September 11, 2020: California Businesses Are Getting COVID Tax Cuts

Gusto Editors

September 11, 2020

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No. 1 SMB concern: Cash reserves running out

Alignable, a small business networking site, recently surveyed 1,400 retail businesses about their prospects for the rest of the year, with “alarming” results:

Based on their current financial situation, they estimate that 64% of 2019 sales will be required in Q4 of 2020 to continue into 2021. Combining that with their Q4 sales expectations, over 35% of retail businesses are at significant risk of failure by year’s end

Even worse, that number could go as high as 50% if consumer behavior does not shift significantly this fall.

Alignable’s September State of Small Business report also revealed that business owners’ greatest worry right now is that their cash reserves will run out, possibly forcing them to close. 

Last month, we launched a series and hosted a webinar to help businesses better understand and forecast their cash flow. If you haven’t already, check out our forecasting blog series and watch a recording of the webinar to learn how to build your own financial model.

California SMBs get COVID tax cut

Earlier this week, Governor Gavin Newsom passed legislation to help support California small businesses in the ongoing COVID-19 crisis. There are two bills in particular that can bolster these businesses financially:

  • One bill states that forgiven PPP loan dollars will not be taxed by the state of California, making the money tax-free in CA.
  • Another bill offers eligible businesses a $1,000 hiring tax credit for each employee hired between July 1, 2020 and November 30, 2020 (up to $100,000).

While these bills aren’t perfect—some have raised concerns that the hiring tax credit, for example, won’t reach businesses that are most in need—they offer some relief while business owners continue to wait for a renewal of federal aid.

Read more about both measures on our blog.

Headlines from the week

  • U.S. Says It Is Cracking Down on PPP Fraud (Wall Street Journal) — Charges have been filed against 57 people for alleged crimes related to the Paycheck Protection Program (PPP). The cases together represent losses to the federal government of more than $70 million.
  • Senate Republicans Fail to Advance Coronavirus Stimulus Bill as Stalemate Drags On (CNBC) — The relief package—which would have reinstated $300-a-week unemployment benefits, authorized new small business loans, and more—fell short of the 60 votes needed to move forward. 
  • 4 Ways Emotional Intelligence Can Help You Be the Boss Your Team Needs During COVID-19 (Gusto) — This is especially relevant now as the pandemic tends to intensify emotions—both yours, and those of your team. Learn how emotional intelligence (EQ) can help you in the day-to-day of running your business in our new normal. 
  • Do Jobless Benefits Deter Some Workers? Some Employers Say Yes. Studies Don’t. (New York Times) — While businesses that have experienced hardships in hiring and retaining workers hold federal unemployment benefits responsible, the 9.3 million workers who returned to work tell a different story.

Top relief options for the week

  • Beyoncé recently donated $1 million for a second round of grants for Black-owned small businesses affected by the COVID-19 crisis. The fund, operated through a partnership with the NAACP, will award $10,000 grants.
  • Wisconsin’s Cultural Organization Grant Program will support nonprofit cultural organizations whose operations have been negatively affected by COVID-19. Grant sizes go up to $250,000.
  • City of Fort Worth and its partners are preparing to launch a second round of Preserve the Fort grants. Funding will be expanded to include both for-profit and nonprofit businesses (including performance art venues) and slightly larger businesses with less than 500 employees.
  • See more relief options in our Small Business Relief Finder.

Want more small business news and resources? Check out past editions in our archive.

Gusto Editors Gusto Editors, contributing authors on Gusto, provide actionable tips and expert advice on HR and payroll for successful business management.
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