Your Guide To Taxes, Unemployment & Finances During The Coronavirus
Stylists & Salon Owners—Taxes, Unemployment & Financial Advice!
In the wake of the coronavirus, we’ve heard all of this talk about the new stimulus package, unemployment and different economic relief packages—but where do taxes come into play? To get you the answers you need, BTC spoke with April McDaniel, a CPA at Kopsa Otte, an accounting firm that specializes in salons, spas and beauty distributors.
We know there’s a lot of info out there, so we’re breaking it down into these topics: immediate action planning, questions and answers surrounding unemployment and how to help improve cash flow.
Kopsa Otte Disclaimer: Because every situation is different, it is important that individuals seeking specific advice contact a professional advisor. The info provided does not constitute legal, tax, accounting or financial advice and is offered as an info service only. No liability whatsoever is assumed in connection with the use of this info.
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But, where do I start? Here’s what you should be doing immediately:
- If you are expecting a refund on your 2019 tax return, file it. This will help your cash flow. If you aren’t expecting a refund and you haven’t filed your tax return for 2019, you have until July.
- Get your financial records in order. Don’t know what to prepare? “Typically a tax accountant would request detail of all income and expenses associated with the business,” shares April. This includes:
- A copy of or access to QuickBooks, or whatever financial software that you use.
- If you are a W-2 employee, then you won’t have business deductions, so contact your accountant for a list of what is needed.
- Most tax accountants will provide a questionnaire or organizer to help gather info.
- Contact your tax accountant to discuss your options based on your personal tax situation.
Having tax-related questions about unemployment? Here are some answers.
Question 1: Are unemployment checks taxed?
“Yes, unemployment payments are typically subject to tax,” shares April.
Question 2: If I receive unemployment, should I expect an extra tax form for filing their 2020 taxes?
“The 1099-G is the most common form used to report unemployment compensation as well as any state or local income tax refunds you received that year,” shares April. “If you received a 1099-G Form this year from a government agency, you may need to report some of the information it contains on your tax return.”
Question 3: Salon Owners: If I apply for unemployment, am I still be able to apply for Emergency Grants or the Payroll Protection Program?
Before making the decision to apply, April recommends speaking with your accountant to gather financial data, including payroll information, to apply for the loans. “Whether these loans are the right choice for you will really depend on your specific facts and circumstances,” she adds.
Learn more about SBA loan and grant programs at sba.gov.
Question 4: Booth renters, sole propieters and suite owners: If I’m not giving myself a formal paycheck through payroll, am I still able to apply for unemployment and PPL?
“A booth renter, sole proprietor and suite owner is typically considered self-employed,” shares April. “In most states, the self-employed can apply for unemployment benefits due to the COVID 19 pandemic.”
Wondering where to apply? Go directly to your state unemployment agency website to apply for benefits.
Question 5: Worried about cash flow? Dig deep into your expenses.
What are those bills that you absolutely have to pay? What don’t you have to pay? This is the time to evaluate where you spend money and start cutting low-priority costs. After you’ve sorted your finances, reach out to people you trust. “This is a relationship business,” shares April. “It’s the time to call on relationships. Call those people that you work with everyday—tax person, banker, credit card company, accountant, etc. See what you can defer and look at absolutely everything.”
Question 6: Don’t have a relationship with someone at your bank? It’s time to make one. “Typically, most banks have relationship managers. If you don’t have a relationship, tell them you are looking to create a longstanding partnership with the bank,” adds April.