CARES Act

The CARES Act does the following:

• Many U.S. residents will receive $1,200 (or $2,400 for joint filers) plus $500 per child under age 17. This benefit will be reduced as taxable income exceeds $75,000 for singles and $150,000 for marrieds filing jointly. Singles who have taxable incomes above $99,000 and marrieds filing jointly who have taxable incomes above $198,000 will not receive anything. Importantly, you must have filed a 2018 OR 2019 tax return to qualify. If you have, there is nothing for you to do at this time.

• If you have lost your job, or if you are self-employed with no employees, you will most likely qualify for unemployment benefits. To apply for immediate unemployment benefits in Florida, please go to https://connect.myflorida.com/Claimant/Core/Login.ASPX. If you are located in another state, please check your state’s unemployment website.

• Payroll Protection Program. Generally, any business with less than 501 employees (including self-employed individuals, independent contractors, sole proprietors, and non-profits) are eligible for a low-interest loan. The covered period is from February 15, 2020, to June 30, 2020. The maximum is 2.5 times certain monthly payroll costs, health insurance costs, mortgage payments, rent, interest on some debt payments, and utilities. If done properly, there is no recourse against the borrower, no personal guarantees, and no required collateral. There is also an element of forgiveness based upon a formula. Please visit https://covid19relief.sba.gov/#/

• Retirement Plan Distributions. Up to $100,000 can be distributed from a qualified retirement plan for those with vested account balances equal to this amount. There is no 10% premature distribution penalty for distributions before age 59½, and tax on the distribution can be spread over 3 years. There is no tax withholding and distributed amounts can be repaid over 3 years.

• Up to the lesser of $100,000 or 100% of a participant’s vested account balance can be borrowed from a qualified retirement plan. There is even a deferral period before repayment commences.

• There is no Required Minimum Distribution (the “RMD”) in 2020. Taxpayers, usually age 72 or older, will not be required to distribute the RMD from qualified defined contribution plans this year. This will prevent a participant from having to sell securities at a low price to fund an otherwise required distribution in 2020.

• The percentage limitations on gifts of cash to a public charity have been increased from 60% to 100% of the taxpayer’s contribution base (approximately Adjusted Gross Income). Corporations go from 10% to 25%.

• An employer can delay the payment of its half of Social Security Tax (but not the employee portion). This also includes Self Employment Taxes. 50% of the deferral will be due on December 31, 2021, and the remainder on December 31, 2022. This increases cash flow.

• Net Operating Losses (“NOLs”) have been liberalized so that NOLs can be carried back for five years from 2018, 2019, and 2020. This will result in tax refunds for businesses that paid Income Tax in earlier years but now are suffering losses.

• The Act provides a refundable payroll tax credit of 50% of employer wages (not to exceed $10,000 per employee) for businesses that were prohibited from operating during the pandemic. Thus, the maximum is $5,000 per employee.

• Limits corporate stock buybacks and executive pay for airlines that receive grants or loans from the federal government to stay afloat. It would also fix the so-called retail glitch by allowing retailers to immediately write off expenses related to physical improvements instead of depreciating them over 39 years.

• Sets aside $150 billion for states and localities whose tax revenues would be affected by moving the federal tax filing date from April 15 to July 15. The legislation also includes $130 billion to help hospitals, nursing homes, and other health care facilities.

• Provides for the appointment of an inspector general and a congressional oversight board to scrutinize grants and loans made by the U.S. Department of the Treasury to businesses to help address the impact of COVID-19.

 

As further details of the Cares Act unfold, we will be on top of it and share it with you. Hopefully, you or someone you know will be able to benefit from one or more of these provisions, to help us all get through this challenging time.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

Payments Source | March 30, 2020

Coronavirus’ Effect on Small Merchants Tests Fintech Lending

The U.S. government will shortly funnel trillions of dollars into the economy to soften the coronavirus’ impact…

Facebook Pledges $100 Million to Help Small Businesses Survive COVID-19

Facebook for Business

As small businesses such as restaurants and gyms are forced to close their doors for an indefinite period, Facebook has stepped up with an offer that may keep them from going under and their employees from losing their jobs.

The grants will provide a total of $100 million in “cash and ad credits” to 30,000 eligible businesses in the more than 30 countries where Facebook operates. That averages out to $3,333 per business.

The cash could be used to cover rent, operational costs, payroll, and connecting with customers. The ad credits would counteract the possible effects of the pandemic on marketing budgets, said COO Sheryl Sandberg. Facebook has always prided itself on affordable, highly targeted marketing opportunities for small businesses, but “the marketing industry is certainly going to see a big impact,” she said.

Also, Sandberg said that Facebook is looking at ways to expand virtual training in our new work-from-home environment.

Facebook and its founder, Mark Zuckerberg, have certainly had their share of scandals in recent years. And there’s undoubtedly some self-interest at work here, since small businesses account for the majority of their advertising revenues. But it’s in everybody’s interest to save small businesses — the backbone of our economy and our society. We believe Facebook has done the right thing, and all of us will benefit.

To sign up for updates about when the program will start accepting applications, go to Facebook’s Small Business Grants Program page.

Also, check out Facebook’s new Business Resource Hub for small business support, tools, and guides during the COVID-19 pandemic.

As small business specialists, Xendoo is well aware of the impacts COVID-19 is having — and will have — on the finances of owners and employees alike. We stand ready to help you through this difficult time. Experience the Xendoo difference with a one-month free trial.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

How to Collect Sales Tax on Shopify

There’s no doubt about it, sales tax is getting more complicated for all e-commerce businesses. Ever since the 2018 Supreme Court ruling on South Dakota v. Wayfair, U.S. states have been free to make their own tax nexus rules.

No longer is it just about having a physical presence in the state — a store, branch office, employee, or stored inventory — in order to trigger nexus. Now more than 40 states have “economic nexus” which includes any business that sells and delivers taxable merchandise or services into the state. And they each have their own specifications for total annual revenue and/or a number of transactions, as well as types of goods and services being sold, that would make you liable for collecting and remitting sales tax.

That means you could be responsible for sales taxes in 40+ different states, whereas just a few years ago it might have been only one: your home state. Here’s how to do it:

Figure Out Where You Need to Collect Tax

This will involve researching each state’s requirements, then estimating — based on current and previous sales records —whether you’re likely to meet their nexus thresholds.

Don’t forget that physical nexus hasn’t gone away. If you use Shopify Fulfillment Network, you’ll need to know the locations of the warehouses they’re shipping your merchandise from. You’ll need to report taxes in each of those states.

Register for a Sales Tax Permit

Information and application forms are available on each state’s Department of Revenue website.

Once registered, you’ll be assigned a sales tax frequency — monthly, quarterly or annually depending on your sales volumes. Be sure to keep a record of the due dates so you don’t get hit with late penalties and interest.

Set Up Tax Collection on Shopify

Fortunately, the platform does a lot of collecting work for you. Once set up, it will automatically calculate the tax for each state and add it to the customer’s purchase.

1. From your Shopify administrator’s page, go to Settings > Taxes

2. Choose the Tax Region

3. Choose from two ways to set the tax rate:

  • Automatic rate calculation
  • Manual rate inputs for the state, county, municipality and shipping charges

4. Exempt certain products if they are not taxable

5. Choose whether to display your prices with taxes included

File Your Return

Although Shopify collects the sales tax from customers, that’s only the first step. It’s up to you to pass that tax money on to the state. There are two ways to do it:

  • Online through each state’s revenue authority website
  • Automatically with your accounting software, if it has a sales tax function

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

COVID small business resources from the commercial sector

Facebook

$100 million in cash grants and ad credits for small businesses. Go to the Small Business Grants Program page to sign up for notification when applications are open.

James Beard Foundation

Food and Beverage Industry Relief Fund is in the works. Sign up to receive grant criteria and application materials when they are ready.

Kiva

Zero-interest loans up to $15,000 with no payments for six months.

Mainvest

Zero-interest, 120-day, $2,000 loans for existing brick & mortar businesses negatively affected by the COVOID-19 outbreak.

Restaurant Worker’s Community Foundation

The Restaurant Workers COVID-19 Relief Fund will be allocated as grants for direct relief to restaurant workers, grants to nonprofit organizations serving restaurant workers, and no-interest loans for restaurants.

Square

All software subscription fees will be refunded for March for existing sellers who currently use Square Appointments, Retail, Restaurants, Loyalty, Team Management, Payroll, Marketing, and Square Online Store. Curbside pickup and delivery fees are waived for the next three months.

Yelp

$25 million in relief, primarily for independent local restaurant and nightlife businesses, in the form of waived advertising fees and free advertising, products, and services. Restaurants and nightlife businesses also receive free access to Yelp page upgrades and three months of free access to Yelp Reservations and Waitlist. For restaurant clients that offer delivery and/or takeout, Yelp will provide $100 in free search advertising.

GoFundMe

In partnership with Yelp, small businesses can take donations directly on their company’s Yelp page. Yelp and GoFundMe will also match the first $500 donated to any business.

 

As small business specialists, Xendoo is well aware of the impacts COVID-19 is having — and will have — on the finances of owners and employees alike. We stand ready to help you through this difficult time. Experience the Xendoo difference with a one-month free trial.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

Home Business | March 22, 2020

Fintech Helping Drive the Digital Transformation of Small Business

Fintech accounting platforms are helping enterprises digitize accounting, bookkeeping, and tax filing…

Updated 3/20: Tax Filing Deadline has been extended to July 15th

The IRS is extending the federal income tax filing deadline to July 15 as part of a growing effort to stem the financial pain from the coronavirus pandemic, Treasury Secretary Steven Mnuchin announced Friday.

There’s one bit of relief for businesses suffering from the effects of the COVID-19 pandemic: You now have until July 15, 2020, to pay your federal income tax. Read the full press release here.

If you owe taxes, the Treasury Department has extended the payment deadline for individuals and businesses for 90 days. The extension is automatic; you don’t have to file any extra forms to get it.

However, you still must file your tax return by April 15.

If you are expecting to receive a refund, the sooner you file, the sooner you’ll get that money. For tax return forms filed electronically, it usually takes about three weeks to receive your refund.

Individual Returns

The July 15 payment extension applies to all individual returns, including self-employed individuals, and all entities other than C-Corporations, such as trusts or estates. 

It also includes estimated tax payments for the 2020 tax year that were due on April 15.

C-Corporation Returns

The tax payment deadline is extended to July 15 for up to $10 million of the 2019 tax due.

Need More Time to File?

As in every other year, you can get a 6-month extension of your filing date from the IRS. You don’t need to give a reason, it is automatically granted after you apply. 

File the application form through your tax professional, tax software, or irs.gov Free File.

Be aware, though, that even with the filing extension, you would still owe taxes and penalties on any taxes that are unpaid as of July 16. 

State Income Tax

The Treasury Department’s tax payment extension only applies to federal taxes, not your state’s. Check with your state agency to see what (if anything) they are changing to meet the COVID-19 crisis. Here’s a list of links to state revenue departments.

As small business specialists, Xendoo is well aware of the impacts COVID-19 has had — and will have — on the finances of owners and employees alike. We stand ready to help you through this difficult time. Experience the Xendoo difference with a one-month free trial.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

What Amazon FBA Sellers Need to Know about the Shipment freeze of Non-Essential-Products

On Tuesday, March 17, Amazon notified its US and EU sellers that it would no longer be receiving non-essential shipments of Fulfilled-by-Amazon (FBA) inventory. As of today, 3/18/20, the freeze for those marketplaces runs through April 5, 2020.

This is in response to the COVID-19 pandemic and will presumably allow Amazon to focus on fulfilling the essential health, safety, and household products consumers are demanding.

Amazon sent the following notification:

Temporarily prioritizing products coming into our fulfillment centers

We are closely monitoring the developments of COVID-19 and its impact on our customers, selling partners, and employees.

We are seeing increased online shopping, and as a result, some products such as household staples and medical supplies are out of stock. With this in mind, we are temporarily prioritizing household staples, medical supplies, and other high-demand products coming into our fulfillment centers so that we can more quickly receive, restock, and deliver these products to customers.

For products other than these, we have temporarily disabled shipment creation. We are taking a similar approach to retail vendors.

This will be in effect today through April 5, 2020, and we will let you know once we resume regular operations. Shipments created before today will be received at fulfillment centers.

You can learn more about this on this Help page. Please note that Selling Partner Support does not have further guidance.

We understand this is a change to your business, and we did not take this decision lightly. We are working around the clock to increase capacity and yesterday announced that we are opening 100,000 new full- and part-time positions in our fulfillment center across the US.

We appreciate your understanding as we prioritize the above products for our customers.

Thank you for your patience, and for participating in FBA.

What does this mean for US and EU Amazon FBA sellers?

As of this writing, Amazon FBA sellers will not be able to create shipments to be received at Amazon’s fulfillment centers through Seller Central. Until April 6, Amazon will only accept essential items such as household staples and medical supplies.

Currently, the categories Amazon is currently accepting are as follows:

  • Baby
  • Health & Household
  • Beauty & Personal Care (including personal care appliances)
  • Grocery
  • Industrial & Scientific
  • Pet Supplies

Note: Not all products in these categories qualify as essential.

However, if FBA sellers correctly classify a product but still can’t make a shipping order, then Amazon is not prioritizing the product in question.

And while many Amazon sellers sell in multiple of Amazon’s 27 physical product categories, many will still be out of luck for not selling in the six allowed.

How many Amazon sellers sell in the allowed product categories?

  • Baby – 17%
  • Health & Household – 20%
  • Beauty & Personal Care – 20%
  • Grocery – 12%
  • Industrial & Scientific – 9%
  • Pet Supplies – 15%

Still receiving and shipping “grandfathered-in” inventory as planned

If you created your replenishment order before March 17, Amazon will still receive it. And while essential items will be given priority, Amazon will still pick, pack, and ship non-essentials.

However, non-essential orders may ship more slowly than normal, especially as shipping carriers feel the strain of increased shipping during the coronavirus outbreak.

Amazon FBA sellers can still use other methods of fulfillment

Amazon encourages sellers who typically sell FBA to use their own resources and carriers for shipping products and to sell Fulfilled by Merchant (FBM).

Fulfillment by Merchant (FBM) is a method of selling on Amazon in which a seller lists their products on Amazon, but manages all storage, shipping, and customer support themselves (or through another third party).

Approximately 94% of all third-party Amazon sellers sell through FBA; 66% sell only through FBA, while 29% sell through both FBA and FBM.

How will this affect Fulfillment by Merchant (FBM) sales and sellers?

So far, there is no change for Fulfillment by Merchant (FBM) sellers who pick, pack and ship their own goods for orders sold on Amazon. Amazon sellers are still able to create and list products.

FBM-only sellers account for just 6% of Amazon’s third-party sellers.

Can sellers still sell non-essential products?

Yes, both FBA and FBM sellers can still sell products that are non-essential. The only change is that FBA sellers cannot send non-essential inventory into Amazon’s fulfillment network.

Therefore, sellers must ship any inventory that is not already a part of Amazon’s FBA supply chain themselves or use another third-party fulfillment network.

Can sellers sell essential products?

Sellers can still sell essential products as long as they are able to create listings for it. But, sellers looking to list products in one of the six essential categories may need Amazon’s approval. Amazon has “gated” some of the categories.

Furthermore, Amazon has started to crack down on price gouging practices for essential goods like hand sanitizer, toilet paper, and protective face masks. Listings with high prices are being taken down and in some cases, Amazon is even threatening prosecution.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

Bookkeeping and Accounting: What’s the Difference?

Bookkeeping and accounting keep your small business ship sailing. But, do you know the difference between the two? Are you familiar with how each can benefit your business when done properly? Do you have a clear understanding of how both disciplines impact your small business taxes? Well if not, allow us to clear things up.

The first thing you should know is that bookkeeping and small business accounting is not the same thing. They sound similar but they are not interchangeable roles. And while they are complimentary of each other, they each play a specific role in serving your business. Think about it this way…booking focuses on the everyday tasks that maintain your business’s finances while accounting for small business considers the big picture strategy to keep your business strong and growing.

Bookkeeping tracks and records important financial information. Accounting puts that information to good use. Make sense? Good. Now, you know what to expect from each party. You can also expect both your bookkeeper and account to work closely together to ensure information is accurate and you are set up for success. Especially during tax time, January through April.

Key Differences in Bookkeeping and Accounting

We’ve explained the difference in the concept behind bookkeeping and accounting. But, the difference between the two really is in the details.

The traditional role of a small business bookkeeper involves managing the day-to-day financial record keeping of a business. As the name implies, they are truly keeping the books. That means transactions get plugged into the QuickBooks or whichever accounting software is being used. Spreadsheets are updated. Bank statements get reconciled at the end of each month. And, financial statements are prepared. In small businesses especially, you’ll often see bookkeepers paying bills, cutting checks to employees, invoicing clients, and making deposits.

 

 So, what’s the accountant doing during this time?

Small business accounting involves analyzing the business’s financial trends and forecasts in order to advise business owners of ways to keep the operation financially sound. They also work to prepare for and minimize your small business taxes. This involves putting together monthly and quarterly statements and making quarterly tax filings. At least, those are the traditional roles of an accountant and a bookkeeper.

Changes in Bookkeeping Methods

It’s perfectly understandable if you thought bookkeepers and accountants did the same thing. After all, they both deal in numbers. And for many of us, numbers turn our minds to mush. But beyond that, dramatic changes in software and technology have streamlined many traditional accounting and bookkeeping processes. As a result, duties are crossing over between the two roles. For instance, new software releases bookkeepers from having to be so focused on data entry. This allows them to spend more time advising their clients, much like an accountant would.

Not Your Grandfather’s Bookkeeping

Speaking of technology…it has become so prevalent in modern bookkeeping and accounting that bookkeepers are now often consulting clients on technology stacks that can help them optimize their business. At the same time, due to the ever-increasing complexity of the tax code, accountants are more often finding themselves in the role of tax coach. They design small business tax strategies for businesses to ensure money stays in the business instead of needlessly going to the government. And, because business income can be directly linked to personal income, the accountant’s tax advice can carry over to the business owner’s personal finances and taxes. Consider it a tax-taming twofer.

Clearly Defining Accountant Roles

Naturally, the blurring of accountant/bookkeeper duties can create some confusion. That’s why certain states are stepping in to define who can or cannot claim to be an accountant. For instance, in some states, like Texas, a person must be a certified public accountant to even be able to call him or herself an accountant. Other states only require you to have a degree in accounting. Regardless of what they call themselves, the most important thing for you to do is ask your prospective accountant or bookkeeper what specific roles they will perform for you and your business.
Which is Best for Your Business?
Ultimately, it’s best for you and your business to have both a bookkeeper and an accountant. Their varied perspectives on your finances can help ensure you’re able to anticipate problems and have the appropriate solutions ready to go. To hire just one or the other could leave you with an incomplete picture of your company’s financial health. The more eyes looking out for your business, the better. That not only allows your bookkeeper and accountant to keep in their respective lanes and focus on what they do best, it also frees you up from those extra tasks and worries to concentrate on running your business. If you wanted to be an accountant you wouldn’t have started your business, right?

Finding The Right Accountant

Finding the right bookkeeper and the right accountant for your small business isn’t as difficult as it might seem. One thing to consider is that many bookkeepers know accountants and vice versa. So, you could always ask them. And because accountants and bookkeepers work so closely together, it’s safe to presume they won’t recommend anyone they don’t like working with themselves.
Here’s another thing to consider: Unlike other companies, Xendoo caters to both bookkeeping and accounting needs. We can provide you with excellent financial management as well as long view advice to help you make the best decisions for your company. Why not contact us now? We’re ready to discuss the best solutions for you.

 

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

The Sooner You Act, The Stronger You’ll Be

At Xendoo, our passion is small businesses and at times like this, it’s critical we support each other and share our expertise on how to overcome challenging circumstances.

Amidst the Coronavirus COVID-19 outbreak, health and government officials are working to maintain the safety of us all. As a small business owner, it is not only important to maintain you and your family members’ health, but also the health of your business.

Our CEO & Founder, Lillian Roberts, has been through economic disruptions before and is sharing her insights on what worked for her in previous businesses to come out on the other side.

1. Revisit all loans as interest rates have come down

There may be cash flow opportunities by lowering your payments. If you find yourself in need of a small business loan, you’ll need to have your financial information up to date so you can start the process of applying. If you’re in a severely impacted area, be aware that the SBA is offering designated states and territories low-interest federal disaster loans for working capital to small businesses suffering injury as a result of the coronavirus. Read more here.

2. Check your staffing against current needs vs forecasted needs

The uncomfortable reality of an economic downturn is assessing staffing levels against needs.

Meet with your core team and determine if there are opportunities to consolidate efforts and increase your operational efficiency. If changes need to be made, see if there’s an opportunity to keep your full team and reduce working hours. This way, everyone shares the burden and comes out on the other side together.

3. Look at fixed and variable expenses

During an economic downturn, going through the exercise of outlining all expenses will provide you with better insight into your costs which will inform the decisions you will need to make. Fixed expenses such as rent, equipment leases, payments on loans, and subscriptions cannot be eliminated but there may be opportunities to renegotiate. Also, if you’re sitting on cash reserves, this is an opportunity to get attractive pricing on overdue investments.

4. Trim 10%

Once you’ve outlined all fixed and variable expenses for your business, review to trim 10%. Assess which fixed expenses can be negotiated and which variable expenses can be eliminated temporarily. If there’s an opportunity to trim more than 10%, take advantage of those cost savings.

What we’re experiencing right now is an unforeseen economic downturn, much like the unfortunate times we have seen previously. It’s too early to tell how long and how severe this may be and therefore, difficult to truly understand the impact. Though it’s unclear whether this will last three weeks or three months, we do know that history has proven that we will survive it and we will thrive again.

Xendoo’s passion is in supporting small business owners and though our usual course of business is wider than tax returns or small business loans, we’re here to help small business owners in any way we can.

If we can offer assistance to you and your business, please click here to schedule a call with us.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.