Resources for self-employed\contract workers and small businesses
COVID 19 is impacting most small businesses. The federal government recently passed legislation to help small businesses stay afloat and keep employees on payroll during the pandemic. Programs available are shown on this page.
Unemployment benefits for self-employed workers
The CARES Act provides $600 per week of unemployment benefits for workers who have lost their jobs. This is the first time unemployment benefits have been available to self employed persons who have lost their jobs. Visit the Oregon Employment Department's COVID page to learn more about this program.
Direct cash payments from IRS
In the next few weeks, millions of taxpayers can expect to see payments from the IRS. If your income is under $75,000 (single filers) or under $150,000 (married filers) you can expect to receive $1,200 for each taxpayer and spouse, plus $500 for each child under age 17.
The fastest way to receive these payments is by filing your tax return and providing IRS with current bank account/address information.
Paycheck Protection Program:
The recently passed CARES Act stimulus bill included nearly $350 billion in funding for zero-fee loans of up to $10 million. If you are a small business, you can use this funding to provide for up to 8 weeks of average payroll and other costs. Importantly, these loans will be forgiven if your business retains its employees and their salary levels. These resources can be used in coordination with other COVID-financing assistance or any other existing Small Business Administration (SBA) loan program.
Loans can be converted to grants
Many self-employed and small businesses will qualify for loan forgiveness, that is the loans will be turned to grants provided certain conditions are met. For this reason, Pacific Northwest Tax Service recommends every self-employed/contractor and small business employer to take advantage of this program. To help our clients understand the rules of the program and who might qualify for loan forgiveness, we have created a Understanding the SBA Payroll Protection Loans Program document which you can download and read.
Low-interest loans for Small Businesses:
SBA announced it will work directly with states to provide targeted, low-interest disaster recovery loans to small businesses that have been severely impacted by COVID-19. Small businesses can receive up to $2 million in assistance.
Emergency Economic Injury Grants:
The CARES Act provides an advance of $10,000 to small businesses and nonprofits that apply for an SBA economic injury disaster loan. This funding will be received within three days of applying for the loan and does not need to be repaid. Your business can use this grant to provide paid sick leave to employees, maintain payroll, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments. Visit https://covid19relief.sba.gov/#/ to apply.
Debt Relief to new SBA Borrowers:
$17 billion in funding is available to provide immediate relief to small businesses with standard SBA 7(a), 504, or microloans. Under this provision, SBA will cover all loan payments for existing SBA borrowers, including principal, interest, and fees, for six months. This relief will also be available to new borrowers who take out an SBA loan before September 2020.
Business Counseling Services for Small Businesses:
Oregon’s Small Business Development Centers and Women’s Business Center provide mentorship, guidance and expertise to small businesses. The stimulus provided these centers with increased resources and training to address COVID-19 related questions. Portland’s Small Business Development Center is operated by Portland Community College and Mercy Corps operates Oregon’s only Women’s Business Center.
Work Share program:
The Oregon Employment Department’s Work Share program may be able to help you prevent layoffs by providing partial Unemployment Insurance benefits to supplement workers’ reduced wages as their hours are reduced.
Rapid Response Services:
Oregon’s Higher Education Coordinating Commission provides rapid response services for employers to assist with the development and implementation of a strategy to help affected workers to return to work as quickly as possible.
Federal Emergency Paid Sick Leave Requirements:
The federal Families First Coronavirus Response Act requires employers to provide up to two weeks of fully-paid emergency sick leave to employees to self-quarantine, seek a diagnosis, or receive treatment for COVID-19. In order to offset the impact to small- and medium-sized businesses, employers are provided a refundable payroll tax credit to cover 100 percent of the cost of emergency paid sick leave wages. There is also a refundable income tax credit for self-employed individuals. These requirements apply to employers with fewer than 500 employees, state and local governments, and employers with employees who work under a multiemployer collective agreement.
Federal Paid Family Leave Requirements:
The federal Families First Coronavirus Response Act also requires employers to offer 12 weeks of paid family leave for an employee with a minor child in the event of the closure of the child’s school or place of childcare. The first two weeks are unpaid, but the employee can overlap this with the two weeks of emergency paid sick leave. This benefit must replace at least two-thirds of the employee’s wages up to a maximum of $200 per day. In order to offset the impact to small- and medium-sized businesses, employers are provided a refundable paid family leave payroll tax credit that offsets 100 percent of employer costs for providing mandated paid family leave. The credit also offsets the employer contribution for health insurance premiums for the employee for the period of leave. These requirements apply to employers with fewer than 500 employees, state and local governments, and employers with employees who work under a multiemployer collective agreement.
Deferral in payroll taxes:
The CARES Act allows businesses to delay the payroll taxes typically paid by employers on wages. The 6.2 percent tax on wages businesses normally pay would instead have to be paid over the following two years, with the first half due Dec. 31, 2021, and the second half due at the end of 2022. Deferral of payroll taxes is not provided to employers receiving assistance through the Small Business Administration Paycheck Protection Program.
Employee Retention Tax Credit:
The federal Coronavirus Aid, Relief, and Economic Security (CARES) Act created a new Employee Retention Tax Credit through December 31, 2020. The Employee Retention Credit is a refundable payroll tax credit for 50 percent of wages paid by employers to employees during the COVID-19 pandemic, up to $10,000 in wages and compensation per employee. The credit is available to employers, including non-profits, whose operations have been fully or partially suspended as a result of a government order limiting commerce, travel or group meetings. The credit is also provided to employers who have experienced a greater than 50 percent reduction in quarterly receipts, measured on a year-over-year basis. The Employee Retention Credit is not available to employers receiving assistance through the Paycheck Protection Program.