As 2020 comes to an end, there are a couple of business tasks you should make sure that you complete. 2020 has been a year like no other and consequently, your business may have to adjust.
A checklist is a great way to remember and prioritize end-of-year tasks. This list should reduce the chances of missing an important task.
During the early months of 2020, the Covid-19 pandemic affected a lot of business. As a result, the US government implemented the CARES Act, PPP Flexibility Act, and FFCRA Act to help affected businesses. If you are a beneficiary of any of the above, here are end-of-year tasks you must complete.
Employer Social Security Tax
Since March, the CARES act allowed employers to defer their social security tax on their employees’ wages. Unfortunately, this will not be possible after December 31, 2020. In 2021, employers will start paying the social security tax.
Moreover, you will have to repay half the amount you deferred before the year ends. It would be best to make sure that your 941 form details reflect the amount you deferred.
Employee Social Security Tax
On August 8, the president gave executive orders allowing employers to defer employees’ social security tax until the end of the year. The deferral period, which began in September, will end in December. As a result, you will have to collect and remit employees’ social security on January 1, 2021.
If you deferred, you need to repay the amount by April 30, 2021. Therefore, ensure that you adjust your payroll to repay the deferred amount. Additionally, make sure that the details on the 914 form concur with the amount you deferred for your employees.
PPP loan Forgiveness
If you are a beneficiary of a PPP loan, you can request PPP loan forgiveness. Ensure that you apply for forgiveness before 2021. To understand the process better, you can consult your lender. In most cases, the lender will require you to fill forms 3508S, 3508EZ, or 3508.
To be eligible for PPP loan forgiveness, you must provide the necessary documents to verify that you used the loan for authorized expenses only. All the documents should be accurate. You can only use the loan to pay utility bills, mortgage, rent, and payroll costs. Otherwise, the federal authorities can charge you with PPP loan fraud.
If you are not eligible for forgiveness, ensure that you start repaying the PPP loan in 2021.
Employee Retention Credit (ERC)
Individuals who didn’t qualify for a PPP loan decided to claim the ERC. In 2021, it will be impossible to claim this credit. Instead, you start paying your tax liability in full. Therefore, in 2021, ensure that you don’t claim the ERC, change your set budget, and report any employee retention credit on form 914.
FFCRA Paid Leave
The FFCRA act allowed employers to give their employees paid leave between March and December 2020. Even though the government helped you offset the paid leave expenses, you should stop giving your employees paid leave.
Moreover, there will be no FFCRA paid leave after December 31, 2021. It means that you don’t have to claim the FFCRA tax credit anymore. As an employer, the government expects you to report any qualifying leave.
The above are tasks that you need to do before the year ends. Ensure that you prepare your finances and taxes. Failure to do some of the above tasks can lead to federal charges.