As the tumultuous year of 2020 comes to an end, many small business owners are left wondering what their tax returns will look like. The unpredictable economic damage caused by the COVID-19 led to the passing of the Coronavirus Aid, Relief and Economic Security (CARES) Act. Through the Paycheck Protection Program, or PPP, this act allotted up to $349 billion in forgivable loans to small businesses for payroll assistance and certain other expenses. If your business applied for a PPP loan, you may be wondering about the tax implications.
While loan forgiveness was promised for PPP loans (if at least 60% was used to cover payroll), expenses paid with forgiven PPP loan proceeds are not deductible. That means that expenses that are typically deductible, like utilities and rent, will not be deductible if you used the loan funds to cover them.
Understanding the Richmond tax implications of PPP loans is a complex issue. Many businesses are still waiting on a response to whether their loans will be forgiven or not and some may not have this answer by the time taxes are due.
PPP loan forgiveness is possible if loan proceeds were used to cover the following expenses:
- Payroll costs and employee retention
- Interest payments on covered mortgage obligations
- Payments for covered rent obligations
- (Under this covered expense, "lease agreements for real or personal property" is included, which covers equipment and vehicles.)
- Certain utility payments
If you are trying to manage PPP loan expenses as you prepare your taxes, Paramount Tax is the accountant in Richmond that you can rely on..
PPP Loan Tax Assistance in Richmond
Economic shocks are hard to navigate and the implications of this past year are no different. Trying to understand how the PPP loan will affect your taxes is much more difficult on your own. Our talented team of professional CPAs and tax preparers are here to help. From the 2018 Tax Plan to Stimulus Checks and now PPP loans, our accountants have worked around the clock to ensure our clients receive accurate assistance and credible information. Taxes are already overwhelming; you can expect this year's filing to be doubly frustrating. With help from our expert tax preparers in Richmond, however, you can rest assured that your taxes will be filed accurately.
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Many people do not know how a professional tax firm differs from a tax preparer. The main difference when working with a professional tax and accounting firm, such as Paramount Tax & Accounting Richmond East, is that our firm utilizes the services of licensed professionals.
Paramount has worked hard to create relationships to deliver the value that our clients expect. In fact, our goal is to be the No. 1 firm in Richmond. So when you ask yourself, "Where can I find accounting services near me?"... think no further than Paramount Tax & Accounting Richmond East!
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Whether you are filing personal taxes or you own a business, if you are not already using a professional tax and accounting firm, you have most likely already missed out on major tax benefits, deductions and credits. This is because a professional tax and accounting firm utilizes licensed professionals, who can not only advise individuals on personal financial matters but who are qualified to advise businesses, financial institutions, nonprofit organizations and government agencies on a wide range of financial topics. Our strict standards ensure that we understand the complicated tax laws and how to implement strategies that return the most benefits to individuals and businesses. Give Paramount Tax & Accounting Richmond East a call or visit our tax and accounting firm in Richmond for a free consultation.
