February Journal

Tuesday, February 2, 2021

February 2020 Financial Update

Happy Bookkeeping got a mention on Gusto’s website in their Partner Resources: How to Grow a Remote Accounting Practice and Avoid Errors – Advice from a Former Paralegal. That former paralegal is me! And I definitely have a remote accounting practice that tries to avoid errors! We are a Gusto partner, and Gusto is indeed my favorite tool for payroll – my business life would be a lot more messy without tools like theirs!

It’s February, and for bookkeepers like me, February is the end of many tax tasks and issues: the previous year’s books are often closed out or nearly there, 1099s and W-2s are sent, and inventories have been updated. February is a bit of a sigh of relief around our office as these extra tasks taper off before it’s time to prepare taxes.

This year’s tax tasks saw a new 1099 for contractors, the 1099-NEC (stands for Non-Employee Compensation), a nod to the rise of the gig economy (also called the on-demand workforce) over the past decade. It really didn’t make sense anymore for that kind of income to be a footnote on a Miscellaneous tax form!

2021 Financial Calendar – February:

Since it’s February, you probably have all your W-2 forms and 1099s. If not, go forth and seek them out, because it’s time to start thinking about filing your taxes if you’re in the US.

Thinking about taxes also includes thinking about your IRA or other retirement savings account. What can you contribute this year to beef up your retirement and save on your taxes? Now is the time to do it.

The real go-getters will also file their taxes this month!

2021 Tax Updates and Dates

January is the first busy month of tax season, so some important deadlines this month. For a full list of tax deadline dates, see the IRS Tax Calendar:

  • February 1: All remaining 940, 941, 943, 944 and/or 945 forms are due to the IRS that haven’t been filed already.
  • February 1: Remaining FUTA payments through the end of the prior year are due.
  • February 1: All compensation reporting forms are due to the employer/contractor and the IRS, including forms W-2, W-3, 1099 and 1098.

Government Aid in Coronatimes

The federal government finally expanded and updated their COVID-19 relief efforts, including a second round of economic impact payouts and additional funds for PPP loans. This second round of PPP is intended to be a second loan for most, and includes provisions so that the funds are more directly targeted to small businesses with smaller payrolls. It also includes more stringent rules about showing economic impact. Gusto created a Small Business Guide to PPP Round 2 Funding that I found helpful to read.

Meanwhile, many businesses who accepted round 1 PPP loans are now filing for forgiveness as banks open up their portals.

Tax-deductible? Congress stepped in and clarified the IRS ruling that I reported on in the last issue, stating definitively that expenses paid for with PPP funds CAN be deducted. This means that funds received from PPP won’t be taxed, and the PPP funds won’t end up being a tax hike for the small businesses who accepted money.

Below are my resources (which continue to be updated) for small businesses and nonprofits who accepted a PPP loan.

What’s Happening, in Charts

The Visual Capitalist published Putting the Cost of COVID-19 in Perspective. The costs of nearly a year of widespread severe communicable illness are high from a lot of perspectives.

Cost of COVID-19

Meanwhile, student loans have been in the news lately as various politicians float ideas and recommendations. The recent stimulus package delayed payments (part of coronavirus relief), but others, including the new president, favor forgiving all or part of student loan debt. CNBC reported recently on student loans as the most common form of loan that people fall behind on, marking student loan borrowers as the most vulnerable borrowers in the market.

CNBC: Big changes could be coming for student loan borrowers

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