COVID-19 has raised several new issues for accountants. Clients’ finances have often been thrown into disarray, and it’s up to their accountants to help make sense of a complicated situation. Dealing with stimulus checks, disaster relief loans, the sudden loss of income, and possibly even bankruptcy are just some of the issues that accountants now have to help their clients with as they navigate a dramatically changed financial landscape.
Loss of income
Loss of income is one of the most common financial effects of the pandemic. Many entities are affected, from individual earners up to the largest companies.
On an individual level, many people have found themselves suddenly out of work. Businesses have cut staff to stay afloat during the crisis or have been forced to cease operating altogether, resulting in multiple sudden job losses. Where businesses have been able to retain their staff, personnel may have dramatically altered their working arrangements. Some have been furloughed, allowed to remain on the payroll at a reduced rate of pay. Others have been shifted to home-working and may receive less compensation in their new roles. Still, others have had their hours cut, with a corresponding reduction in pay.
Of course, this has a knock-on effect as those people can no longer pay their usual rent or other expenses. Many landlords have been impacted by this, losing the income from their properties. This has left some unable to meet mortgage payments or other costs associated with property ownership.
Financial effects on enterprises
Many businesses have sustained significant losses, either as a direct effect of the pandemic and the regulations put in place to contain it or indirectly through a loss of custom. For example, a restaurant that is forced to close due to emergency restrictions would immediately suffer a loss of income. Even if the restaurant was able to continue operating by serving take-out and delivery food, they might still struggle to survive if customers can no longer afford their services.
While some people are eligible for unemployment if they lose their jobs due to the pandemic and the attendant restrictions, not all are. Stimulus checks have been issued to many individuals who have been impacted by the effects of the COVID-19 virus. As a way to help those affected make ends meet and help the economy continue functioning, stimulus payments have been provided. Accountants will need to help their clients understand what payments are available and how these might help them.
Small business disaster assistance
Some small businesses affected by the pandemic may be eligible for a low-interest loan from the Small Business Administration (SBA). Providing that there has been a declared disaster, small businesses and some homeowners may be able to obtain one of these loans to cope with the pandemic’s effects.
The Paycheck Protection Program
The SBA also assists with the Paycheck Protection Program. This is a loan paid to small businesses as an incentive to keep employees on the payroll, rather than laying them off or putting them on unpaid leave during the ongoing crisis.
These and many other issues continue to affect individuals and businesses of all sizes. Helping clients to understand the complicated situation, particularly if they’re facing bankruptcy, can be a difficult task for any accountant. Investing in quality professional tax software can be a great help to all concerned. It allows users to calculate taxes correctly, no matter how complex a financial situation may have become.