bookkeeping and payroll post covid-19€¦ · services renee lujan. what is bookkeeping?...
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Bookkeeping and Payroll Post COVID-19
Precision Business Services
Renee Lujan
What is Bookkeeping?
• Bookkeeping is the systematic recording of the financial transactions relating to your business
• Organization of these transactions into appropriate Charts of Accounts
• Verification of transactions against bank statements and credit card statements
• Ability to run reports such as a Profit/Loss Statement and Balance Sheet to see your company financials
Is this a DIY or should I outsource
Bookkeeping is such an important part of running your business that unless you have an understanding of basic accounting principles – you should not try to DIY.
• Cash vs Accrual Accounting Systems
• Understanding Assets, Liabilities, and Equity
• Understanding Revenue, Expenses, and Cost of Goods Sold
Applied for the EIDL Loan?
The EIDL loan asked for 2 things – your Income and your Cost of Goods Sold (COGS) -not your expenses
So what is COGS? The direct cost of producing goods sold by a company – such as the materials and labor directly used to create the good.
What if I do not sell a product but provide a service?
You may be able to categorize your expenses into Direct Expense and Indirect Expense. Direct Expense is an expense that you incur that you must have in order to provide your service to your clients.
Direct Expense Indirect Expense
Direct Labor Cost Insurance
Commissions Office Supplies
Rent Postage
Independent Contracted labor (if same industry)
Utilites
Software Dues or Subscription fees Printing
What if you made physical changes to your business to be able to operate during COVID-19?
This is an example of money you put into your business (EQUITY) and not an expense. How you categorize it in your
bookkeeping system can make a big difference!
Example: You own a restaurant and had to put in a drive thru window to be able
to still serve customers.
COVID-19 as it relates to your Payroll
You can only take advantage of 1 of the programs, so deciding which has the best impact for your particular
business is important!
COVID-19 created several different programs that effect your business as it relates to paying your employees and
paying your employer contribution payroll taxes.
Families First Coronavirus Response Act (FFCRA)
This act requires employers with fewer than 500 employees to provide up to 80 hours (or part-time 2 week equivalent) of paid sick leave based on the higher of the employee’s regular rate of pay for the following qualifying reasons (as long as employed for 30 days prior to COVID):• Subject to quarantine isolation order• Advised by health care provider to self-quarantine• Experiencing symptoms and is seeking medical diagnosis• Caring for individual subject to #1 or #2 above• Is caring for child whose school or daycare is closed (can request
an additional 10 weeks of partially paid expanded family leave)
Paid Sick/Family Leave Credit (FFCRA as amended in CARES Secs 7001,7003)
Employers who pay their employees the Sick/Family Leave are eligible for a credit against employer Social Security tax liability equal to 100% of the qualified sick leave wages paid plus the proportionate share of health care costs incurred and the applicable Medicare tax on such wages. This requires setting up a new income category in your payroll to track the amount paid to your employees.
Deferral of Employer Social Security Tax (CARES sec 2302)
Beginning April 2020, employers may defer deposit and payment of their share of social security tax through 12/31/2020. Deferred amount will be paid in equal amounts over 2 years with payments due 12/31/21 and 12/31/22.
- Not to be used for wages already receiving other program benefits
- If you received the PPP loan, you may no longer defer any taxes due after the PPP loan is forgiven
Employee Retention Credit (CARES Sec 2301)
Businesses who are fully or partially suspended by COVID-19 OR whose gross receipts are below 50% of the comparable quarter in 2019 are eligible for a 50% credit of qualifying wages paid, including a portion of the cost of health care provided, up to $10,000 in total wages from 3/12/20 to 12/31/20
Employee Retention Credit (CARES Sec 2301) - Continued
Businesses with more than 100 employees will receive a credit for wages paid to employees that provide no services during the shut down. If you have 100 or less employees, all wages qualify for credit regardless of if the employee worked or employer was in operation during this time.
**If you receive the PPP loan, you are not eligible for this credit
COVID-19 Employee Rights Poster
U.S. Department of Labor created and require all employers to post/provide the poster to all employees, even those working from home.
