How will CARES Act Funding impact your 2020 Taxes?

 
2020 was a year for the books, so it probably comes as no surprise to you that last year may have a unique impact on your books. If your business received a slice of the $5 billion+ pie that was the Paycheck Protection Plan in 2020, you’ll want to know about the PPP loan tax implications that will apply for 2020 filing. Will you be taxed on this income? Are you allowed to deduct expenses paid for with PPP? We’ve outlined a few of the common questions we have been receiving in hopes to help you gain a foundational understanding. As always, see your CPA for legal tax advice regarding your specific situation. 
 

Will my business be taxed on PPP income?

In December of 2020, the Coronavirus Response and Relief Supplemental Appropriations Act clarified that a forgiven PPP loan is entirely tax-exempt and is classified as non-taxable income. Your PPP loan is forgivable as long as the money was spent on payroll expenses, mortgage interest, utility payments, rent, operational expenses, property damage costs, (due to public disturbances in 2020), supplier costs, and/or worker protection expenditures.
 

Can my business deduct traditionally deductible expenses paid for with PPP Loan Income?

Yes. The Coronavirus Response and Relief Supplemental Appropriations Act passed in December 2020 reversed the original decision not to allow deduction of expenses paid for with PPP income. The decision was reversed due to the fact that some businesses may have had higher taxable revenue in 2020 than in previous years without being able to write off as many expenses. 
 

Can payroll taxes be deferred if my business received a PPP loan?

Yes, payroll taxes from March 27th, 2020, through December 31st, 2020. Even if your PPP loan is forgiven, you may still defer the payroll taxes. Fifty percent of the deferred taxes accumulated in 2020 must be paid by December 31st, 2021, and 50% of the deferred amount must be paid by December 31st, 2022.
 

Can my business use PPP funds to pay for 2020 taxes?

No. PPP loans can only be used to pay for specific outlined expenses outlined in the answer to question number one above, so taxes cannot be paid with PPP funds.
 

A note on other CARES ACT income:

PUA- Pandemic Unemployment Assistance

It often comes as a surprise to many, but unemployment benefits are considered taxable income. You will still owe state and federal taxes on any unemployment compensation that you have received. However, you will not owe any medicare or social security taxes. Some people opt to have the taxes automatically withheld from their benefits by filing a W-4V, but if you do not remember specifically requesting to have taxes automatically withheld, then you will still owe them when reporting the income you received on your 2020 tax return. You should have received a 1099-G from your state labor office stating how much PUA compensation you received and if any taxes were already withheld.
 

EIDL- Economic Injury Disaster Loan (and Grants)

EID Loans will be treated as any other loan when it comes to tax time, but EID grants have been declared tax-free and it is, therefore, unnecessary to include that grant amount in your taxable income total for 2020.
 
Still have questions?
The U.S. Chamber has released an updated guide to Small Business COVID-19 Emergency Loans that further explains the substantial changes passed into law in December 2020.

Looking for Professional Help Sorting Out PPP Loan Tax Implications?

Contact us for service you can trust! Perry & Associates CPAs has multiple offices throughout the Mid-Ohio Valley. 

Tax Advisor Near Me in Ohio and West Virginia

Every business and individual should have access to a local tax advisor. Not only are annual tax returns required by law, a qualified tax advisor can potentially save you thousands of dollars in deductions and rebates. An added benefit is that a tax advisor can keep your documents organized throughout the year. While other people struggle to find receipts and sales documents, you’ll breeze through tax season stress-free. 
If you’re searching for a “tax advisor near me” for any of your business or individual tax needs, take a look at all we have to offer. 
Perry & Associates serves corporations, small businesses, and individuals through our Ohio and West Virginia offices. We pride ourselves on providing personalized, quality service. With Perry & Associates, you will have convenient access to tax advisors near you. Our tax advisors understand your local economy and regulations and can help you succeed financially.
Below we’ve included an overview of our tax advisor services. 

TAX SERVICES

Receive the largest deductions and rebates on your tax returns with our year-round tax services. Perry & Associates tax advisors will work closely with you to catch tax issues early. Our comprehensive tax preparation ensures a no-stress filing process. With offices near you in Ohio and West Virginia, expert tax advice is just a quick drive, call, or email away.

FORENSIC AUDITING

Have you noticed some indescrepencies with your taxes or finances? You may need a tax advisor for forensic auditing.
Unfortunately, many financial crimes are committed by people closest to you. Our corporate clients use our firm to investigate suspicions of fraud and laundering. Individual clients often need help discovering a spouse’s hidden assets and income during divorce settlements.
Perry & Associates full forensic auditing services include Money Laundering, Terrorist Financing, Financial Crimes, Banking Operations (banking products, services, and customer behavior), Compliance Program Weaknesses, Financial Crimes, Divorce Hidden Income and Assets, and Lawsuits.
Read how our team uncovered one of the largest cases of fraud in Washington County.

ACCOUNTING SERVICES

Every successful tax return begins with professional accounting services. Because our team keeps your documents ordered throughout the year, filing your tax statement is a breeze.
Perry & Associates works with long-standing companies as well as brand new startups. If you are near the launch date of your business, our team of tax advisors can help set up your accounting system so that your financial reporting is accurate from the get-go. 

CONSULTING SERVICES

It’s important to consult a tax advisor before you make a major financial decision. Our team of tax advisors can guide you through the entire business lifecycle. We often give entrepreneurs advice on business entity selection and what each classification will mean for your tax burden. Later, we can consult you on mergers and acquisitions. Tax considerations are major components to these events.
Consulting isn’t just for businesses. We work closely with individuals to plan estates and manage debt. Call one of our tax advisors and we can make sure those near and dear to you are provided for. Because Perry & Associates is a regional firm with local offices, you can rest assured that you’ll receive the same amount of attention we give our business clients.
In addition to our traditional consulting services, we also consult on COVID-19 tax breaks and reporting requirements.

Tax Advisor Near Me in Ohio and West Virginia

Perry & Associates has convenient locations along the Ohio-West Virginia border. Find the office nearest to you and give us a call using the information below. If you’d like to send us an email, click here.
Marietta, OH
313 Second St
Marietta, OH 45750
Office: (740) 373-0056
Email: perrymta@perrycpas.net
 
Cambridge, OH
749 Wheeling Ave, Suite 300
Cambridge, OH 43725
Office: (740) 435-3417
Email: perrycam@perrycpas.net
 
St. Clairsville, OH
150 W Main St, Suite A
St. Clairsville, OH 43950
Office: (740) 695-1569
Email: perrystc@perrycpas.net
 
Vienna, WV
1907 Grand Central Avenue
Vienna, WV 26105
Office: (304) 422-2203
Email: perrypkg@perrycpas.net
 
Wheeling, WV
1310 Market St. Suite 300
Wheeling, WV 26003
Office: (304) 232-1358
Email: perrypkg@perrycpas.net

Tax CPA Explains 1099 Changes for 2020. Don’t Miss Them.

Preparing your W-2s and/or 1099s, like most things about the year 2020, will be slightly different. Below, we’ve outlined a brief overview of the changes; but as always, feel free to contact a tax CPA here at Perry & Associates if you have further questions after reviewing.
 
Preparing 1099s
More 1099s may be filed this year than any other year. Because of the many jobs lost to the COVID-19 pandemic, a great number of people took up contract work in order to help pay the bills. 
If your business hired anyone – or any non-incorporated partnerships or LLCs – to conduct contract work for you last year, you may need to prepare a 1099 form. This would apply to any hired work that received a cash or check compensation of $600 or more. 
Unlike previous reporting years, you will need to prepare a 1099-NEC (Non-Employee Compensation). This is different from the 1099-MISC you would have filed for contract work in the past. Notice that this excludes contract work payments made via credit card. All business credit card payments will be reported in 1099-Ks, which crediting merchant and third-party payment processors are responsible for generating. Do not generate 1099-NECs for contractors paid via credit card, only those paid with cash and/or check. 
 
Types of payments that warrant the filing of a 1099-NEC for reporting year 2020:

• Contract Labor, Commissions, Directors Fees, and any other like services provided to your business of $600 or more.
• Dividends, Interest, and Royalties of $10 or more.
• Professional Fees of $600 or more.
• Rents (other than to real-estate agents) of $600 or more.
• Attorney fees for legal services over $600.
• ALL payments to attorneys for settlements.

The deadline for submission of all 1099 forms to the IRS for reporting year 2020 is February 1, 2021. Your copies of these 1099s should also be distributed to their recipients on or before February 1, 2021.
 
If you have over 250 returns (W2s AND/OR 1099s) to file, it is required that you file all federal forms electronically. A tax CPA can quickly and efficiently assist you in your 1099 preparation.
 
Preparing W2s
The following wages must be included in Gross Wages on all employee W2s if applicable:

• Wages
• Bonuses
• Tips
• Any other compensation
• Business expenses paid in excess of allowed amounts
• Sick pay
• Automobiles
• Club dues
• Event tickets
• Plane flights
• Discounts on property or services
• Legal and educational services
• Value of life insurance group policy in excess of $50,000
• In some cases, moving expenses, educational assistance payments, and scholarships paid to an employee must be reported. Please contact us if you are unsure whether or not this applies to you.
• As always, employers’ contributions (matches) to retirement plans are not to be reported and are not taxable.

When to call a Tax CPA Instead of Using Software
There are many different online software options for preparing these forms; however, when it comes to all the unprecedented situations 2020 brought, a tax professional may be a wise choice for this year’s tax and employee form preparation. 
Non-compliance fees and late fees can pile up fast for innocent mistakes small business owners make when attempting to prepare their own W2s and 1099s. It will not only be costly to you if you miss something, but it can also affect your employee and contractor returns as well. It is undoubtedly worth paying a far less cumbersome amount to a Tax CPA than it is to be indebted to the IRS.

Looking for a Tax CPA Near You?

Contact us for service you can trust! Perry & Associates CPAs has multiple offices throughout the Mid-Ohio Valley. 
Marietta, OH
313 Second St
Marietta, OH 45750
Office: (740) 373-0056
Email: perrymta@perrycpas.net
 
Cambridge, OH
749 Wheeling Ave, Suite 300
Cambridge, OH 43725
Office: (740) 435-3417
Email: perrycam@perrycpas.net
 
St. Clairsville, OH
150 W Main St, Suite A
St. Clairsville, OH 43950
Office: (740) 695-1569
Email: perrystc@perrycpas.net
 
Vienna, WV
1907 Grand Central Avenue
Vienna, WV 26105
Office: (304) 422-2203
Email: perrypkg@perrycpas.net
 
Wheeling, WV
1310 Market St. Suite 300
Wheeling, WV
Office: (304) 232-1358
Email: perrywhg@perrycpas.net

Looking for the Easy Way Out of Business Bookkeeping ?

Procrastination Isn’t It.

Whether you dread your business bookkeeping or you simply cannot find enough time to get it done, putting off your accounting duties never ends well for you or your business. We understand that as a small business owner, you are being pulled in numerous different directions at once and it can be complicated to accomplish the mundane task of keeping up with the books. It is easy to write it off as non-urgent, vowing to catch up later.
But inevitably, later becomes next week, which becomes next month, which becomes 2 weeks before taxes are due. So why is this important? What does it matter if you wait until April to start actually doing your “business bookkeeping” for the previous year?

Top 5 Reasons Procrastination Can Kill Your Business

     1.)Poor Bookkeeping Leads to Poor Financial Decisions
The list of decisions a business owner must make every day often seems endless – how much inventory should be purchased, how much to invest in marketing, is it time to open a new line of credit, can you afford to hire a new employee, which bill should you pay first, should you get this new software, can you afford hardware updates, and on and on.
It can be difficult enough to make intelligent and informed decisions even with all of the data in front of you, but when you have no idea what the numbers are to back up these decisions, you will be driving blindfolded through your decisions. You are far more likely to crash when drawing upon ‘gut feelings’ for choices rather than your up-to-date cash flow, account balances, Accounts Payable and Accounts Receivable totals.
     2.)Audits…Need We Say More?
Handing your CPA a total mess of papers come tax season will not end pretty for either party. You will end up paying a much larger bill for the time they are going to have to spend on your filing, and while CPAs can work some magic, they are still human. Improper account management will likely leave you open for an audit.
If you are not carefully and accurately reporting what is going on in your business, you’re a much more likely target for the IRS. This can result in large late fees and expensive penalties if mistakes were made when you were rushing to reconcile the books.
     3.)You Could be Giving Away Free Money
Let’s face it, most businesses don’t have customers reminding them that they owe money. Getting behind on bookkeeping for your business means falling behind on your accounts receivable and invoice cycling as well.
If you simply try to make mental notes or “jot down” who owes you what, you will likely forget and lose money somewhere. Not collecting on accounts receivable is like giving away free money. Cash flow is the #1 reason that businesses fail, and much of that success or failure can be tied to tracking and updating your accounts receivable.
     4.)You Won’t Keep Good Employees Around
Your employees are the frontline of your business, and what you do is not possible without them. It is critical that your employees are paid on time and correctly on the regularly agreed upon schedule.
If you are slacking on the books, you may end up with an issue where you sacrifice your own paycheck so that all others are able to be paid. This is not unheard of for small businesses.
You may also end up with employees who do not report if you are over paying them, but who certainly would if you were underpaying them. Overpaying and underpaying employees will show on W-2 forms and can cause serious tax and legal issues for both you and the employee.
If employees cannot expect a reliable and regular paycheck, they will begin to look for work elsewhere, and it will be difficult to find new hires as word spreads.
     5.)You Will be Denied Financing
When it comes time to ask your bank for a loan or other line of credit, they will check your records in order to approve or deny your application. If the bank sees that you have poorly updated records and your bookkeeping is a mess, they may be unable to reach a decision or even deny your request.
Additionally, investors or donors will also want to see your most recent records and financial statements in order to confirm the security of investing in your business. When these are unprofessionally done, or not done at all, you have lost the ability to increase your company’s growth through business lending or investing.
Overwhelmed? Don’t procrastinate your bookkeeping…outsource it!

Outsourcing Business Bookkeeping

Most firms that provide business bookkeeping services actually end up costing far less than the amount of time it would take you to properly manage it. Do you know your ideal hourly wage for your own time (i.e. what are you worth in your business)? Multiply that hourly by the amount of time it would take you to keep your books in order each month. Chances are, it’s much less than the amount you would pay a business bookkeeper to do it for you. And you’ll have the added peace of mind that your business bookkeeping is being done properly and orderly.
If you need help with your bookkeeping, call Perry & Associates today. We have 5 different offices throughout the Mid-Ohio Valley as well as online portals for handling accounting virtually.
 
 

COVID Brings Spotlight on State Taxation of Telecommuters

With the onset and persistence of the COVID-19 pandemic, more and more employers have had to promote or, at the very least, permit telecommuting (teleworking). Some experts are predicting that the teleworking trend will be here to stay for many, regardless of the pandemic resolution. 6 out of 10 employees have reported greater satisfaction with their work/life balance since beginning work from home, and many businesses have actually reported greater employee productivity and retention.
However, for many companies, this may mean that they now have employees working in states other than those that their business currently has an established taxable presence within. So what does the ‘work from home’ wave mean for your small business tax filing and preparation for 2020? How does state taxation of telecommuters affect your new operations model?

Employees Living and Working in Neighboring States

Fifteen states have reciprocal tax agreements with neighboring states where an employee resides in one state and is employed in the other. The State of West Virginia has reciprocal income tax agreements with Kentucky, Maryland, Virginia, Ohio and Pennsylvania. Reciprocal tax agreements mean that the employee is only responsible for filing taxes in their state of residence, not the state in which their employer is located.
For business owners, a reciprocal tax agreement means that it is not necessary to withhold taxes in the state of residence for their employee. However, if your state, or the state in which your employee lives or is temporarily working from, is not one of the 15 states that have agreements with some of their adjacent states (Illinois, Indiana, Iowa, Kentucky, Maryland, Michigan, Minnesota, Montana, New Jersey, North Dakota, Ohio, Pennsylvania, Virginia, West Virginia, Wisconsin) then there is a tax base nexus on both the state of residence for the employee and the state from which the income is earned.
Businesses are expected to withhold taxes for the employee in the state in which the work was performed, which can be a costly compliance for businesses that are not used to having their net income subject to taxation from multiple states. The employee will have to file taxes in both states, but will receive credits to avoid double taxation.
Both businesses and employees in this situation would benefit from the help of a professional CPA to help prepare and file their taxes appropriately to avoid the expensive consequences of confusion further down the road.

Employees Living and Working in States with No Reciprocal Agreement

As an employer, when you think of having a taxable presence in another state, you probably think that it warrants a physical branch or location. After all, sales alone in another state are not enough for that state to lay claim to any of your business income.
However, having just one employee in another state could be enough for that state to claim that you have an established workforce presence there. If your business makes considerable sales in outside states in which 1) you have no office or sales force located, 2) you do not service your goods there and use a common carrier to ship your goods there, or 3) have them come to your location for pick-up, then you have no tax base nexus there.
If, however, you now suddenly have even just one employee working in that state, then you may have established a taxable workforce presence there, and all of those sales could come into consideration when determining what percentage of your net income that state is allowed to tax.
This is where “nexus” and “apportionment” come into play. Tax base nexus determines whether or not a business’s presence within a state is sufficient enough for the state to tax any of the business’s activity.  Apportionment determines how much of the business income is appropriate for the outside state to tax.
This can become even more complex if you have an employee that is teleworking from a state that is not their state of residence or a state that your business has established presence within. This has become more common with the COVID-19 pandemic as several individuals may have moved temporarily to other states to be with family, or to simply flee a ‘hot spot’ area of concern and wait it out. Some states begin to require those employees to file a non-resident return there the moment they begin working from that location. This means that you, as employer, would also need to withhold for that employee in that state during that time, which can be costly and confusing to navigate without CPA guidance.
Different states have vastly varying regulations with situations like these, so it is important for your employees to check how long their state of temporary residence allows them to work there without having to file and withhold taxes in that state.

Get Help from a CPA Near You for Telecommuting Taxation

Perry & Associates CPAs has multiple offices throughout the Mid- Ohio Valley, where many of these state working lines are crossed. Contact us for expert advice from an accountant that knows the intricacies of each state’s law.

5 Ways a Wheeling, WV Tax Accountant Will Help Your Small Business Flourish

A recent study performed by Intuit shows that 89% of small businesses report that they saw more success once they hired an accountant or financial advisor. But why is this? You know your business best, why can’t you just go it alone? Read on for 5 surprising ways that a tax accountant Wheeling, WV businesses lean on can help set you up for more success. 

Businesses in Wheeling, WV Succeed with Professional Tax Service Help 

First, we’d be remiss if we didn’t mention the distinct difference between an accountant and a CPA. A CPA makes all the difference. Not all Wheeling, WV tax accountants you might hire are Certified Public Accountants. CPAs have passed a rigorous, multi-day, state-specific examination on financial and tax expertise. A CPA will know how to best help your business comply with the exact laws and code of your state, where a general accountant may not be able to do so. Also, a CPA will be able to fully represent your business before the IRS in an audit, where an enrolled agent, who is not a CPA, will be very limited in how they can represent you.
So, how does a CPA help businesses profit more?

• Assist with Tax Advice and Planning

A good CPA will know State and Federal Tax Codes inside and out. This means that they will often have far more knowledge of different tax cuts and credits that could save your business thousands of dollars. They can also provide monthly accounting services by managing all the required documentation and record keeping that you will need come tax season. Think of how nice it would be to eliminate the night-before-the-deadline-scramble that inevitably happens every tax season despite best intentions.

• Representation During Audit

As mentioned before, one of the greatest benefits of using a professional CPA for your tax preparation is that they will be able to represent you fully in an IRS audit. Equally as important, CPAs will also be able to audit you themselves as they work with you to catch any red flags or possible mistakes before the IRS does. 

• Protecting Your Finances 

In recent years, small and large businesses alike have begun to recognize the benefit of forensic accounting. Unfortunately, even small businesses can be the victims of embezzlement, fraud, and other financial crimes that a CPA can help catch and resolve. CPAs certified to perform forensic accounting can also help you establish effective preventative measures for guarding against internal financial fraud.

• Managing and Consulting Aid

Not all entrepreneurs are good with numbers. Likewise, not all CEOs have natural accounting skills. Good leadership doesn’t mean you must have proficiency in business financials. And many that have cursory knowledge may not know the depth of what other avenues are available for their business bookkeeping and financial health.  Do you understand accounting methods and terms such as LIFO and FIFO? Do you know the pros and cons of various bookkeeping methods like single entry versus double entry? What about financial statements? Do you know how to properly prepare and interpret Income Statements, Balance Sheets, Statements of Cash Flow etc.?
Even if you do understand these things well and know how to manage them, most likely you don’t have the time. A CPA can act as your CFO assisting with budgeting, risk management, financial statements and more, leaving you free to focus on your operations, goals and growth.

• Bookkeeping and Payroll Administration

A CPA can also help you with day-to-day financial tasks such as payroll, payroll taxes and general bookkeeping. A professional tax accountant in Wheeling, WV can assist invoicing, accounts payable and receivable, vendors, timely rent and more. These time saving and stress saving duties could be worth the fee all on their own!

Need a Tax Accountant near Wheeling, WV?

Perry & Associates CPAs has offices in Ohio and West Virginia. Contact us at our Wheeling, WV office for service you can trust!