Professional services firms are a little bit different from normal entities in that they like to pay out all of their profits in the form of salaries prior to the end of the year.”
Besides matters pertaining to the PPP and other provisions of the CARES Act, accounting firms and their clients have needed to cope with issues left over from the Families First Coronavirus Response Act and what happens from providing paid leave to employees. Other issues may involve what to do with any payroll taxes that have been deferred under the coronavirus relief laws, as well as issues involving workers who have been furloughed or needed to reduce their hours.
Payroll provider Paychex has posted a 2020 year-end checklist for small businesses and their accountants. It advises, among other matters, for businesses to report all COVID-19 related tax credits with a Dec. 31, 2020, or earlier check date, as well as report Employee Retention Credits under the CARES Act. If a business overlooked reporting this information in previous quarters, it can still be reported in the fourth quarter. They will need to report any qualified wages for the Employee Retention Credit, in addition to qualified health plan expenses on wages reported for the Employee Retention Credit. If a business allowed its employees to defer their payroll taxes, the amounts are due for repayment by Dec. 31, 2021, and employees should be reminded of this.
Christopher Ewing is the founder and Chief Strategy Officer of One Inc. A long time entrepreneur raised in Sacramento, CA, Christopher has a proven track-record building effective teams and partnerships to deliver innovative solutions to customers.
Christopher began his insurance industry career in 2003 as the President and CEO of Keenan Holdings. He also served as the CTO and General Counsel of Cost-U-Less Insurance Center, growing the company from 32 locations to more than 100. Chris was also the Co-Founder, President, and CEO of Stonewood Insurance Services, Co-Founder and CTO of ClearSide General Insurance Services, and Co-Founder, General Counsel, and Executive VP of GreenPath Insurance Company.
Christopher received his Bachelor's degree in Business Administration from the University of California, Riverside, and his Juris Doctor from University of the Pacific McGeorge School of Law.
Mark Snyder is the principal consultant and claims subject matter expert at Hi Marley.
He is a proven leader and P&C insurance claims optimization expert with significant experience in quality management program design, insurtech and digital strategy operationalization, operational transformation, project management and training development and delivery.
Mark also has deep claims technical handling, management and auditing knowledge and skills across all major lines of business and select specialty lines.He previously held leadership positions with Ohio Casualty, Liberty Mutual, Athenium Analytics and Aon Inpoint.
Elad Tsur, chief AI officer at Applied Systems, is a serial entrepreneur who is passionate about bridging the gap between technology and business – specifically in insurance and other financial services.
Prior to joining Applied Systems in 2024, he was co-founder and CEO of Planck, where he helped create an AI-based data platform for commercial insurance that enables insurers to grow new and organic business while drastically reducing their loss and expense ratios.
Before launching Planck in 2015, Elad started BlueTail Corporation, which delivered the first comprehensive AI platform for customer relationship management. Acquired by Salesforce.com in 2012, today it is known as Salesforce Einstein.
“Keep an eye on the reporting that’s required,” said Michael Savage, senior manager of ENS product operations at Paychex. “That takes on a new tone with COVID-19 and all of the legislation that passed to support small businesses and just support businesses in general. Businesses that took advantage of tax credits or paid sick leave wages, that will have an impact on reporting at this time of year, whether it’s the W-2 or 941. Being conscious of how those will impact reporting is really important.”
The quality of the data is also going to be critical this year for employee reporting, he added, including having the correct addresses, Social Security numbers and wage information. “They’re always important every year, but they definitely take on a new importance this year with COVID-19,” said Savage.
Paychex has created an online Coronavirus (COVID-19) Help Center, which includes a PPP Loan Forgiveness Estimator that accountants can use with their small-business clients to help estimate how much of their PPP loan may be forgiven.
Savage believes that small businesses are going to be relying on their accountants more than ever in the year ahead. “These are challenging times for small businesses,” he said. “They don’t necessarily have the expertise in-house to understand all of these complicated changes in the IRS Code, so they’re leveraging their trusted advisors — whether it’s their CPA, their payroll provider or an attorney — and really taking advantage of those relationships at this critical time. We’re seeing too that the do-it-yourselfers that have been prevalent in the small business space are really starting to shift more to leveraging providers that can really provide that expert counsel and advice in these situations.”
