Navigating COVID-19: A Roadmap for Your Business

COVID-19 has presented a new economic environment that most businesses are unprepared for. How does this new climate affect your business, and what are steps you can take to help be proactive during these uncertain times? Our team is helping clients navigate through these issues and are here to assist you during these challenges as well. Our specialists lay out some tips for each area of your business to help you address this new landscape:

Tax

• Tax Return and Tax Payment Date Extended from April 15, 2020 until July 15, 2020. This would apply to any 2019 tax payments due by April 15, 2020 and also the 2020 first quarter payment due April 15, 2020. This applies to individuals, trusts, estates and corporations. Next, on March 20, 2020, the IRS pushed back the 2019 tax return filing date from April 15, 2020 until July 15, 2020. Businesses and individuals should be aware of these dates related to their 2019 tax returns and for any tax payments they had planned for April 15, 2020. The delay in these payment dates may assist businesses preserve some working capital during these turbulent times.
• Monitor Possible Tax Legislation from Congress. Congress is now working on a major economic stimulus package. The CARES Act (also referred to as “Phase 3”) offers significant financial assistance to employees, businesses, health care providers and others. It includes financial incentives, loans and many tax changes. Items are moving rapidly in Congress, so stay tuned for further updates.

Jim Brandenburg has extensive experience and knowledge in corporate and partnership tax law, mergers and acquisitions and tax legislation. His expertise includes working with owners of closely held businesses to identify tax planning opportunities and assist them in implementing these strategies.

Human Capital Management/Human Resources

• HIPAA: Confidentiality should be maintained with respect to employees who have or may have the coronavirus, consistent with the privacy protections of the Health Insurance Portability and Accountability Act (“HIPAA”). Employers should not disclose the name of any infected employee(s) to their co-workers or any information regarding their medical condition.
• Tax Credit: Set up special pay codes within your payroll system to track any time taken for Emergency Paid Sick Leave or Emergency FMLA. This is necessary to track and report tax credits on a quarterly basis to receive the refundable tax credit. Three separate payroll codes will be required to track and report the following benefits:
  • Families First Paid Sick Leave, Employee’s Own Illness
  • Families First Paid Sick Leave, Family Member
  • Families First FMLA
• Employer Notice Requirements – Families First Coronavirus Response Act (FFCRA): Employers are required to post a notice in a conspicuous place in the workplace. A model notice will be published and made available within 7 days after the enactment by the Department of Labor to employers for this purpose. There is no requirement to maintain a handbook policy or actively notify employees who are working remotely. However, employers should consider electronically distributing the requirements of the EPLSA if they are not posting it in physical workspaces due to office closures.

Financing/Liquidity

• Get in Touch with Your Bank. If your bank hasn’t called you, get in front of them to see what they’re willing to do. Be prepared with the following information:
  • 2020 projections of cash flow
  • Map out your likely financial challenges
  • Discuss your financial needs
  • Talk through how they can support you and what options are available
• SBA Disaster Loan Program. This is a direct loan for which you apply directly with the Small Business Administration (SBA). Banks are not involved. Loans can be up to $2M and borrowers get an automatic 4-month deferral to start payments. Borrowers can use the funds to refinance existing debt, for working capital, etc. The loan is at a 2.75-3.75% fixed rate, with up to 30 years to repay. Due to the volume of online loans, it is recommended applying at off hours.
• Monitor additional incentives and loan programs being proposed. There are many federal and local incentive programs, loan programs and tax breaks being proposed that can improve your cash flow and offer liquidity options. Stay in touch with your trade association and your advisors to learn how you may benefit from these offerings.
• Business owners need a realistic projection of cash flow for the remainder of 2020 so that they understand if, and when, they will have shortfalls and then be planful. This may include drawing down on an existing Line of Credit or potentially applying for a loan. Given the uncertainty of the length of this current event, they should err on the side of conservatism.
• Business owners should ensure they have good 2019 financial statements and up-to-date interim financial statements for 2020 to assess their current financial position as well as to be prepared for any borrowing needs they may encounter.
• Business owners should stay in touch with all major vendors and creditors to update them on their financial position in the event they may need to request better terms.

Ray Lampner, CPA, ABV, CVA, CFF, CGMA, CEPA, has more than 20 years of experience in consulting, taxation and advisory services. He specializes in valuation, exit, succession, tax and legacy/estate planning.

Thomas E. Bayer, CPA, CExP, has more than 25 years of experience providing a broad range of accounting, tax, and business advisory services to commercial clients across various industries and Sikich offices.

Tom has specialized expertise in the areas of business succession planning, tax planning and compliance, and business advisory. He puts his business succession planning abilities and knowledge to work firm-wide, serving clients in advisory services across the country.

Wealth Management

• Don’t React Too Soon. If you made a financial plan and set your goals, you don’t want to make drastic changes to your portfolio in the middle of a crisis. This is because you have most likely set your plan with the long-term perspective in mind. Don’t let short term emotions influence your long-term planning.
• Revisit Budgets. Now is a better time than any to revisit your budgets based on your work/job situations. Do you need to adjust expenses? Where can you make temporary cutbacks.

Advisory Services offered through Sikich Financial, an SEC Registered Investment Advisor.

Andrew Paoni, MBA, AIF®, CFP®, CFA, partner of Sikich’s wealth management team, provides financial planning and wealth management services to individual, corporate and not-for-profit clients for Sikich Financial. Andrew’s focus is on constructing investment portfolios consistent with the client’s objectives. He is a licensed securities advisor and holds a State of Illinois life, health and long-term care insurance license.

Technology

Our tech group stays on top of COVID-19 related developments:

We’re here to help you through these uncertain times. For assistance with your business’s tax situation, human capital and more, contact us.