Weekly Update – September 23rd 2021
Even before the pandemic, some restaurant owners were challenging the model of paying servers only $2.13 an hour and depending on tips from customers to make them whole. Today, as restaurants and bars struggle to find enough workers to stay open, a few are making further changes to their business model. Some are raising wages and offering sign-on bonuses. Others are adding service charges to every bill, and others are simply including tips in the price of food to enable them to pay workers a higher hourly wage. A few are making changes with scheduling to bring balance into their employees’ lives. With more than half of restaurant workers considering leaving their jobs, these changes may help to stem an exodus of employees.
We don’t have many restaurant clients, but we certainly feel for them and are happy that the government realized what a disadvantage they were at and provided special stimulus relief packages. I was so disappointed Sunday morning as I drove down a major thoroughfare in Brooklyn and saw that one of my favorite middle eastern restaurants was closed for good with a building for sale sign on the front. It really hit home, this used to be a bustling business, with a huge take out crowd for lunch and dinner. They has installed a special oven for baking the breads that they served with homemade dips. What a huge loss for the owners, staff, patrons and community at large and not a one off story!
Many of you have commented on my photos and while I do love sharing, this week has been a particularly busy week of work and cloudy mornings, but the cloudy sunrises are still so appreciated…
The rain has boosted our fig harvest with a minimum of 10 a day but how many fig salads or figs with fetta can you photograph?
I am excited to share that I will be hosting 2 amazing seminars this week, one about the pitfalls and importance of planning in divorce cases and one on the passive entity tax for NYS residents (PET), again I am lamenting my NYC residency, but check out the details next week under tax matters as I alert you to some tax reduction planning opportunities enacted in the recently passed NYS budget which we were given guidance on just the other week.
THE AMERICAN RECOVERY PLAN ACT (ARPA)
Monthly Advance Child Tax Credit Payments
The September installments were scheduled to go out on Wednesday, September 15, but some parents have not yet received their payments. Parents who had no problems receiving their July and August payments are getting conflicting answers when they contact the IRS about their missing September payments. IRS representatives have variously told them they will receive their payments in five days, or that they will not receive a payment for September but will receive larger payments for the rest of the year, or that they will receive the missing funds when they file their tax returns.
As a reminder, if you want to opt out of future payments, you must opt out by the deadline for the next month’s payment. Check out the IRS FAQs where you’ll find everything you need to know about opting out in Section J.
Economic Injury Disaster Loans (EIDL)
Recently the SBA made changes to the EIDL loan program looking to help small businesses still struggling with the pandemic. The SBA still has more than $150 billion available in funding. These changes include the following:
- The maximum loan size has increased from $500,000 to $2 million.
- Loan proceeds can also be used to prepay commercial debt and to make payments on federal loans.
- Deferred repayments are now available. Small business owners have two years after loan origination before payments are due. Interest will accrue, and payments will be made over 28 years.
- Eligibility has been expanded to organizations with multiple locations. Under the old rules, only organizations with fewer than 500 employees were eligible. Now, organizations with up to 20 locations are eligible, provided that each location has fewer than 500 employees.
The EIDL program will run through December 31, 2021 and offers 30-year loans with interest rates of 3.75% for small businesses and 2.75% for not-for-profits.
While there has been some talk about these loans being forgiven, I would not count on it and have attended seminars where officials stated that this would NOT be the case. This may be a great time evaluate your current business loan portfolio in light of the increased flexibility in the use and size of these loans. We always recommend creating a set of plans including a cash flow and return on investment analysis before committing to a loan of any size and duration.
Are you still waiting on a tax refund from the IRS? A backlog of returns, a workforce shortage, technology difficulties, and a higher rate of errors on returns mean that it may take the IRS up to 120 days to issue refunds. Although the IRS says it has processed all error-free returns received before April, pandemic-related challenges combined with the expanded child tax credit, missing information, and possible identity theft continue to delay refunds. Even the Taxpayer Advocate Service (TAS), a service that helps taxpayers resolve issues with the IRS has been overwhelmed by the demand.
How about those crazy notices that you have alerted us about several times, yes we have answered them time and again to no avail. Even speaking to the tax practitioners hot line and faxing documentation in support of our claims has been taking weeks and months longer that usual. What can we say, just be patient, you don’t owe the government anything and it will all work out in the end. Its so difficult to feel comfortable with these answers but that all we have at this time. This too will pass.
We have also seen amended tax returns, both personal and payroll related take months and months to resolve, again we ask that you be patient and hope that these returns will be reviewed and the related refunds be authorized with interest soon.
Hurricane Ida Tax Deadline Relief
Residents of New York and New Jersey impacted by Hurricane Ida now have additional time to file (NY extended filings which had original due dates occurring between September 15th and October 2nd):
- January 3, 2022 to file New Jersey business and individual tax returns and make tax payments.
- December 14, 2021 to file New York business tax returns and make tax payments. New York business tax returns with an October 15th deadline are still due October 15th.
- Individual tax estimates originally due on September 15th now have an extended due date for payments until December 14th.
- 2020 individual income tax returns are still due October 15th.
While NJ followed the IRS announcement almost immediately, the NYS announcement came in the final hours of the September 15th “perfect storm” deadline for extended corporation tax filings and the personal and corporation 2021 estimate #3, again this does NOT include the personal tax deadline of October 15th (glad they didn’t wait any longer). For NYS, this extension applies to any tax returns or tax payments that normally would be due between September 15, 2021 and October 2, 2021. For NJ and IRS this extension applies to any tax returns or tax payments that would normally fall between September 1, 2021 and December 31, 2021. Residents of Louisiana also have an extension to file tax returns and pay taxes.
THE GREAT REASSESSMENT
“Turnover contagion,” may occur when a key employee resigns or is fired, setting off a chain reaction where other team members leave in quick succession. This may also happen when a well-liked and respected team leader leaves, and the remaining team members don’t mesh well with the next leader, or when a company scraps a popular workplace policy such as flexible or remote work. Mass resignations seem to happen more frequently in times of uncertainty, such as the ongoing COVID pandemic. To counter a mass exodus, best practices suggest that employers clearly communicate the reasons employees are leaving, especially if the departure is non-work related. Increasing wages for remaining team members can also help, even if it cuts profit margins for the short term, but those increased wages may stave off even bigger losses if employee turnover continues.
Addressing workplace burnout will also help to counter the great resignation. According to a recent survey, 87% of employers said burnout and stress were issues for their employees. In response, many companies are offering new and expanded mental health benefits to employees. These benefits include access to counseling, meditation apps, and simply providing the example of leaders paying attention to their own mental health.
Employees in many companies are being asked to work longer hours or take on extra shifts to keep operations running, but that tactic may make finding enough workers even more difficult. While working overtime means bigger paychecks for many employees, that also increases stress and burnout. Overtime pay is more expensive for companies, who may also find that employee performance drops when employees work longer hours. Some companies are adding additional educational benefits in an attempt to add the additional employees they need for growth.
Employers who rely on software to screen candidates may be unwittingly excluding many qualified candidates. Automated job applicant screening software is often configured to exclude applicants with lengthy resume gaps or whose skills do not exactly meet defined criteria. However, that detailed screening process can lead to difficulties in hiring for some positions. Companies such as IBM, Amazon and JPMorgan Chase have been trying different methods to reach out to candidates who had been eliminated from consideration by screening software. Other small companies are reverting to manual screening methods to find candidates.
REOPENING THE OFFICE & REMOTE WORK OPTIONS
Companies around the world are experimenting with different models for work in the post-pandemic era. No one model will work for all companies. For example, Chargebee, founded in India, has moved to a fully remote model, and had been transitioning to an asynchronous model before the pandemic. Employees have the freedom to manage their time. To guard against overwork, Chargebee employees get the first Friday of every moth off and must take two weeks of PTO per year. Paddle, a UK-based software company, redesigned its London office as a hybrid workspace. Their digital-first strategy means that whether an employee works in the office, remotely, or on a hybrid schedule, they all have access to the technology they need to collaborate easily.
While many employees prefer remote work, 72% of U.S. managers would prefer their team members all work in the office. While the pandemic demonstrated that people can work effectively from home, some managers prefer the sense of control they have when they can easily check in on their teams. However, many workers have grown accustomed to the autonomy and freedom that remote work offers, so offering remote work can have a positive impact on recruiting.
Even with the delta variant rising across the U.S., retail sales rose 0.7% in August, surprising many economists. However, sales at restaurants and bars stayed flat while online sales soared 5.3%. Back-to-school shopping may have helped retail sales as many children returned to school for the first time in more than a year.
For about 41% of Americans, financial security in retirement is “going to take a miracle.” That’s according to a recent survey, that also found 36% believe they will never have enough money to retire. A top concern is that increased government spending due to the pandemic may lead to future decreases in Social Security benefits. It has been reported that many younger workers reduced retirement contributions or took withdrawals from their accounts.
The strange economics of gas stations mean that even with gas prices are at a 6-year high, station owners barely turn a profit on sales of gasoline. The average profit on a gallon of gas is only five to seven cents per gallon, and tight competition between stations means that owners are reluctant to raise their prices when wholesale prices increase. Most profit comes from retail sales inside the store, where the profit margin on some items can be as high as 53%.
- IRS resources for stimulus payments:
- IRS information about the Advance Child Tax Credit Payments
- The best source for up-to-date and accurate health information is the Center for Disease Control (CDC)
- Our Covid-19 Resource Center with relevant blog posts, videos and prior weekly newsletters
- Payroll, HR and benefits company Gusto has put together An Employer’s Guide to Navigating the Coronavirus
- Accounting Today has a special page for articles on COVID-19
- Intuit QuickBooks has a dedicated page to help small businesses
- Entrepreneur put together a listing of free tech resources for remote work
- The Consumer Financial Protection Bureau has warnings about COVID-related scams
- Fast Company has a listing of the best productivity apps for 2020
- The New York Times has an online newsletter on K-12 and higher education
- The Wall Street Journal has a collection of articles on education
- The Louvre has digitized 482,000 artworks from its collection
- PC Magazine explains how to carry your vaccination card on your phone
- How to create a strong password
We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are all in this together!
Complementary Discovery Session
If you need help with your accounting, want to create a tax minimization plan, want to discuss your business growth plan or your finances, are concerned about retirement goals or need to be held accountable for your 90 day action plan, contact us for a complimentary discovery session or an appointment to just get started.