When the COVID-19 pandemic hit New Jersey in March 2020, many businesses were forced to close for a time, causing unemployment claims to spike.  More than 2 million state residents have filed for unemployment since the start of the pandemic, and over $33B in state and federal benefits have been paid out.  As a result, the state’s Unemployment Trust Fund (UT Fund) has been severely depleted, and the state was forced to borrow from the federal government to keep paying claims.

The arrival of the COVID-19 Delta variant has many New Jersey and Pennsylvania-area employers concerned about the potential for future economic challenges. The number of new cases in both states has increased at an alarming rate, and the anxiety is compounded by the expiration of several Small Business Administration (SBA) COVID-19 relief programs, including the Paycheck Protection Program (PPP). Of the few remaining programs, the Employee Retention Credit (ERC) offers a compelling savings opportunity and is still underutilized by businesses and nonprofit organizations.

Nonprofits will see their leases in a whole new light as they begin implementing the Financial Accounting Standards Board’s (FASB’s) new lease reporting standards. As was revealed in early 2016, the FASB will soon require almost all for-profit and nonprofit entities to start recording leases on their balance sheets and statements of financial position. Under current lease accounting standards, nonprofits do not record operating leases on their statements of financial position at all but merely record “lease expenses” on their statements of activities when they make their monthly payments. Let’s walk through the basics of this new requirement and discuss how it will affect you and your organization in the future.

The Paycheck Protection Program (PPP) was one of the Small Business Administration’s (SBA) most popular COVID-19 relief programs and officially came to a close at the end of June. These loans were in such high demand primarily because of the possibility of loan forgiveness, assuming certain conditions were met. Now that the ten-month covered period is quickly winding down, the attention amongst borrowers has shifted to the loan forgiveness process.  Many PPP first draw loans have an August, September, or October 2021 deadline to apply for forgiveness, so now is the time to start evaluating how to maximize PPP forgiveness and the Employee Retention Credit.

On August 10, 2021, the IRS and the Department of the Treasury provided new guidelines regarding the Employee Retention Credit (ERC) via a safe harbor, allowing employers to exclude specific items from their gross receipts only when determining if the qualifications for the ERC are met.

Last week the Small Business Administration (SBA) announced the launch of its Paycheck Protection Program (PPP) loan forgiveness portal, which opens August 4, 2021, to streamline applications for PPP loans of $150K or less. Concurrently, the new COVID Delta variant is now a cause for concern as cases in New Jersey have quadrupled since last month.  The combination of these events has many business owners concerned since it appears that the PPP will not be replenished with additional funding. They’re left wondering, what will happen if restrictive government orders are reimposed and how will businesses be able to survive yet another COVID wave?

Since the closure of the Paycheck Protection Program (PPP), Restaurant Revitalization Fund, and other Small Business Administration (SBA) COVID-19 relief programs, New Jersey and Pennsylvania-area businesses have been searching for funding alternatives. Over the past few months, the Employee Retention Credit (ERC), a payroll-based tax credit, has moved to the forefront. The ERC provides an immediate savings opportunity to businesses that experienced a decline in gross receipts in either 2020, 2021, or both.

Whether you are an insurance agency shareholder, partner, employee, or independent agent, you need to be aware of the tax treatment of reimbursed and unreimbursed business expenses. Like most businesses, agencies typically reimburse employees for ordinary and necessary business expenses. Depending on the circumstances, expense reimbursements may be treated as taxable income subject to federal income and employment taxes.