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Worried about government indecision hurting your business?

Government indecision has caused widespread uncertainty, particularly among small business owners – but there is a solution… stop paying attention.

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Small business uncertainty

Across the country, small business owners are becoming more and more familiar with a feeling of paralysis. Paralyzed by fear, uncertainty, misinformation, and a general sense of swimming upstream, many are finding it difficult to make the important decisions that will shape their business and personal futures.

What does new tax legislation and the Patient Protection and Affordable Care act mean for my business? What will happen if those in Washington don’t see fit to set aside their personal agendas for the goodwill of the country? What would a government default or extended furlough mean for my business and our economy?

When consulting with small business owners on financial decisions, these questions arise constantly, and it is apparent that people are afraid. If they aren’t at least slightly afraid, they’re probably not paying attention. If you own a small business, you may relate to their fear.

What I’m about to propose may surprise you, then. I recommend that you stop. Stop paying attention. Stop listening to the talking heads and doomsday predictions. Stop listening to the various predictions of outcome and speculation as to the dire effects of each possible result.

Why should you stop paying attention?

It sounds counterintuitive, doesn’t it? After all, those who are informed typically fare better than those who aren’t. Therefore, you should remain informed and do your best to stay current with the facts.

But is it possible to be informed and to stop paying attention, and if so, why would you? People I know who have given it a shot can tell you that it is. These successful people would also tell you that they are no less worried, afraid, or interested than anyone else.

What sets them apart is their realization that paying attention is an action, a (sometimes) conscious effort. The more aware you are of it, the more you can choose what you pay attention to. And what you choose to pay attention to shapes your reality, your attitude, and your outlook for the future. These people continue to be successful because they realize that no matter what the government does, they’ll find a way to deal with it until they can’t, and no matter how challenging things get down the road, they’ll be better off if they stayed focused on doing the best they could with the hand they were dealt at any given time. They know that they can only accomplish this by focusing on the things they can control, so they set their attention on the activities they know will produce a positive outcome.

Setting your business apart

Small business owners have limited control over market forces. Supply and demand will always win, and consumer sentiment matters now more than ever. The majority of us cannot control tax legislation or industry regulations. What business owners can control is how they face challenges, how they treat their employees and how their customers view their company.

How customers view the people who run a company, and how they view their relationship with a company, its people and products are some of the factors that set businesses apart. Setting your business apart from the herd is increasingly important in constricted, commoditized economies like the one we are experiencing today and could see for some time.

Adapting to changes

Many of us are in business because we want to improve the world in a certain way, the only way we know how. When it comes to federal governmental policy, however, the truth is that the vast majority of business owners don’t have the time, resources, or power to directly affect outcomes. Changes will come down the pipeline, and we’ll have to learn how to adapt. It may be painful, and it will most likely be inconvenient.

Most business owners will probably have to pay people or other companies to help us navigate whatever changes come down the line, whether that fits into our plan or not (and it should). Some businesses may be pushed out, and some will be replaced by new organizations who realize that with every challenge comes an opportunity.

The fact of the matter is that we don’t know the future, and we can’t control it. So why waste your time and resources fretting the unknown? Your concerns are valid and you are right to stay informed. You are right to be a little afraid. But learn from those who are forging ahead and making their businesses stronger than ever, knowing that strength and focus are key to their survival. Follow their lead, and no matter what happens over the coming months and years, I assure you that you’ll be better off than those who chose to remain paralyzed by fear of the unknown.

Daniel Larsen is an Independent Financial Adviser based in Austin, Texas. After beginning investing as a hobby, he has specialized in investments and personal finance for seven years, helping successful professionals achieve financial independence. A graduate of the University of Texas, he has been featured in local and national publications and you can get more financial advice from his blog. Securities offered through WFG Investments, Inc. member FINRA & SIPC. Investment advisory services offered through WFG Advisors, LP.

Business Finance

Politicians reconsider PPP rules too cumbersome for small businesses

(BUSINESS FINANCE) The PPP loans may have some changes coming soon, to help small businesses even more by extending the time they have to spend the money.

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Congress has reported talks over fixing parts of the Paycheck Protection Program (PPP), a key program designed to help businesses during the coronavirus pandemic. Changes could range between small tweaks to an overhaul of program requirements. Congress remains divided over a phase four relief bill (passed in the House last week) which includes several of those PPP changes.

The PPP was created to provide forgivable loans to businesses with fewer than 500 employees. Although the Treasury is continuing to offer updated guidance, any significant changes will require approval from Congress.

One of the major potential changes is an extension to the eight-week time frame for businesses to spend their loan money. Senator Marco Rubio (R.-Fla.) is advocating the change. He told reporters “I think the more important thing to change is the time frame in which they can use it for,” Rubio told reporters. “We do need to give them more time to spend those monies.” The hope is to pass those changes before the first PPP loan recipients reach their deadline in early June.

Other changes proposed in the House bill include extending the spending time period to 24-weeks and eliminating the requirement for 75 percent of loan spending on payroll in order to qualify for full forgiveness. The flexibility could allow recipients to allocate money towards rent, another challenge facing small business owners. While Senate Republicans haven’t shot down that option, they’ve voiced concern on the spending rule which was originally designed to keep workers employed. Meanwhile, Democrats argue for flexibility which could support businesses with fixed costs. Both sides are open to discussing a 50 percent payroll and 50 percent additional cost breakdown in a new PPP changes.

The Small Business Administration has reported $195 billion from the $310 billion of the second tranche of PPP has been approved. With no defined plan to reopen the country, small businesses are counting on relief programs. Senior White House advisor Kevin Hassett has said the government can’t continue to lend money to businesses indefinitely. “It is something we can do through Jun, I would, guess if there’s enough cash for that.”

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Business Finance

Unless you call your representative, the IRS will be forced to screw PPP recipients

(BUSINESS FINANCE) Small business owners, can your Covid-19 loans really be forgiven? “Free money” never sounded so good…or bad. The CARES act missed a vital tax hole.

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The Paycheck Protection Program (PPP) portion of the Coronavirus Aid, Relief, and Economic Security Act (CARES) was hailed as a revolutionary life line to small businesses that had to shutter their doors against the plague.

Basically, the Feds said: Keep your expenses up, pay your staff so they don’t have to go on assistance, and not only will we loan you the cash to do so, so long as you can prove it was spent stimulating your business, we’ll not only forgive the loan, it won’t be taxed as income.

Right said, Fed. But some sharp-eyed readers of the letter of the law say they’re too savvy for these loans, and here’s why.

It was announced on April 30th that anything paid with PPP payments won’t be tax deductible.

Specifically, the IRS says, expenses that qualify a business owner loan forgiveness cannot be deducted from 2020’s tax filings, in order to keep people from getting “double tax benefit[s].” You can read up on the tax code citations and legal precedents right here, straight from the tax horse’s mouth.

So what’s happening here is you can “enjoy” free money from the government, but if you were counting on it being non-taxable income, then you’d best count again.

I may be a simple country (adjacent) April, but is the purpose of handing out money somehow… NOT to put business owners AHEAD?

This move strikes me as a ship throwing someone in the water a life-vest… then sailing off without reeling them in.

‘Well you don’t want people to double-dip,’ is a rebuttal I’d expect. Or ‘that’s how the CARES Act was written,’ but right now we’re dealing with people and their businesses needing EXTRA. Not ‘a bit,’ not ‘enough,’ but quantifiably EXTRA help in order to do better than just tread water. We NEED that extra dip… and individual bowls for everyone while we’re at it.

“No half measures,” as a wise, narcissistic fictional criminal once said. Brian Cranston won an Emmy for delivering that line, so I figure it’s stand-by-able.

As of right now, there’s not much that can be done except for business owners to gather and lobby their representatives en masse to alter the language of the CARES Act, or add an amendment to it that allows the IRS to let the deductions business owners need to slide.

As is, strict interpretation of the law doesn’t give our beloved agents enough wiggle room to LET this money be deducted. And I’m guessing that the IRS isn’t really the type of agency to DO interpretative judgements as a matter of course so… the ball is in Congress’ court on this one.

Fortunately, it seems like they’re taking it and running with it!

On May 12, a bill aptly named the HEROES Act was proposed in the house, and it clarifies: “For purposes of the Internal Revenue Code of 1986 and notwithstanding any other provision of law, any deduction and the basis of any property shall be determined without regard to whether any amount is excluded from gross income under section 20233 of this Act or section 1106(i) of the CARES Act.”

They’re reaching past the last stimulus bundle (that I haven’t received my share of yet by the way, cough cough) with a total of three trillion as a distribution goal. That’s a three followed by twelve zeroes, sweeties. And this is all cold, hard, tax free, DEDUCTIBLE cash.

My advice here? Get your letter-writing hands ready, business owners! It’s not a law YET, so keep pushing your politicians as best you can, and telling your friends, (and sharing our articles) And best of luck.


Sidenote from the Editor: Research for this story includes insights from Caleb Ellinger at Ellinger Services (CPA wizard (our word, not his) in Austin who is very well known as serving startup and freelance communities).

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Business Finance

Companies seek brownie points by returning PPP cash they shouldn’t have applied for

(BUSINESS FINANCE) It turns out some large national companies received millions of dollars of the PPP loans that were pitched as for small businesses, what gives?

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The CARES Act, passed last month in response to the COVID19 pandemic, allocated over $370 billion to small businesses in the form of PPP loans. The Paycheck Protection Program (PPP) was hastily ran through Congress, with many of the small details left for the SBA, IRS and other entities to iron out, even though the legislation was over 800 pages.

Now, Bloomberg is reporting that many small businesses are returning loans as the Trump administration issues new guidance for these loans.

PPP loans- confusion over eligibility, rules and restrictions

The PPP was designed to incentivize employers to maintain payroll through the pandemic. The law’s intent was to help small businesses, non-profits and smaller organizations without other resources.
Within just a few days, the money was exhausted.

As Congress allocated more money for the program, it came to light that many larger businesses made requests for the money. Shake Shack, a national chain, received $10 million. Ruth’s Chris steakhouse received $20 million. Even the Los Angeles Lakers received about $4.6 million through the PPP. It should be noted that each of these entities returned the money. Technically, each of the entities qualified under the PPP, too.

Treasury Secretary Steven Mnuchin and the SBA announced that all PPP loans over $2 million will be reviewed to ensure borrower eligibility. The SBA continues to provide guidance for the PPP loans. One financial expert likened it to building the plane while it was still in the air. Some companies are receiving guidance that no publicly traded companies qualify, even though these companies have received PPP funding, and some intend to keep it.

If a company doesn’t qualify for the PPP, they could face criminal charges for making false certifications on their loan applications. This could include statements that indicate the PPP funding is necessary to support ongoing operations.

Return the PPP money or not?

The SBA is giving borrowers a deadline of May 14 to return PPP loans without any legal trouble. Some companies are returning the money, not only because of public backlash, but to avoid problems. The government is sending a message that it will be vigilant over the use of PPP funding. There are still so many questions about how the loans will work and will be forgiven, it pays to tread carefully if you’ve received more than $2 million in funding under PPP.

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