Tax Deadline & Updates
You may have heard that the IRS extended the individual tax deadline by one month to May 17th, but there are important updates to know as follows:
- The deadline to file corporate taxes has not been extended and is still April 15th
- States are expected to extend their deadline, but we’ll have to wait and see
- Tax payments for the year 2020 are now due on May 17th
- The extension does not apply to first quarter 2021 estimated tax payments, which are still due on April 15th
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PPP Deadline Approaching
The deadline for the PPP loan is March 31st, so do not wait to apply if you qualify. Some tips are as follows:
- Apply through your existing bank
- You must have 300 or fewer employees
- Have already used or plan to use your original PPP funds
- Can demonstrate at least a 25% reduction in revenue during a least one quarter of 2020 when compared to 2019.
Is there a possibility of extension? Possibly, but if you qualify, why take the chance?
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Possible Extensions
There have been major challenges with being able to file tax returns, especially business returns, which are due soon on March 15th for s-corporations and partnerships. This relates to new tax laws, loan forgiveness, and delays with states approving tax forms and software. Additionally, New Jersey has new complexities with its new BAIT (Business Alternative Income Tax) forms.
We may have to file extensions for your business and possibly individual returns due to these delays.
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IRS Delays Tax Season Plus Important Deadline Reminders
With all of the last minute tax law changes the IRS needs more time to program their systems. Here are important filing dates:
February 12th: IRS begins 2021 tax season. Individual tax returns begin being accepted and processing begins.
February 22nd: Projected date for the IRS.gov Where’s My Refund tool being updated for those claiming EITC and ACTC, also referred to as PATH Act returns.
First week of March: Tax refunds begin reaching those claiming EITC and ACTC (PATH Act returns) for those who file electronically with direct deposit and there are no issues with their tax returns.
March 15th: Deadline for filing S-corp and partnership returns
April 15th. Deadline for filing individual and corporate tax returns.
May 15th. Deadline for filing exempt organization returns.
September 15th. Deadline for filing extended S-corp and partnership returns
October 15th. Deadline for filing extended individual and corporate returns
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5 Black Friday Mistakes I Made in the Past
Today is Black Friday and there are sales on virtually everything. It can be both a fun and stressful experience, and there are some mistakes I made in the past:
- Allowing myself to be convinced to wake up at 5:30 AM or was it 4:30 AM?. Waking up early does not bring out my “best” self.
- Not having a plan of which items to purchase or at least having a budget. This relates to shopping the old-fashioned way and online.
- Almost getting into a physical confrontation with someone 3 times my size because he thought that I cut in line. I like challenges.
- Not enjoying the experience, especially if it wasn’t your idea. Don’t fight over parking spots, run or walk quickly, complain, cut in line, be rude, or put on a frown.
- Remember these mistakes for next year!
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4 Business Ideas During These Times
What are some business ideas that you can implement and that should thrive during these times and in the future? Here are 4 to choose from:
Marketing Services
This includes web design, social media marketing, and developing content for your customers. The online marketing trend should continue and there will be a demand for this service to be outsourced.
Pest Control
With people spending more time at home they will notice more of the creepy crawlies around the house. If you’re spending more time inside your home then you are probably making more of a mess with food and inviting opportunities for pests.
Virtual Services
Although this is a huge market, there is a growing trend for services to be delivered online. Examples include: training videos, consulting services, and learning about various topics from personal to business knowledge.
Online Product Sales
Unfortunately, most online sellers do not do this one correctly and would be better off getting a minimum wage job. However, if you focus on a niche product or line of products that you can easily manage and that have a large enough profit margin, then you can do very well. Options include selling directly though your website or through online marketplaces like Amazon.
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5 Risks to be Aware of that Will Hurt Your Finances
There are ups and downs in life, good times and bad, and everything in between. Unfortunately, some events can hurt your finances in a significant way and may even be beyond your control. What are some of these risks to be aware of and what can you control?
Health Issues
As we become older, there are more chances of having a serious health issue. What is not commonly thought of is that family members, such as spouses, elderly parents, and children can develop health issues, both physical and mental. We have a responsibility to take care of our family, and the time spent will take time away from our job or business, which will eventually lower our earnings. While you cannot control the health of others, you can take charge of your own health and that of your children by living a healthy lifestyle.
Addictions
Do not think that you are immune to addictions. Aside from alcohol, illegal drugs, and gambling addictions, there are other destructive addictions that will ruin your finances such as prescription drugs, video games, and pornography/sex. The statistics on who has these addictions, how they start, age groups, and the impact on your brain are alarming. Be aware of these addictions and do your best to stop them before they start.
Divorce
Aside from paying legal fees, there are statistics that show that divorced women experience a prolonged loss of earnings and lower standard of living after divorce, even though various studies show that approximately 70% of women initiate divorce. Surprisingly, statistics show that a man’s earnings increase significantly after divorce. Focus on a healthy marriage and your finances will be stronger, plus some studies show that divorce does not lead to a better life.
High Income then Low Income
Inconsistent income patterns can hurt your finances in multiple ways. The first is that if your income is very high in one year, then your spending will probably increase, and once your income drops, your spending will probably not drop as quickly, if at all. Second, if you have a very good year in your business and don’t set aside a reserve for taxes, then you won’t have the money to pay your tax bill, especially if your income is lower in the following year. I have seen this situation happen repeatedly.
Expense Creep
Expenses have a way of increasing faster than your income and are hard to lower once they do. A good rule is to increase your savings in the same proportion as your income, and do not incur additional debt. This way, it does not really matter what you spend, and yes, I really did say that, because mathematically it does not matter. It’s putting first things first.
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Before You Open Up A New Location
It’s not a crazy idea, but now may be the time to open another location. Before you do, here are a few things you should consider:
Do you still have capacity at your existing location?
It’s much, much easier and less expensive to utilize your existing location to increase your sales and profits then to look for a new location. If you still have plenty of capacity in your current location then the time is not right. If you the opposite is true or you are trending to be at full capacity soon, then the time may be right to look for a new location
Relocate or additional location?
A relocation is essentially just a move, however, if you are keeping your existing location then the task becomes more complex. An additional location is almost like running two separate businesses at the same time.
If an additional location then consider management and staffing
Who will manage your new location? If you answered that you will, then expect to burn yourself out in a short period of time. Strongly consider either hiring a manager for the new location or for your existing location, while you manage the new location.
What is your cash flow like?
If your cash flow is already tight, then figure out what the reason is before you magnify the problem. A larger location or additional location will only add to cash flow problems if you haven’t addressed this issue already.
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What Changes Will You Make?
Hopefully we don’t see a pandemic like COVID-19 in a long time or never see one again. Aside from practicing safety, there are many business changes that you are probably thinking of making and here are a few examples:
Work from Home More, but not too Much
Now that many of us have been forced to work from home more, you may want to continue the trend. Although, working at the office does have benefits, including less distractions from family members, a better work set-up than working in your bedroom, kitchen, or basement, being around co-workers, and the sense that you are now in work mode.
Work Better Hours
Maybe you were used to putting in 12 hour days and realize that there is more to life then working. After taking a breather, now may be the time to cut back those hours, but be careful that the hours do not creep back up over time.
Expand Your Business
There may be opportunities to expand your business in a low-risk way if your business is currently in a strong position. It can be possible to find a good location with reasonable rents, good employees to fill positions, and marketing may be more effective if your competition decides to sit tight.
Evaluate Your Current Business Model
Instead of bricks and mortar, you can transform your business to be either virtual, online, or delivery based. Many industries have changed and I believe that some of the virtual trends, including telemedicine, will continue to increase.
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A Few PPP Loan Forgiveness Tactics
You want to make sure that as much of your PPP loan is forgiven as possible. Here are a few ways you may not have thought of:
Non-Payroll Costs:
You can include interest payments on loans, the cost of telephone services, including your cell phone, faxes, VOIP services, and Internet services, fuel for your vehicles, and lease payments for any personal property, such as for vehicles and equipment as long as they were in force before 2/15/2020.
Payroll Costs
Payroll costs include wages, but also include group health care benefits, retirement plan contributions, and state and local payroll taxes.
Deadline
The application expires on October 31, 2020. Once the 8 week period is over do not hesitate to work on the application.
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