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.
Andrew is the founder of Planning Across the Spectrum. From his personal experience as an individual with ASD, he was inspired to create Planning Across the Spectrum to specifically work with individuals, families, and care teams of those with special needs. Andrew is a known national advocate for Autism awareness and serves on various boards and advisory committees. Andrew is CFP®, Behavioral Financial Advisor (BFA™), and Chartered Special Needs Consultant (ChSNC®) among his other designations. (He has more than Michael Kitces.)
Sandra Wiley is the CEO and chief strategist of Sandra Wiley Strategies. A regular member of Accounting Today's Top 100 Most Influential People, she is a certified Kolbetrainer who advises firms on building balanced teams, managing employee conflict and hiring staff, and was previously president of Boomer Consulting. Wiley is regularly invited to speak at national conferences, and has been published by many trade journals including CPA Practice Management Report, Accounting Today, Accounting Web, The CPA Practice Management Forum, The CPA Report of South Carolina, Lagniappe of Louisiana and The Asset of Missouri Societies. Prior to joining Boomer, she worked for over 16 years in the financial services industry in the areas of human resources, marketing/sales, training, and business development. Wiley is a graduate of Friends University, in Wichita, Kansas, where she earned a bachelor's degree in Human Resource Management. She also graduated with honors from the University of Colorado School of Bank Marketing. She and her husband make their home in Manhattan, Kansas. They have three children.
Sandra Wiley, COO & Shareholder, is ranked by Accounting Today as one of the 100 most influential people in accounting as a result of her prominent role as an industry expert on HR and training as well as influence as a management and planning consultant. Sandra is a certified Kolbe trainer who advises firms on building balanced teams, managing employee conflict and hiring staff.Sandra directs Boomer Consulting, Inc.'s annual Talent Development Advantage and offers her services as co-director of the Performance3 Academy Program as well as the CEO Advantage. She has been in the Strategic Coach Entrepreneurial Team Program for over 10 years and is responsible for communicating its concepts to clients and the Boomer staff.Sandra is regularly invited to speak at national conferences where she empowers audiences with new ideas and a sense of humor.She is a popular author who is frequently published by many trade journals including CPA Practice Management Report, Accounting Today, Accounting Web, The CPA Practice Management Forum, The CPA Report of South Carolina, Lagniappe of Louisiana and The Asset of Missouri Societies. She also contributes a regular column covering human resources to the Boomer Bulletin and penned an award winning marketing plan, Rebuilding the Community Bank, published by the Bank Marketing Association.
“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.”
