CPAs point to better future • Northwest Indiana Business Magazine

CPAs point to better future

Buy Us A Coffee

Businesses look to financial experts to navigate government programs, forecast rest of 2020

Series on Pandemic ResponseThis year, business owners have an opportunity to lead through change amid the COVID-19 pandemic. From operations to financial decisions and tax considerations, the situation is ever changing, and business owners are faced with daily decisions that impact both the short and long term.

As trusted advisers, CPAs can help business owners identify key areas of focus, navigate economic challenges and make business decisions to mitigate the financial impact of the crisis.

Tim Anderson
Guest columnist: Tim Anderson

Initially in response to the pandemic, the government introduced a waterfall of new government programs. On March 27, President Donald Trump signed into law the Coronavirus Aid, Relief and Economic Security Act (CARES Act). This substantial piece of legislation impacted most closely held businesses, creating new funding programs in response to the economic effects of COVID-19. Key components in the CARES Act included the Economic Injury Disaster Loan Program and the Paycheck Protection Program, which offered forgivable loans for businesses to maintain payroll, benefits and other related costs.

The rules for these programs were complicated and changed frequently. The government issued periodic “frequently asked questions” to provide clarity regarding who was eligible, permissible uses of the funds, the application process, loan sizing and the forgivable portion of the loan. Rules continue to change regarding how much of the loan can be forgiven and how to calculate the forgivable amount.

CPAs continuously monitor the rule changes and program clarifications to provide timely information to clients. They’re also helping organizations look at ways to take advantage of potential future appropriations and comply with existing ones.

There were a host of tax savings opportunities introduced by the CARES Act. These opportunities included provisions to defer Social Security tax on payrolls, new employee retention credits, rule changes related to net operating loss carrybacks, modifications on the business interest limitation, and changes to the bonus depreciation rules for leasehold improvement property. All of these provisions offer significant potential tax savings opportunities and were designed to improve cash flow.

Beyond new programs and rule changes, CPAs are helping clients assess the overall economic impact of COVID-19 — from surviving in the short term to preparing for life after the pandemic. In the beginning, the pandemic created uncertainty regarding near-term revenue impact, business closures and workforce considerations for certain industries. For most business owners, the current challenges include assessing the true impact of the pandemic, financial statement modeling and forecasting cash flow for the balance of 2020.

During the height of the crisis and in the weeks that followed, CPAs continued to answer questions, and provide support and guidance to their clients. Some of the most seasoned business leaders even struggled to find the right response. Navigating the tax code, providing quality financial statements, and forecasting the future are part of the equation, but providing practical solutions to challenges and giving business owners another perspective during difficult times are also a significant part of the role of the CPA in public practice.

The professional services industry is also feeling the effects of the coronavirus. The crisis impacted CPAs and how they operate.

Virtual private networks and other technologies allowed professionals to observe the work-from-home orders, but eliminated face-to-face meetings, at least in the short term. The traditional “tax season” was extended, as most professionals considered tax filings and other compliance obligations secondary to helping clients navigate the immediate crisis, assessing risk and taking advantage of the time-sensitive provisions of the new programs.

The new reality for CPAs may be similar to other industries, with more of the workforce working remotely than in traditional office settings. Businesses might find their workforce more mobile and flexible than it was before COVID-19, too.

As business leaders plan and implement measures to ease the transition, COVID-19 continues to be top of mind. Leaders must continue to look forward. We might not have all the answers today but giving thought to potential scenarios as part of your plan will help position you for a better tomorrow.

Click here to read more from the August-September 2020 issue of Northwest Indiana Business Magazine.

Author

Leave a Reply

Scroll to Top