If you’re a small business owner, COVID-19 has likely had a financial impact on your company that may include paying any taxes you owe this year. However, the IRS offers tax relief programs for small businesses as well as individuals. Here are ways the federal government is currently helping small businesses.
1. Employee Retention Credit
If your business shut down or your gross receipts fell significantly because of COVID-19, you might qualify for the Employee Retention Credit (ERC). The ERC gives a refundable credit of up to $5,000 per full-time employee retained between March 13 and December 31, 2020, reports Consumer Affairs.
The Employee Retention Credit is designed to encourage business owners to retain employees, even if they are unable to work because the business isn’t open. Certain restrictions apply — for example, you can’t qualify for this and the Paycheck Protection Program (PPP). Read more about the Employee Retention Credit on the IRS website.
2. Coronavirus-related paid leave
The federal government is providing support to small and medium-sized businesses struggling to cover paid leave for employees who take off work due to coronavirus-related reasons. The government will pay 100% of an employee’s salary for up to 80 hours of sick leave. Other related benefits include paid sick leave credit and credit for child care. The IRS website has more information on various paid leave relief options.
3. Deferred employment taxes
If you anticipate having trouble paying your employees’ Social Security taxes, this benefit might help. It lets employers delay paying these taxes, and it also applies to self-employed individuals. Several restrictions apply — for instance, companies are not eligible if they receive a loan under the Paycheck Protection Program. Read the FAQ section on the IRS website to see if you qualify.
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4. IRS virtual workshop
This resource isn’t a tax benefit, but it will help you handle your tax obligations as a small business owner. Taxes can be confusing, even when there isn’t a pandemic going on. The IRS has designed a virtual workshop on taxes for new small business owners to help. The first three lessons apply to all business owners, and later videos cater to more specialized needs, including setting up retirement plans or running a business from home.
Still, concerned about your ability to pay taxes? Read our Tax Relief Buyers Guide to learn more about companies trained to mitigate small businesses’ tax debts.