The coronavirus pandemic has made this a stressful time for many—especially those who own their own business or are otherwise self-employed. At Bryant Consultants, we know that business owners and entrepreneurs just like you are the backbone of our economy. That’s why we want to explore how the Families First Coronavirus Response Act can help small businesses, including self-employed individuals.
What You Need To Know
Taking effect as of April 2, the Families First Coronavirus Response Act offers the following benefits:
- Extending the tax deadline – Federal income tax payments are deferred until July 15, a three-month extension from the usual April 15 deadline, with no interest or penalties. This extension applies to individuals, trusts, estates, and corporations.
- Paid leave – The new law requires any business with fewer than 500 employees to provide limited paid-leave benefits to employees who are affected by the pandemic, either because of their own illness or a family member becoming sick. You, as the business owner, receive new tax credits and federal payroll tax relief to compensate for these newly required benefits. Those benefits include emergency paid sick leave, which is capped at $511 per day for 10 days for an employee in COVID-19 quarantine or who is seeking a coronavirus diagnosis. Employees also become eligible for up to $200 per day for 10 days in mandatory emergency paid sick leave to care for a quarantined family member or to provide childcare in the event of coronavirus-related school closures. Moreover, employees can take up to 12 weeks of protected family leave, either in the event of a family member being in quarantine or coronavirus-related school closures. Compensation consists of $200 maximum per day.
Your Benefits as a Small Business Owner
- Tax credits – The FFCRA gives small business owners a tax credit to cover these legally required payments. This credit can be equal to 100 percent of all qualified leave payments made between April 2 and Dec. 31, 2020.
- Tax relief – Any leave payments made under this new law are rendered exempt from the 6.2 percent Social Security tax component of the usual federal payroll tax, as it applies to wages. Employers still are responsible for paying the Medicare portion of the federal payroll tax (1.45%) but can claim a credit for that.
How about the self-employed?
The FFCRA offers tax credits for self-employed individuals as well. This consists of a refundable credit against your federal income-tax bill, including the self-employment tax. The government will issue a payment for any excess if the credit exceeds the bill. The credit consists of 100 percent of sick-leave equivalent, plus 67 percent of the equivalent for caring for a sick family member or a child due to coronavirus-related school closures. Self-employed persons also have the option of claiming a coronavirus emergency family-leave credit for up to 50 days.
Helping Your Business Through COVID-19
This is an uncertain time, and you probably have questions about what the pandemic means for you and your business. Please call Bryant Consultants at (877) 768-4799. We provide consultation, training, and coaching and will continue to post relevant updates regarding the coronavirus pandemic.
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