Tuesday, March 2, 2021
March 2020 Financial Update
It’s March, that middle point between winter and spring, when you’re not quite sure what weather will arrive, but flowers start popping up anyway. Meanwhile, in the bookkeeping world March means the end of the first quarter of 2021. The tax world is busy in March filing business tax returns and getting ready for personal income tax returns.
As we approach the March year-marker of the pandemic spreading rapidly in the US, the news is mostly about the different ways that small businesses are feeling the economic effects. On the down side, the Federal Reserve’s banks recently released the results of a study highlighting serious economic concerns. The study focused on businesses with under 500 employees, which represent the vast majority (almost 98%) of businesses in the United States. The results indicate a general sense of unease and worry over operations going forward.
Just under 90% of companies surveyed by the Fed banks said business had not returned to pre-pandemic levels almost a year after the crisis began. Of those that lost ground, 30% said that without more government aid, their companies might not survive, the report said.The Wall Street Journal, citing a report from the Federal Reserve’s 12 regional banks released February 3
The report was released amidst a second round of PPP loans, as well as new talks about stimulus packages for individual Americans.
2021 Financial Calendar – March:
March is Business Tax month, with many businesses needing to file by March 15. Save that date! Get your tax forms in order!
For individuals, we still have a month to file taxes, but what are you going to do with that refund if you get one? Time to make a plan for saving at least part of it, and spending part of it. Think of it as part of your long-term financial strategy rather than some extra cash to spend.
If you’re not getting a refund, it’s time to start making plans for paying your debt to the IRS. And maybe rethinking how you managed your withholding and estimated tax payments last year.
2021 Tax Updates and Dates
March is the third month (I’d argue fourth month) of tax season, and there are important deadlines this month. For a full list of tax deadline dates, see the IRS Tax Calendar:
- March 15: S Corp (Form 1120S)returns are due today.
- March 15: Partnership (Form 1065) returns are due today.
Government Aid in Coronatimes
Small businesses are again benefiting from PPP relief from the government’s second-round program. Businesses who haven’t gotten a PPP loan before also qualify to apply this time. However, there are guidelines in place this time that weren’t there before:
- quarterly revenue loss of 25 percent year over year
- fewer than 300 employees
- maximum loan amount is 2 million dollars
President Biden announced a number of changes to the PPP last week, the biggest of which is a starting 14-day period in which only businesses with 20 or fewer employees can apply. This is intended to give an advantage to the smallest businesses in America, which also make up the majority of businesses in the country. A number of other changes were announced as well, detailed in this article by Forbes.
Meanwhile, concerns over PPP taxation continue. The IRS at the request of Congress has reversed their ruling taxing PPP income, however many states are not in conformity with the IRS. MSN has a breakdown on what types of taxation, and which states are not in conformity.
PPP Application and Forgiveness Resources
- Gusto’s Small Business Guide to PPP Round 2 Funding
- NFIB’s Guide to Forgiveness of PPP Loans under $50,000
- the FMA PPP Toolbox for Nonprofits
- the Freelancers Mutual Aid Circle,
- the SBA’s Coronavirus Small Business Guidance page
- Quickbooks has a Q&A Forum on the PPP
- Gusto Payroll has a Step-by-Step Guide to the forgiveness application
- Paychex has a PPP Practical Guide
What’s Happening, in Charts
The US Department of Labor reported on unemployment statistics by demographics detailing who has been suffering most from job loss from February 2020 through December 2020. The chart shows that the economy’s recovery will ultimately depend on being more inclusive in hiring, as Black and Hispanic women suffered the most job loss during the period.
On a completely different note from most of the doom and gloom in this newsletter is the below chart on new business applications in the U.S. as of January 2021. This chart shows the increase in applications by state from January 2020 to January 2021. Mississippi takes the lead at 164.4%, followed by Georgia at 126%, Allabama at 111.4% and Illinois at 110%.
Small Business Optimism Drops Further Below Historical Index Average in January
NFIB reports that their Small Business Optimism index declined again in January, with the pandemic continuing to loom large in how small business owners think about their prospects.
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The Wall Street journal reports that business are opening as fast as they're closing during the pandemic.
Ask Rita: Can Our Paid Employees Also Do Volunteer Work for Us?
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Why Women Don’t Get Ahead at Nonprofits
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Practical Steps Toward More Diverse Boards
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Google’s next big Chrome update will rewrite the rules of the web
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Vox talks about the encrypted messaging app and alternative to WhatsApp, whose popularity soared during January.
Clearview AI ruled ‘illegal’ by Canadian privacy authorities
Clearview's facial recognition software has long been controversial, but now it's been found to violate Canadian privacy laws, TechCrunch reports.