Updated: January 2, 2021
At Advance Partners, the health and well being of you and your staffing firm is very important to us. We are closely monitoring the COVID-19 pandemic and have taken precautionary measures to ensure the ongoing health and safety of our team members, while ensuring that service is uninterrupted and support teams are responsive and available to provide your payroll funding.
Advance Partners is uniquely positioned to help staffing firms thrive during these uncertain times and we will continue to be here to serve you.
We've also created resources and information specifically to help staffing firm owners navigate these uncertain times. Click the links below and check back often for the latest updates on how the coronavirus will affect your staffing firm.
If you or your staffing firm has been affected by the COVID-19 pandemic, either directly or as a result of your current funder tightening restrictions, and you would like to learn more about how Advance Partners can help you, our teams are standing by to help you find a solution. Click here to get in touch.
Payroll Tax Deferral
President Trump signed one executive order and three memoranda on Aug. 8, 2020, aimed at providing financial assistance and relief to Americans amid the ongoing COVID-19 pandemic.
Note: This is a deferral, not a payroll tax forgiveness. This memorandum instructs the Secretary of the Treasury to defer the withholding, deposit, and payment of the tax imposed on the employee portion of the Social Security tax of 6.2% until next year.
The due date for the withholding and payment of the employee share of Social Security tax on Applicable Wages is postponed until the period beginning on Jan. 1, 2021 and ending on April 30, 2021.
It does if you are an employer who is required to withhold and pay the employee share of Social Security tax under section 3102(a).
The "Applicable Wages" are wages or compensation paid to an employee on a pay date during the period beginning on Sept. 1, 2020 and ending on Dec. 31, 2020, but only if the amount of the wages or compensation is less than a defined threshold amount for each pay period.
The determination of Applicable Wages is made on a pay period-by-pay period basis. If the amount of wages or compensation payable to an employee for a pay period is less than the corresponding pay period threshold amount, then that amount is considered Applicable Wages for the pay period. The employer then may defer the employee share of social security tax on the Applicable Wages, irrespective of the amount of wages or compensation paid to the employee for other pay periods.
Note: These assumptions are based upon the original $104,000 annual limit put forth in the President’s Executive Memorandum. This is also assuming 26 check dates, for a bi-weekly schedule. ($4,000 x 26 = $104,000). The guidance does not specifically indicate any threshold amount other than the bi-weekly amount.
An employer remains responsible to collect and remit any deferred taxes. An employer must withhold and pay the total taxes due that the employer deferred under this notice ratably from wages and compensation paid between Jan. 1, 2021 and April 30, 2021 or interest, penalties, and additions to tax will begin to accrue on May 1, 2021, with respect to any unpaid taxes. If necessary, the employer may make arrangements to otherwise collect the total taxes from the employee.
Keep in mind that this is a deferral and nothing in the memorandum explicitly forgives this amount nor can it without an act of Congress. It does specifically state that amounts deferred will not be subject to penalties, interest, additional amounts, or additional tax.
Employers, meanwhile, have had the ability to defer payment of the employer share of the Social Security tax (6.2%) paid since the passage of the CARES Act in April. The law allows such payments over a two-year period – with half due by Dec. 31, 2021 and the other half due by Dec. 31, 2022.
Employers may be facing the brunt of any implementation because of the complexity created on calculating and tracking such tax deferrals. Plus, the process itself of creating new regulations is wrought with layers of complexity, including rules that might change as the process progresses from drafting proposed regulations to taking public comments to issuing finalized regulations. If shifts occur, employers will need to be nimble and stay up to date on any changes to current law.
The IRS has released a draft Form 941 to reconcile this deferral, but this could be revised before the final version. Additionally, we await instructions for the form to understand how the specifics work.
The Paycheck Protection Program (PPP)
PPP Loan Updates:
Many of the changes to the loan forgiveness provisions of the PPP loan involved extended deadlines, as well as to the covered period for loan forgiveness. Additional changes were made on the percentages applied to eligible costs that could be forgiven and exemptions on full-time equivalent (FTE) employees that are included in calculating forgiveness.
The Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act both provide refundable tax credits for qualifying wages. There are three reasons you might file a Form 7200:
Paychex will apply the amount of the credit to the federal tax liability, which in most cases is the quickest way to use the credit. If the amount of the credit exceeds the federal liability, and you choose not to carry the credit forward to the liability for the next check date, you can complete a Form 7200 to apply for an accelerated credit from the IRS. NOTE – you must inform Paychex if you are filing a Form 7200. If you do not inform Paychex, we will continue to apply the credits to their next payroll which may result in potential liability for your business.
The CARES Act’s Paycheck Protection Program (“PPP”) provides significant financial incentives for small businesses to hold on to current employees and to bring back employees who have been laid off or furloughed, even before their business is fully back up to speed.
Update: On July 1, the House passed the U.S. Senate bill extending the PPP application deadline to August 8. The bill now heads to the White House, where President Trump is expected to sign it into law.
Loans can be up to 2.5 times your average monthly payroll costs, not to exceed $10 million.
To calculate payroll costs:
sum of INCLUDED payroll costs - sum of EXCLUDED payroll costs = payroll costs
Included Payroll Costs:
The sum of payments of any compensation with
respect to employees that is a:
Excluded Payroll Costs
How could the forgiveness be reduced?
The amount of loan forgiveness calculated above is reduced if there is a reduction in the number of employees or a reduction of greater than 25% in wages paid to employees.
What if I bring back employees or restore wages?
Reductions in employment or wages that occur during the period beginning on February 15, 2020, and ending 30 days after enactment of the CARES Act, (as compared to February 15, 2020) shall not reduce the amount of loan forgiveness IF by June 30, 2020 the borrower eliminates the reduction in employees or reduction in wages.
Once your PPP loan closes, your eight-week period for loan forgiveness begins immediately. To maximize forgiveness eligibility, you need to get people back on payroll quickly. Click here to see how the process works:
Whether you have recently received your Small Business Administration loan through the Paycheck Protection Program (PPP), or are hoping to apply in the future, how much of your loan may be forgivable by the federal government is based on many factors. Our friends at Paychex have created a Loan Forgiveness Estimator to assist you with understanding what part of your loan may be forgiven.
To calculate your estimated loan forgiveness, please visit https://www.advancepartners.com/ppp-loan-forgiveness-estimator
Families First Coronavirus Response Act
Here’s what we know as of Monday, March 30, 2020:
Under the Emergency Paid Sick Leave Act, employers would be required to provide sick time, available for immediate use, to each employee who requires such time for qualifying reasons associated with COVID-19.
Employers also must provide up to 80 hours of paid sick leave (PSL) to eligible full-time employees and pro-rate part-time employee paid sick time based on the average number of hours regularly scheduled in a two-week period. The calculation and caps for compensation vary dependent on the reason for leave up to the maximum $511 per day if the employee is directly impacted and up to $200 per day if it is for care provided to someone else. Aggregate caps exist as well.
Congress is trying to make sure that payment of family and sick leave come at no net cost to employers.
To achieve this, an employer required to pay family or sick leave is allowed to claim a credit against the employer's 6.2% share of the Social Security taxes paid on all wages. Any credit in excess of this amount is fully refundable.
To speed along the process, the IRS issued Form 7200 to:
You can download the instructions for the form HERE
Download the actual form HERE.
Coronavirus Aid, Relief, and Economic Security (CARES) Act
The CARES Act is a financial stimulus package designed to help small businesses get a loan of up to $10 million to stay afloat to help offset the financial challenges created by the COVID-19 pandemic. Additional benefits provided through the Paycheck Protection Program (PPP) incentivize you to avoid layoffs.
Yes! A key piece of the largest relief bill in recent memory is the more than $370 billion in funding for small businesses, including staffing firms who meet eligibility requirements. Businesses with fewer than 500 employees are eligible for up to $10 million in loans, which can be used for payroll and other expenses, such as insurance premiums, mortgage interest, rent or utilities.
The loans, available at financial institutions currently extending SBA loans and other non-traditional lenders, would be completely forgiven if the employer continues to keep the employees or hires back those who already have been laid off, and uses the funds for covered expenses.
You are eligible if you are:
• A small business with fewer than 500 employees
• A small business that otherwise meets the SBA’s size standard
• A 501(c)(3) with fewer than 500 employees
• An individual who operates as a sole proprietor
• An individual who operates as an independent contractor
• An individual who is self-employed who regularly carries on any
trade or business
• A Tribal business concern that meets the SBA size standard
• A 501(c)(19) Veterans Organization that meets the SBA size standard
In addition, some special rules may make you eligible:
• If you are in the accommodation and food services sector (NAICS 72),
the 500-employee rule is applied on a per physical location basis
• If you are operating as a franchise or receive financial assistance
from an approved Small Business Investment Company the normal
affiliation rules do not apply
REMEMBER: The 500-employee threshold includes all employees: full time, part time, and any other status.
In evaluating eligibility, lenders are directed to consider whether the borrower was in operation before February 15, 2020 and had employees for whom they paid salaries and payroll taxes or paid independent contractors.
Lenders will also ask you for a good faith certification that:
1. The uncertainty of current economic conditions makes the loan request necessary to support ongoing operations
2. The borrower will use the loan proceeds to retain workers and maintain payroll or make mortgage, lease, and utility payments
3. Borrower does not have an application pending for a loan duplicative of the purpose and amounts applied for here
4. From Feb. 15, 2020 to Dec. 31, 2020, the borrower has not received a loan duplicative of the purpose and amounts applied for here (Note: There is an opportunity to fold emergency loans made between Jan. 31, 2020 and the date this loan program becomes available into a new loan) If you are an independent contractor, sole proprietor, or self-employed individual, lenders will also be looking for certain documents (final requirements will be announced by the government) such as
payroll tax filings, Forms 1099-MISC, and income and expenses from the sole proprietorship.
Assistance from the CARES Act is not dependent on:
• Whether you sought and were unable to obtain credit elsewhere.
• You providing a personal guarantee.
• You putting up any collateral.
What is it?
The Employee Retention Credit is a fully refundable tax credit for employers equal to 50 percent of qualified wages (including allocable qualified health plan expenses) that Eligible Employers pay their employees. This Employee Retention Credit applies to qualified wages paid after March 12, 2020, and before January 1, 2021. The maximum amount of qualified wages taken into account with respect to each employee for all calendar quarters is $10,000, so that the maximum credit for an Eligible Employer for qualified wages paid to any employee is $5,000.
More information on eligibility and other FAQ's on this can be found here:
Our partner, HIREtech, has created an online COVID-19 Tax Credit Analyzer. If you are interested in seeing how much you will be credited, that resource can be found here: https://covid19.hiretech.com/?utm_source=active_campaign&utm_medium=email&utm_campaign=covid19_tax_analyzer
Advance Partners Operations
Absolutely! Advance Partners is open for business.
For your health and safety, as well as that of our employees, the majority of our team members are now working from home, with only about 10 deemed essential who still go into the office.
We have gone to great strides to ensure none of our services have been interrupted and that it's business as usual.
In addition, you'll never have to turn down an opportunity due to lack of working capital while partnered with us. Because we're backed by Fortune 1000 company, Paychex, we can provide unlimited funding without restricting our credit requirements, regardless of the economic state.
Absolutely not. Because of our extensive preparedness plans, our teams were able to leap into action as soon as we saw that we may have to begin setting up offsite operations.
As a result of that preparedness and execution, all our services are humming along as they were and we don't expect any interruption of service.
No. We're still able to offer our entire range of back office support, including invoicing, payroll tax administration, custom reporting, and software solutions.
Because we provide funding, including to some staffing firms who provide essential functions, we are considered an essential business. We are committed to being there for you and will make necessary accommodations so that we can provide service to you and your employees while still following government regulations.
Coronavirus Webinar Resources
Listen to Episodes 1-10 now!
Wondering how the most recent stimulus bill passed by Congress will affect your business? Join us Friday, Jan. 8 at 2 p.m. ET to learn about:
• The targeted expansion to the PPP, and other loans and grants;
• Changes to the employee retention and paid leave tax credits, as well as employee social security tax deferral repayments;
• Tax extensions under the 2021 fiscal budget;
• Expansions to unemployment insurance;
• Changes to retirement, Section 125, and HSA Relief; and
• New healthcare provisions impacting individual and group health plan members.
Navigating the Ohio workplace during COVID-19
June 10, 2020
Register here: https://pages.paychex.com/oh-webinar.html?utm_source=advance-partners&utm_medium=referral&utm_campaign=oh-webinar-489739
Navigating the Texas workplace during COVID-19
June 3, 2020
Register here: https://pages.paychex.com/tx-webinar.htm
Navigating the New York Workplace During the COVID-19 Pandemic
May 6, 2020
Register here: https://pages.paychex.com/ny-webinar?utm_source=advance-partners&utm_medium=referral&utm_campaign=nys-webinar-regulations-practices-462352&__hstc=&__hssc=&hsCtaTracking=e659d8ed-67f4-45ba-a991-0b83a6840e51%7Ce2194f91-8e48-4fcf-9afb-dab15614bb4d
Understanding the CARES Act and its Business Impact
Friday, April 3, 2020
Link here to watch: https://www.paychex.com/secure/seminars/understanding-cares-act?utm_medium=email&utm_campaign=435136&utm_source=marketo&utm_content=default&campaign_id=&os_ehash=50@marketo:A7NVZ94&lift=A7NVZ94&mkt_tok=eyJpIjoiTVdVNFlUTTBOVFEzWm1VNCIsInQiOiJPTWtUZE9xQVVhakdWOFNaODVoWDBMNTVISThzRStsR2ZyQmE5WVYzREVndTFmaWpXSitHQ3pDdnIySGlYWjdJQmcrTzdUeGtjU2FRcjBJY1dNbjZPVEpwWnV5Um5hODdLMDdTZkRPMFIzVnZWSTNINlJFXC82THhkelkzc1NLK0QifQ%3D%3D
The CARES Act- Overview for Staffing Firms
Wednesday, April 1, 2020
Host: American Staffing Association
Link here to watch the webinar: https://americanstaffing.net/webinars/the-cares-act-overview-and-ramifications-for-staffing-firms/
Coronavirus at work
The coronavirus pandemic will end, but it won't be overnight. It will take a concerted and sustained effort from federal, state, and local governments, as well as its citizens to ensure that people are and feel safe and more at ease.
Make sure you are made aware of all the potential changes for your workers.
The CDC recommends simple, everyday preventative actions to help curb the spread of respiratory viruses.
Additionally, experts suggest:
If you have symptoms of acute respiratory illness (fever, coughing, shortness of breath), the CDC recommends you stay home until you are free of fever, signs of a fever, and any other symptoms for at least 24 hours without the use of fever-reducing or cough suppressant medication.
If an employee is returning from international travel to an area with widespread sustained transmission of COVID-19, as confirmed by the CDC (as of March 4, 2020, that’s China, Japan, Italy, Iran, and South Korea), consider the most current recommendations found on the CDC website.
Employers should reference their established paid sick leave policies as well as federal, state and local paid leave laws where applicable. Employers should also be aware of federal and state disability leave laws. Keep in mind that they may be quarantined and not diagnosed with the virus. In such cases, paid time off or sick policies may not be implicated.
What you should consider when recalling employees from furlough/ temporary lay-off, or rehiring after termination.
Paychex has put together a very useful checklist to help answer these questions.
New Jersey Return to Work Checklist