No matter where you currently are parked, you’re likely being impacted by this crazy coronavirus pandemic. I’m also guessing that you are worried about how it will impact your business finances including taxes. Now’s the time to create a financial plan.
I’m sure many of you are experiencing financial changes to your business already. It’s time to create a financial plan for the Coronavirus now before you’re in crisis mode so you can be grounded and empowered vs. panicked and frustrated.
Create a Financial Plan
Here are the two big things which I’m sure are on your mind: taxes and loss of income.
The IRS announced that it’s delaying the tax PAYMENT and FILING deadline by 90 days to July 15, 2020.
Many states have followed the lead of the IRS. Here’s the list of states I know so far that have extended deadlines:
7/15: Alabama, California, Colorado, Connecticut, Indiana, Louisiana, Maryland, Massachusetts, North Carolina, Oregon
6/1: South Carolina
If your state isn’t shown above, then you should visit the taxation website directly for information regarding late filing, penalties, and fees.
If you’re due a refund, then file and get that money now. No need to wait! The IRS is processing refunds.
If you think you’ll owe, I STRONGLY recommend that you file your taxes ASAP, so you know exactly how much you owe. Plus, you can file without paying the full bill until July 15.
If you don’t have money saved up for your taxes, you can use the extra 90-days to save and pay your bill. Bonus = no interest or penalties!
I’m sure this is front and center on your mind. How much will this impact my business? Will my income drop? By how much? How much can I weather this storm?
If these thoughts are going through your mind, know that they’re going through MY mind too. It’s completely natural to have money panic right about now.
Let’s try to alleviate some panic with some basic money planning. Here are some steps to review:
1. Review monthly business expenses
List all non-essential business expenses. Rank them from most important to least important. Most important are the nice-to-haves which make running your business easier and more efficient. The least important are expenses that benefit your business but don’t impact your day to day operations (like buying books for professional development).
2. Cut unnecessary business expenses
Use the list you created in step 1 to decide if there’s anything that can be cut immediately. These are things you aren’t actually using or that don’t impact your day-to-day. Cut those out of your budget and start redirecting those funds into savings, if you can. If you can’t save money, then at the very least you are cutting your monthly business expenses to help minimize the impact of any loss in income.
3. Review personal expenses
Go over all your personal expenses to become clear on your monthly essential expenses. List non-essential personal expenses in order of importance. This might be a discussion with a partner, husband, wife, etc. and might also dig into your true values at this moment. For example, keeping connected to the internet via your multiple cell phone plans during this time might be more important than another subscription. This amount, plus any essential business expenses, is the bare minimum that you need to earn right now. This will let you not only know exactly how much you need to bring in but also how much you can slim down in income and still stay afloat.
4. Cut personal expenses
If your income dips, cut the least important personal and business expenses first. This minimizes the impact on your daily operations and life. If you use your social media scheduler every day, keep that around as long as possible. But if you rarely use your Audible subscription, let that go for now.
5. Use savings to supplement LAST
If, after reducing your expenses, you aren’t earning your bare minimum, use savings to supplement the difference. DO THIS LAST. I highly recommend adjusting your spending before you rely on savings. You can also look for creative ways to bring in a little more income. Can you release a new product? Can you offer something that is less expensive for people to still buy? This is the time to get creative.
What else can you do
I understand that everyone has different ideas of risk, financial health and more. This is why I urge you to do what feels right for you and your family.
If you haven’t’ filed yet, there might be time to reduce your self-employment taxes.
The government is still trying to pass financial plans. This might include stimulus payments to every American of $1200 for those who earn less than $75,000 (single) and $150,000 (married) as well as other loan programs and payroll benefits.
File 2019 Taxes ASAP
The stimulus check is just one more reason to get your 2019 tax return filed ASAP because the income is going to be based off your last filed tax return. If your income dropped significantly or even below the threshold of $75,000 single or $150,000 married filing jointly in 2019, then make sure the return is filed to reflect that change. You can file even if you will owe money. Paying and filing are TWO separate items. File ASAP to show the decrease in income and PAY when the tax is due which is July 15.
I’ll try to keep you updated as I learn more about all this and bills get passed by our government so feel free to follow my Facebook page for the most recent updates.
In the meantime, the government has made Small Business Administration loans available. Check for your state to see if a disaster area has been declared and how they are handling things.
You can apply online for a loan from the US Small Business Administration. In times like these, this might be the thing that gets your business through this lean period.
If there’s something else you like to learn or have questions about, let me know!