The knowledge you need

One of the many lessons learned from the COVID-19 pandemic is the importance of cash flow and the need for cash flow planning. When the pandemic first arrived in Atlanta many businesses were scrambling to adjust to the various government orders including forced business closures. This meant some had to make challenging decisions to reduce costs when limited, to no revenue, was generated.  Congress stepped in offering a lifeline in the form of the CARES Act which not only created the Paycheck Protection Program (PPP) but also introduced the  Employee Retention Tax Credit (Credit).

As the end of the year quickly approaches there are only a few weeks left before the holidays. For many Atlanta businesses, this is a time to analyze financial performance, review operational benchmarks, assess vendor relationships, review financing and credit opportunities, and outline a path forward in 2021. There is little doubt that many plans for 2020 were interrupted by the COVID-19 pandemic requiring mid-year adjustments.

For many physicians, making it to the end of 2020 successfully is an achievement of perseverance, planning, pivots, and good business sense. An industry not traditionally associated with financial challenges was tested thanks to COVID-19 when in-office patient contact was restricted, elective procedures were all but halted, and ongoing medical care shifted to virtual. Many offices were forced to shut their doors or furlough staff, and the added cost of PPE and technology upgrades strained already-tight budgets.

U.S. independent auto dealerships started 2020 with a measured and slightly positive outlook and will be ending the year like most other industries: down. The coronavirus pandemic has shattered and reshaped outlooks for practically every sector, including auto dealerships. That is not to say that 2020 has not been without its opportunities, however, as there are several positive forward-looking trends that spell opportunity.

2020 has been a year of unique events and unexpected outcomes. For many, the pandemic has forced them to take things one day at a time. This is especially true for Atlanta businesses that have taken a loan through the Paycheck Protection Program (PPP). Since the PPP was launched as part of the CARES Act in March, there have numerous changes and updates including 2 separate frequently asked questions (FAQs) documents published and 26 interim final rules.

The COVID-19 pandemic created a host of new challenges and issues never before experienced by Atlanta business owners. It started with forced business closures and stay at home orders and has transitioned to new safety protocols, limits on gathering sizes, and more. Many businesses have elected to transition to a remote work environment to protect against virus transmission. Despite these measures,  it was recently reported the seven-day rolling average of new Coronavirus cases has increased 42% since October 2nd which likely means additional restrictions.

The Tax Cuts and Jobs Act of 2017 (tax reform) was designed to make the tax code easier to navigate and reduce taxes on American businesses allowing them to be more competitive. Many of the changes were well received including the reduction of the corporate tax rate to 21%, a new 20% deduction for pass-through entities, and an increase in Section 179d expensing. However, there were other changes not well received by Atlanta businesses including the elimination of the entertainment expense deduction, limitation on business meal expense deductions, and implementation of a $10,000 cap on the deduction of state and local taxes (SALT) for pass-through entities.

The challenges created by the COVID-19 pandemic have been especially difficult for Atlanta mid-sized businesses. The almost overnight changes from “business as usual” to stay at home orders and forced closures meant a significant drop in revenue. The businesses hit hardest include retail, transportation and warehousing, employment services, tourism, and entertainment/recreation.

The popular Paycheck Protection Program (PPP) is back in the news again as the Small Business Administration (SBA) is seeking formal approval from the Office of Management and Budget (OMB) to collect loan necessity information. The questionnaires include SBA Form 3509 (nonprofit organizations) and 3510 (for businesses) are designed to obtain more detailed information about loan necessity from borrowers who received loans greater than $2M.

As the closing weeks of 2020 quickly approach many Atlanta businesses are taking a closer look to uncover new tax-saving opportunities. Given the number of challenges presented by the COVID-19 pandemic, it is not surprising there have been several new and extended federal tax incentives introduced to help businesses survive and recover. While valuable tax-saving opportunities, it is important not to forget about the tax extenders passed by Congress at the end of 2019. The one most relevant to Atlanta construction companies and contractors is the Section 45L, New Energy Efficient Home Tax Credit, which provides a credit for meeting certain energy efficiency minimums.