PADGETT BUSINESS SERVICES®
December 2020
What a year! While year-end tax planning may not be your biggest concern these days, it’s important so you can strategically position yourself for the upcoming tax season! There have been some major changes that might affect your 2020 tax return, and it’s important to have a plan in place.
 
There’s lots of new legislation to consider. The Coronavirus Aid, Relief and Economic Security (CARES) Act, Families First Act, and even last year’s Setting Every Community Up for Retirement Enhancement (SECURE) Act all feature various provisions to help individuals and small business owners. There also is the massive Tax Cuts and Jobs Act (TCJA) that went into effect two years ago but still impacts today’s tax planning.
 
It’s also possible there could be more tax law changes before year end or that the potential for changes next year could retroactively affect 2020. What does all this mean for you? Let us help to navigate all these new provisions so you can take advantage of tax savings before the end of the year.
Six things your business should consider for year-end tax planning
There’s no doubt that 2020 has delivered its share of twists and turns, and that businesses are ready to hop off this roller coaster as soon as possible. It’s understandable many are unsure about what’s to come, including future shutdowns, the fate of the Paycheck Protection Program and the possibility of another round of stimulus.

In a world where we feel like we have less and less control, here’s a checklist of some things you can do to get ready for 2021.
Your one-step tax planning checklist for individuals
The holidays are right around the corner, though many of the family traditions we’ve come to treasure may look different this year. However, during this pandemic we’ve discovered new and innovative ways to remain connected.

This year also has brought with it a myriad of new tax rules designed to help people weather the financial impact of COVID-19. As you start to make a plan to handle 2021, it’ll be important to know how those tweaks and changes fit in.

Here are a few of the things to keep in mind as you begin your year-end tax planning.
Is it time to take action on PPP loan forgiveness?
Earlier this month, our trusted team of accountants, CPAs and tax professionals advised business owners to exercise just a bit of patience as we all waited for additional guidance on the loan forgiveness portion of the Paycheck Protection Program (PPP).

Now, thanks to a recent statement from the IRS, we have some much-needed clarity.

The IRS has determined businesses that either already have received loan forgiveness or have a reasonable expectation they will have their loans forgiven won’t be able to deduct business expenses paid for by the loan. However, the IRS did say businesses which are unable to have their debts forgiven -- whether it’s because their loan forgiveness request is denied or if they simply decide not to seek it -- can still claim those tax breaks for things like payroll, mortgage payments and utility costs.

If you’re a business owner, what does this mean?
Three things to know about managing your cash flow
As a small business owner, have you ever taken a closer look at your cash flow situation?

If not, it’s something you might want to consider doing on a regular basis. For starters, understanding your cash flow can give you the information you need to make smart choices for your business.

That’s because taking closer looks at your finances, such as accounts payable and accounts receivable, inventory and credit, can give you a clear picture of the health of your business. This takes a bit of foresight and planning, meaning you’ll need a good bookkeeping system and accurate records.

Here are three reasons why you should do a regular cash flow analysis.
Making a plan for PPP loan forgiveness
It’s safe to say most of us are ready for this unprecedented year to come to an end! Before it does, however, there is one more thing many small business owners need to be mindful of, and that’s crafting a sound plan to navigate the loan forgiveness process of the Payroll Protection Program (PPP).

If you’ve already used all of your loan funds, you’re probably ready to get this whole thing behind you, particularly if your covered period is over. However, there are some important things to keep in mind that could change your plans on when to submit your application, including the potential for significant tax savings if you’re willing to wait just a little longer.

Should you wait? Well, a tiny bit of patience and some smart planning can go a long way, so here are a few things to keep in mind when you talk to your accountant or tax professional.
The impact of refinancing your home
In the wake of the current economic climate, interest rates are falling, and that means the number of homeowners interested in refinancing is rising. As such, homeowners are wondering what kind of benefit refinancing may have on their taxes.

If you’re thinking of refinancing, or have recently refinanced, here are some key considerations to keep in mind.
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