Will Emergency Tax and Funding Laws Affect Your Business?
In the time of COVID, the IRS is rolling out new protocol by the day … sometimes with multiple announcements in one day. As a business owner, it's hard to stay ahead of the curve. (The curve is more of a waving line with erratic turns.) Therefore, your franchise takes the heat – how do you plan when the game is constantly changing? How do you plan ahead with your business?
When looking at taxes due, business write-offs, and grant money that's available in the status quo, you're simply out of your element. Any plan could be deemed out of date the same day it was made.
Of course, the IRS is releasing information as it's ready. The problem comes from frequent adjustments to the way the US economy works. Things are not business as usual. Changes like the Payment Protection Plan (PPP) loan, Economic and Injury Disaster Loans (EDIL), forgivable grants within these two, as well as a change in how you normally conduct business for your franchise, and more have all come into play. That has caused the IRS to go into high alert in order to account for these mass changes … while their employees were working from home.
Even now, as IRS workers have returned to office, lawmakers are making daily amendments that require tax announcement adjustments to be made. While we can hope all of the above is being done in citizens' and business owners' best interest, we essentially sit and wait.
Will Tax Changes Affect Your Franchise?
However, the short answer as to whether or not tax laws will affect your franchise business, is yes. Yes your franchise business is likely to be affected. Even if, financially, you don't see a flux, you will be affected in time and commitment. You're looking out for changes, keeping extra papers on hand, and putting time into following the status quo. Though this is a small change, it still affects you as a franchisee. How your brand might be further affected still depends on upcoming changes that haven't been voted into place, it depends on your state of record, location of business, as well as the industry. Growth vs. waning during COVID can also come into play. There are many factors, and most franchise owners must wait to see not if their location will be affected come tax time, but by how much.
How to Prep Your Business for Tax Changes
In this time of confusion, make good friends with your accountant. It's likely that they're just as confused as you are with all the frequent changes. However, it's their job to stay in the know. They will update you about important adjustments that will affect your franchise business.
You should also keep track of anything and everything. Receipts, payments, all documents should be scanned and filed for safekeeping. You never know what you'll need to file with your taxes this go-around, so play it safe and keep everything on hand.
Meanwhile, ask your accountant if there are any special measures you should be taken, based on franchise location or industry, in order to prep your for tax time. They'll have the inside scoop that will allow you to ready your business as much as possible.
Looking Ahead with Your Franchise Funds
Another aspect to consider is tax timelines that have been thrown off their schedule. Most states have extended filing deadlines for 2019 paperwork, and it's likely that 2020 due dates will follow suit. This gives you, as a franchisee, more time to gather funds that are due, as well as organizing paperwork. Consider how this extra time could allow you to prep your brand for a better financial outcome. This is true for filing for your annual taxes, as well as following protocol for the PPP, EIDL, and other SBA programs. Track how every dollar was spent; this detailed record could help your franchise from having to return borrowed funds.
Next, when looking at filing paperwork for grants and loans, remember it's not a bad idea to drag your feet. As rules continue to change, there's no need to be at the forefront of the deadline. Hold onto your papers until rules are steady and unchanging before you cause yourself (and your accountant) more work when filing said paperwork.
Keep your data on file until it's go time, and help keep your franchise safe from a potential audit or need for re-filing.
We are living in strange times, and knowing how or when to file paperwork for your franchise taxes can seem as if it's a guessing game. However, by staying up to date on important news, and remaining in close contact with your accountant, you can help prepare your franchise business in the best way that you know possible.
By Bethaney Wallace | Jul 24, 2020 | General Franchise Information