How COVID-19 Affected U.S. Taxes

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COVID 19 continues to deliver wide-ranging impacts in terms of social, business, and economic aspects. Tax, trade, business operations, and even people are affected. The good thing is that everyone is cooperating and responding to extensions, relief measures, and regulatory change. The effects of COVID 19 are felt negatively, and the many other consequences of this health crisis are expected to be experienced by different sectors, including businesses. 

How COVID 19 Affects Small Businesses? 

Small businesses, not just in the U.S. but also in other countries hit by the virus all over the world, are the most affected. In the U.S., there have been closures, and mass lay off just a few weeks after COVID 19 has occurred. There are indeed clear indications that small businesses felt the biggest impact of the coronavirus. 

Based on a survey conducted by the CBIZ, Inc., small and medium-sized businesses in the U.S. have shown disproportionate impacts from COVID 19, with more than 47% surveyed presenting severe impacts. These findings were reported by the CBIZ Main Street Index. It has been found out that around 84% of businesses that were surveyed realized certain impacts from the pandemic and economic slowdown. Small businesses, particularly those with below 4 employees, are severely affected by COVID 19. 

The results of these findings were based on the responses of more than 1,600 businesses all over the U.S. within over 30 different industries. The survey conducted also assessed a wide array of challenges and issues, including the impacts of the pandemic on business staffing, revenues, sales, headcount, and overall health. 

To summarize the general effects to small business based on the survey conducted, the following are the evaluated results: 

  • The overall health of small business was drastically impacted by COVID 19 pandemic 
  •  Current valuations also experienced the impacts, and future growth of the business has become uncertain considering these trying times 
  • Small businesses have been impacted disproportionately 

Aside from the details mentioned above, economic and health-driven demands and social distancing restrictions are factors behind many entrepreneurial and small business ventures to close down. 

COVID 19’s Effect on Business Operations and Accounting

The pandemic has become a massive focus and has caught public attention worldwide. Aside from worrying about workers’ health, front liners, business individuals, and people from all walks of life, many are also concerned about how businesses suffer, including their performance, operations, relationship with partners and suppliers, financial results, and accounting. If bigger companies are impacted by this health crisis, what more the small businesses. 

The full effects of COVID 19 are unknown, but the impacts are already global. Every business, big or small, is affected in many ways. As this outbreak continues worldwide, U.S. businesses from big up to the smaller ones will struggle to survive. These businesses are somehow finding ways to respond to the challenge. 

The effects of COVID 19 are evolving rapidly, taking a tragic toll on people’s lives and resulting in negative impacts on financial reporting and accounting. 

How Businesses Cope With-Discover Accounting Pivots to Help Business Emerge Better and Stronger Amidst the Health Crisis 

The frustrating negative impacts of the pandemic to the U.S. business sector and even worldwide are real. Fortunately, there are still possible ways that businesses can do to beat the challenge. The following are helpful accounting pivots that can help businesses, especially smaller ones, to emerge better and stronger from this health crisis: 

Getting Accounting into Cloud 

Over the years, small and medium-sized businesses have been using accounting software run on server-based software or desktop. But with the COVID 19 pandemic where companies and businesses decide to let their employees work at home, using old-style accounting software can be very hard in terms of fulfilling accounting works. With Cloud, business owners can now allow their accounting staff to work remotely with very minimal impact on accounting operations. 

Automating Work Processes 

This is a great move that will minimize exposure to the virus and make accounting works easy and manageable. Overwhelming works are eliminated through advanced automation, enabling you to be more effective and efficient as a business owner and your staff. 

Outsourcing Your Accounting 

With your business accounting on the Cloud, outsourcing your accounting operations is easy. This is also proven to be an excellent way of eliminating costs, decreasing risks, and having more time to focus on other aspects of your business. 

COVID 19’s Effect on U.S. Taxes 

COVID-19 continues its wide-ranging effects not just on businesses but also on taxes. In the U.S., as part of the government’s response to the coronavirus, deadlines of tax payments were extended for businesses and individuals owing particular amounts. This is an advantage since taxpayers are also affected. Tax reliefs have also been offered, but other taxes such as excise tax, payroll tax, and more may not be covered by said tax reliefs.   

As mentioned, taxpayers in the U.S. and even in other parts of the world hit by the pandemic are also struggling. Some of the COVID-19 tax issues involving taxpayers are stimulus payments, IRA distributions, required minimum distribution waivers, and more. Even small businesses face COVID-19 tax issues such as employee retention tax credit, paycheck protection programs, tax credits deferral, and more. 

The effects can be massive, but people and businesses always find a way out of the problems caused by COVID 19. 

Get Your Tax and Accounting Questions Answered by Our CPA Firm in El Paso, TX

If you’re looking for a reputable CPA firm in El Paso, TX consider calling us at Marcus, Fairall, Bristol + Co., PLLC! We’ll answer any and all of your accounting related questions such as IRS issues. We offer our clients with a variety of accounting services such as the following:

Marcus, Fairall, Bristol + Co., PLLC
230 Thunderbird Dr Ste G, El Paso, TX 79912
Phone: (915) 775-1040
info@marcfair.com