How Your Small Business Can Qualify For COVID-19 Relief

The United States Senate legislated the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), geared toward providing financial support to the American public and American businesses in light of the economic fallout from the coronavirus (COVID-19) pandemic.

A principal component of the CARES Act is the allowance of $349 billion for small businesses through federally supported loans under an amended and broadened Small Business Administration (SBA) 7(a) loan guaranty program known as the Paycheck Protection Program.

Below, the tax experts at Donohoo Accounting Services address some of the fundamental elements of the CARES Act.

Critical Aspects of the CARES Act

Eligible businesses comprise:

  • Businesses with as many as 500 employees or which meet the appropriate size standard for the industry as stipulated by SBA’s current requirements.
  • Businesses in the food services and accommodation industries that exceed one physical location but contain less than 500 employees at each location.
  • Nonprofit organizations
  • Approved sole proprietors and independent contractors.
  • Loans will be accessible across SBA and Treasury accepted banks, credit unions, and select nonbank lenders.
  • Borrowers can withdraw loans 2.5 times their monthly payroll expenses, not to exceed $10 million.

Which businesses are eligible for the Paycheck Protection Program?

Based on the wording of the bill, typically, any business active on February 15, 2020, with less than or equal to 500 employees (or that meets the appropriate size benchmark for the industry as required by SBA’s existing regulations) qualifies.

What is the maximum loan value that a business can accept through the Paycheck Protection Program?

Each business can accept the lesser of $10 million or a total of 2.5 times the average total monthly payroll expenses for the previous year.

What can a business use loans for?

Businesses can leverage funds from the Program loans to meet costs involving:

  • Payroll costs, including remuneration to employees; disbursements for vacation, family, parental sick or medical leave; payments due to termination; payments necessary for group health care benefits, retirement benefits, and local and state employment taxes
  • Interest payments concerning any mortgage obligations or additional debt obligations sustained prior to February 15, 2020 (excluding any payments or prepayments of principal)
  • Rent
  • Utilities

How does a business apply for a loan under the Paycheck Protection Program

Businesses can visit an authorized SBA 7(a) credit union, bank or lender, apply for a loan and be approved that very day. While there is no cost to apply for the loan, businesses will be charged a fixed interest rate.

What are the terms and conditions of Program loans?

The terms and conditions for a covered loan are identical to the relevant terms and conditions for conventional SBA 7(a) loans.

What documents must a lender require to provide a borrower loan forgiveness?

Documentation that confirms the number of full-time employees on payroll and pay rates for the periods designated under the reduction for loan forgiveness above. For example:

  • Payroll tax filings to the IRS, state payroll and SUTA filing
  • Financial statements corroborating payment on debt obligations sustained prior to the covered period
  • And, any additional documents the SBA may request

Ready to discover what tax credits you or your business qualify for? Call Donohoo Accounting Services today at 513-528-3982 for a FREE consultation! For more tips and our latest updates, check us out on Facebook, Twitter or LinkedIn!

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3 Tips To Save For Vacation Without Touching Your Savings

With this weather, it’s normal to find yourself occasionally daydreaming of sandy beaches and drinks with little umbrellas. It’s time to start today to make that dream a reality, without digging in to your existing savings. Follow these tips below and soon you’ll be digging your toes in the sand relaxing your cares away.

Form a Budget

If you’ve already decided where you’d like to go on vacation, when you will go, and for how long, establishing a budget is easy. You can go about forming your budget in two ways: First, research via the internet to find the best flight fares, hotel packages, transportation, restaurants and other expenses. Then plug those numbers into a vacation budget planning form that will help organize and calculate your expenses. Second, form a budget by outlining your vacation destination, travel dates and the estimated amount you’ll have to spend. Then, have a travel agent find you the best deals based on the vacation packages they have available.

Look for Ways to Save

We’re all familiar with the traditional ways of saving money for vacation, such as having a change jar or piggy bank, or opening a savings account with a local bank. Those ideas still work and may be useful in helping you save for your vacation. But in today’s world there are even better means of helping you reach your savings goal. First among the modern savings tools you can use to help you are the many smartphone apps that automatically transfer a set dollar amount – at pre-determined times – from your checking account into an account for your vacation. In addition to saving money from your paycheck each month, you can create sources of additional income by selling household items and collectibles online on sites such as eBay or Etsy or Amazon.

Also, consider what you can give up to go toward the expenses. Making coffee at home can save $20-$50 per week. Packing lunch instead of eating out during the workday can save $50-$100 per week. It won’t be easy at first, but these funds can easily make up the difference between a basic vacation and a luxury vacation.

Make Your Goal Tangible

While your spring or summer vacation may only seem like a dream until you actually leave for the trip, there are things you can do to make it tangible now. Print off some color pictures of your vacation destination and hang them up where you’ll see them daily. Additionally, you may consider purchasing a few small items that you will need for your trip, such as sandals or a bathing suit. Put these items out where you’ll see them regularly to remind you of why you’re saving.

The professionals at Donohoo Accounting Services have even more ways to help you save. Contact us today to schedule your free consultation or call 513-528-3982. And don’t forget to check us out on Facebook, Twitter and LinkedIn for our latest updates!

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Tips for Completing the FAFSA

Planning ahead is vital for a successful academic year and it’s never too early to start thinking about financial aid for next year. The 2020-21 FAFSA is available for filing beginning October 1 and getting an early start means you’ll have plenty of time to complete and submit your financial aid well before the deadline. Whether you’re a student or a parent, filling out FAFSA can be complicated and time-consuming, so it’s important to be careful in order to avoid costly mistakes. With these helpful tips, you can avoid dreading the deadline and rest easy knowing next year’s financial aid is secured.

Fill It Out Early

You may think that you have plenty of time to fill your FAFSA out, but putting off finishing it can cost you. Filling it out and submitting your FAFSA as soon as it’s available provides you with the opportunity to get the most financial aid available, as some financial aid is awarded on a first-come, first-served basis. In some instances, states and colleges run out of money early, so make sure to complete your FAFSA early to avoid being left high and dry for the next academic year.

Get A FSA ID Before Starting Your FAFSA

Your FSA ID is an important part of completing your FAFSA as it allows you to electronically sign your FAFSA and submit it and access other Department of Education websites. Each FSA ID is unique and both parents and students will need to create their own separate IDs in order to avoid any delays that may result from a mix-up.

Use the IRS Data Retrieval Tool (IRS DRT)

One of the requirements for completing your FAFSA is supplying your financial information. The IRS Data Retrieval Tool lets you avoid the difficulty of finding old tax returns or risk entering the wrong data. In a few simple clicks, you can import your tax information quickly and accurately, reducing the risk of any errors. Simply click “Link to IRS” to use it.

Carefully Review Information Before Submitting Your FAFSA

Even the simplest mistake can have a serious impact your financial aid, delaying your application or affecting the amount of financial aid you receive, so before you submit your FAFSA it’s important to make sure everything is complete. Common mistakes include leaving too many fields blank, forgetting to list the colleges you plan to attend, or misplaced commas and decimal points. Mistakes often come from failing to read or misunderstanding directions so while you’re reviewing your information make sure you’ve filled everything out according to the instructions.

Sign and Submit

Until you’ve signed and submitted your FAFSA it’s still incomplete. Once you’ve reviewed all of your information and checked or corrected and mistakes you can submit your FAFSA electronically using your FSA ID.

If you’re looking for help with questions about making sure you have everything you need for your financial aid application, contact an experienced accountant like the ones at Donohoo Accounting Services. Schedule a free consultation at 513-528-3982 or email us today. Check us out on Facebook, Twitter or LinkedIn for our latest updates!

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Tips for Saving for College

Having a college degree is vital in today’s economy because a degree means higher wages, more career opportunities, greater job satisfaction and other benefits. But as college costs continue to increase it’s more important than ever to start saving for your children’s future as early as possible. These tips can help you get a head start and put your student on a path to higher education that leaves them with as little student debt as possible.

Put Yourself In The Right Financial Position To Start Saving

Parents are encouraged to start saving for their child’s college fund as early as possible, but before you do it’s important to make sure you’re in the right financial position. Paying off credit card or your own student loan debt, establishing an emergency savings account, as well as saving for retirement are important financial milestones to complete before establishing a college fund. Completing these milestones will help put you in the right financial position to start saving.

Research College Costs

With college costs continuing to rise, it’s important to make sure you’re saving enough to cover your future student’s tuition, living expenses, materials and fees. Researching and comparing the costs of attending public colleges both in and out of state with private universities and community colleges gives you an idea of what kind of costs to expect. This allows you to determine a time frame and budget.

Explore Different Savings Options

There’s a variety of different savings options available to start your college fund, and researching available plans will help you find the one that’s right for you. Education Savings Accounts (ESA) offer parents the opportunity to save $2,000 per year, per child that grows tax-free. While the money can be withdrawn tax-free when it’s ready to be used, you must meet a certain income limit to qualify and contributions are limited to $2,000 a year.

529 plans are an alternative to those looking to contribute more than $2,000 or don’t meet the income limits of an ESA. The high contribution rates offer the opportunity to quickly meet your goal and like the ESA, your money grows tax-free. While 529 plans provide parents great saving opportunities for a single child, restrictions may apply if the parents decide to transfer the funds to another child.

Find Out If You Qualify for Certain Tax Breaks

Qualifying for available tax breaks helps provide you with more money that can be put toward educational costs. If you’re eligible for the American Opportunity Tax Credit, you can get a credit of up to $2,500 that covers certain educational expenses while the Lifetime Learning Credit covers costs other than tuition and books including activity fees.

For help with questions about the best ways to save for your child’s future, contact an experienced accountant like the ones at Donohoo Accounting Services. Schedule a free consultation at 513-528-3982 or email us today. And don’t forget to check us out on Facebook, Twitter or LinkedIn for our latest updates!

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