Worcester Business Journal

wbjournal.com | December 7, 2020 | Worcester Business Journal 19 10) Read all available news sources for updates. Whether you read the WBJ or local newspapers, read them daily. They can be some of the most informa- tive sources to everything going on. 9) Reach out to your local legislators. Legisla- tors are humans too. They feel the effects of the pandemic just like everyone else. Your business may be unique and not fit into a general category. Explain to them what your immediate needs are. 8) Inquire about available grants or loans. Throughout this pandemic, various grants and loan opportunities have presented themselves. The Paycheck Protection Program loans were a big help. Grants through the City of Worcester has helped pay rents and overhead. The Worcester Together nonprof- it fund has helped many in dire straits. 7) Be cautious about fraud. Pandemics such as COVID-19 can sometimes breed some ill-willed people. They know some are vulnerable and send emails or calls pretending to be a government agent or charitable organization. Do not give out personal information to someone who pretends to be an ally. 6) Join your local neighborhood business asso- ciations. These groups usually meet monthly and will have very similar issues as your business. They typically have elected officials there. 5) Re-train your staff. We have all had to pivot in one way or another to comply with regulations set forth by the state or local boards of health. Use free webinars available through business organizations and government agencies. 4) Watch your local city council or town select- men meetings. Are they advocating for you and your business? Do they understand what is really happen- ing to the core of your company? Participate in public testimony and let them know you are watching! 3) Promote, promote, promote. Use your social me- dia, website and advertising to let folks know you are open. Do a Facebook/Youtube live video and show people what you have been doing to open safely. 2) Use your local chambers of commerce. I'm a little biased, but hear me out. Chambers are some- times your best supporters. Individual voices are important, but our collective voice is powerful. Use their (virtual) networking events, webinars/seminars and legislative advocacy. 1) Continue to use safety protocols. Nothing will shut down your business quicker than the spreading of COVID-19. If you are not open because you are not using safe distancing, requiring masks, using sanita- tion products, then you will not make any income. K N O W H O W Watch out for these PPP tax surprises A 2019 study by Harvard Business School Assistant Professor Ashley Whillans showed 80% of U.S. workers say they do not feel recognized for the work they do. is doesn't necessarily mean salary increases are the only reward for good employees, either: Saying "thank you" more oen, arranging a role-shadowing opportunity, or writing them a surprise recommendation on LinkedIn might be creative ways to commend good work. There are recognition traps, such as vague appreciation initiatives. Decidedly not motivating, they oen involve employees who feel resentful of a team member who has won an honor, as they never understood criteria for the award to begin with, says Susan M. Heathfield at eBalanceCareers.com: "is is especially frustrating when the employee believes their contribution was equivalent or even better. Or, the employee recognition becomes a joke (must be your turn to be the Employee of the Month) or a demotivator (I didn't get nominated, so forget it when you need help again)," she writes. Appreciation improves productivity. HumanResourcesToday's Kellie Wong cites a Deloitte survey showing organizations with recognition programs have 14% higher productivity, employee engagement and performance. "Recognized employees perform their best, making them more engaged with their work and their peers. Unsurprisingly, this translates to better customer experiences, as well," she writes. Recognition must be appropriate. According to the Society of Human Resource Management, team members must know the awards are aligned with their achievements and their efforts. "A recognition system will falter if employees feel that their work is trivialized or even insulted by inconsequential incentives or insincere gestures," the SHRM says. Completion of a two-year project warrants a different appreciation than does a quick favor for a manager. e program must appear objective and be appropriately timed, said the SHRM, with recognition as close to completion of the accomplishment as possible, and adequately funded. 1 0 T H I NG S I know about... ...Getting your business through the pandemic BY DAVID S. MCLAREN Special to the Worcester Business Journal O ne of our government- provided assistance plans during the pandemic was the Paycheck Protection Program loan. e Small Business Administration, with the help of banks, gave out more than 5 million loans, making this program one of the most popular for small business. ere was a great deal of confusion getting these loans and even more confusion later, as the rules and regulations changed. One of the main points was the loans would be forgiven if you spent the money during an eight- or 24-week period. e requirements included spending 60% or more on payroll including benefits, 40% or less on utilities, loan interest and rent. Other parameters included maintaining or restoring the full-time equivalency of your employees as well as keeping their pay level the same or more, but not a pay cut of more than 25%. Most small business owners were told in the news these loans were then forgiven, TAX FREE! How could you beat that? Unfortunately, the Internal Revenue Service issued a notice, stating any expenses paid with money from a forgiven PPP loan cannot be deducted on a tax return. What does that mean? at means even though the forgiveness of the money was tax free, you now could not deduct the expenses you paid for with that money. To clarify, if you did not have a profit this year, and you were at zero, there would generally be no tax on your profit as you did not have any. If you received a $100,000 PPP loan, and it was forgiven because you spent the money as directed, you now will have a $100,000 profit to pay tax on, even though you do not have that money. What's worse, if the tax rate is 35%, you owe $35,000 on money that you no longer have. Normally, if you receive $100,000 and you have to pay $35,000 in taxes, you may not like it, but you pay your tax and still have $65,000 le in your hand. In our example above, you have no money le in your hand but still have to pay tax on the $100,000. Surprise (and not in a good way)! Where will the money come from to pay the tax? Do I just repay the loan? Certainly this will depend on your personal circumstances. I would certainly say paying the $35,000 in my example for the tax is better than paying all $100,000 back with interest. But what if you do not have the $35,000? All is not lost e government has had a fix for this in multiple bills, none of which has passed to date. If they fix this, then you will be able to deduct the expenses. If not, you need to have a tax projection to avoid surprises in April. Seek out your tax advisor as soon as possible to address this or give us a call. Other options e IRS issued a notice. is is not a law. ere are options to challenge the IRS's position on this notice. We recommend you speak to your tax advisor to address this option as well. All of this was new for the IRS as well. Massachusetts does not appear to even have accepted the forgiveness being tax free as of the date this was written. So while this may come as a major surprise to many, and even a kick in the gut to many suffering local businesses, there may be options to help your specific situation, whether challenging the IRS, making it a loan or even using losses to offset the taxability. Reach out to your tax advisor for help and planning now so this is not a surprise six months from now. Together, we will get through this. David S. McLaren is the managing partner of McLaren & Associates CPAs, LLC in Shrewsbury. Reach him at Dave@ dmclarencpa.com. BY SUSAN SHALHOUB Special to the Worcester Business Journal By Alex Guardiola Alex Guardiola is the director of government affairs and public policy at the Worcester Regional Chamber of Commerce. Reach him at AGuardiola@ worcesterchamber.org. 10 1: E M P L O Y E E R E C O G N I T I O N W W W

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