Tax Changes Are Coming For Small Businesses & 4 More Small Business News Stories You Need To Know
Welcome to another week of Merchant Maverick’s essential news roundup for small business owners.
This week, we saw the IRS make headlines for several tweaks coming soon to small business taxes. Elsewhere, shoppers are keen to help small businesses out for the 2020 holiday season. Read on for this week’s top five must-know stories for small business owners.
Table of Contents
Tax Changes Inbound For Small Businesses
The IRS made waves this week with a few stories:
- Starting December 13, the IRS will begin masking sensitive data on business tax transcripts. This move is meant to increase privacy to protect taxpayers from identity theft. The new transcripts will feature partial pieces of info, such as only the last four digits of Social Security Numbers and Employee Identification Numbers.
- According to a report by Bloomberg, the IRS is planning “50% more” audits of small businesses in 2021. The increased audits will target pass-through entities such as partnerships, limited liability companies, and sole-proprietorships. While a 50% increase seems like a lot, the IRS is boosting its total from a low number — Bloomberg says only 140 partnerships were audited in 2018 out of the more than 4 million returns filed.
- The IRS okayed a workaround that enables small business owners to bypass the $10,000 cap on state and local income tax deductions, per CNBC. The workaround allows pass-through entities to be responsible for the entity’s entire income, while the owner can claim a credit on the state tax paid by the business. Business owners will be able to use this workaround in seven states: Connecticut, Louisiana, Maryland, New Jersey, Oklahoma, Rhode Island, and Wisconsin.
Further reading: What Can I Write Off As A Deduction? The Complete List Of Small Business Tax Deductions In 2020, Merchant Maverick
Shoppers Want To Buy Local This Holiday Season
According to a recent study by Mastercard, shoppers will be more conscious of where their dollars go this holiday season. Among the key numbers uncovered by the study include:
- 77% of the over 2,000 US residents Mastercard surveyed said they plan to shop local this year.
- 75% said they plan to be more mindful of where they shop. Shoppers plan to favor small, minority-owned, women-owned, and Black-owned businesses, as well as businesses they share personal values with.
- Nearly two-thirds said they plan on shopping at businesses with contactless payment options, a recurring trend in 2020.
Further reading: The 5 Best POS Systems For A Cashless Society: How To Accept Digital Payment Methods, Merchant Maverick
Government Stimulus Plans Hasn’t Been Enough
According to a recent survey by lending marketplace Fundera, over 86% of small business owners haven’t received financial aid from state or local governments. Only half of those surveyed were even aware of state or local government funding, while 23.5% didn’t take aid because they found the terms unclear. Many business owners indicated that they are wary of becoming saddled with debt.
State governments, which can’t operate at a deficit the same way the federal government can, have (at the very least) been urging Capitol Hill for additional aid. According to the Associated Press, a mixed partisan assortment of governors from Colorado, Maryland, Washington, and Wisconsin have all pushed for expanded aid programs in recent days.
Meanwhile, a recent Wall Street Journal report found that at least 300 companies that received Paycheck Protection Program (PPP) funds have since filed for bankruptcy. The true number of failed businesses that received PPP aid is likely even higher — the Wall Street Journal noted that only big businesses were analyzed in the report while many smaller businesses “simply liquidate” instead of filing for bankruptcy.
Further reading: JPMorgan’s Dimon says ‘childish’ U.S. politicians are preventing stimulus package, Reuters
The SBA Won’t Have To Reveal PPP & EIDL Borrower Data — Yet
The SBA won a temporary stay regarding a judge’s order that it would need to release names and specific loan amounts for borrowers in PPP and EIDL programs. This ruling is part of a suit brought forth by a number of news organizations requesting detailed information on PPP and EIDL borrowers under the Freedom of Information Act.
The original order gave the SBA a November 19 deadline to release the data. Now, the plaintiffs will have until November 27 to respond to the SBA’s request.
Is Business Travel Dead?
Bill Gates certainly thinks so. Speaking at the New York Times’ Dealbook conference earlier this week, the Microsoft co-founder said he believes “that over 50% of business travel” will go away in the future. Gates also predicted that the number of days in the office would be cut down by 30%.
“Now that it’s not the golden standard that ‘yes, you flew all the way here to sit in front of me,’ that you can do the virtual connection, it will be a very high threshold for actually doing that business trip,” Gates told financial columnist Andrew Ross Sorkin. “There will be ways that you can work from home a lot of the time. Some companies will be extreme on one end or the other.”
Further reading: Future of business travel unclear as virus upends work life, Associated Press
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