End-of-Year Business Spending in November 2020
A Year of New Challenges and Opportunities
As the end of the year approaches, business owners are looking for the best ways to minimize their companies’ tax liabilities. With the tremendous blows that COVID delivered throughout the year, however, getting 2020 end-of-year business spending right could be more complicated than ever. There are many businesses that have suffered irreparably, others that can recover but have had to make drastic changes, and yet others that have had one of their best years ever. It’s a milieu of extremes, for sure. Add to that the complexities of the unprecedented Paycheck Protection Plan (PPP) and the resulting Small Business Administration loans that blur the tax picture with new uncertainties, and businesses have a lot of decisions to make by the end of the year.
In short, what businesses are considering at this time of year is how they can save money on taxes by timing their income and expenses, which effectively means moving income into a year of lower taxes and moving expenses into a year of higher taxes. Every company’s year-end strategy will look different, which is why it’s important to hire a professional to walk you through it. They can help you look at the big picture and see if it makes sense to maximize your tax savings this year or possibly move some of those expenses to the next year.
In 2020, COVID-19 ushered in financial challenges, some of which forced local businesses to reimagine how they do business. Congress supplied needed relief but much of that runs through the tax code, so year-end tax planning may be more important than ever this year. Developing the right tax strategy for your particular business will help you navigate the pandemic’s disruption and keep you on the right track moving forward.
Tax Services at Grant Thornton offered some key tax considerations for 2020 year-end business-tax planning, including: accelerate your alternative minimum tax refunds, sped by the CARES Act; use current losses for quick refunds, as the CARES Act resurrected a provision allowing businesses to use current losses against past income for immediate refunds; claim quick disaster loss refunds stemming from President Donald Trumps’ COVID-19 disaster declaration; and consider the timing of payroll tax deductions, as the CARES Act allows employers to defer paying their 6.2% share of Social Security taxes for the rest of 2020.
It’s going to be a whole new year-end, for sure—and it gets complicated and confusing quickly if you’re not a tax-law expert. We talked to a number of tax specialists in the Omaha area to get some incite about what businesses need to be considering for year-end spending to close out an onerous year in the best financial condition possible.
Plan Your Growth
If you’re looking for a company to help you sift through your end-of-year spending and other financial options for your business, consider CFO Systems (cfosystemsllc.com). They are a nationwide company founded in 2004 to provide practical and experienced leadership to companies of all sizes. They have a team of Chief Financial Officers (CFOs); controllers; accountants; and finance, procurement, and human-resource directors that offer businesses more than 1,700 years of combined experiences across a variety of industries. One of the biggest mistakes that businesses make with end-of-year spending is failing to plan their growth.
“CFO Systems works with clients to understand they should NOT buy stuff they don’t need in a misguided effort to save taxes,” said Founder and Managing Director Brett Frevert. “We have seen a multitude of businesses invest in equipment, inventory, or other items—hoping for a tax savings in the current year—but when growth occurs in the new year, liquidity is stressed or stretched, and the business struggles to handle the growth. DON’T buy stuff you don’t need. Plan your growth.”
Part of that planning is understanding the various types of capital, or liquidity, so you need a professional who can walk you through creating your growth plan accordingly. CFO Systems offers tremendous strategic-planning services, which involve a sophisticated evaluation process that companies need to go through to help increase their growth and success.
When it comes to the effects of COVID on 2020 year-end spending, the effects are mixed.
“There will be a wide range of issues, including banking relationships, investor relations, tax treatment of PPP proceeds and expenditures, Economic Injury Disaster Loans (EIDL), SBA loan waivers, and the like,” Brett said. “The biggest thing about 2020, though, is the varied impact. While some businesses did see dramatic reductions in income, there are a good number of businesses that excelled and grew in 2020. Millions of new entities were formed and new businesses created. Stress and turmoil create challenges, yes, but they also create opportunities.”
Brett’s advice for local businesses: “Plan to grow. Be optimistic. Build your business plan with a flexible model—and capitalize on the turmoil!”
Best Coverage, Competitive Price
When you’re planning your business spending, insurance is a BIG consideration—including commercial insurance—especially in this day and age of change, change, change. King Insurance (kingins.com) of Omaha is a tremendous option when you’re looking for advice about your insurance needs. They are an independent insurance agency with an aim to reduce your insurance costs and close any gaps in your coverage. In the event of a loss, they are there to follow through and see that you get fair, prompt action, too.
“We are committed to a high standard of excellence in all that we do and to establishing a firm relationship of mutual trust and service with each of our clients,” said King Insurance President Rick King. “With all that the pandemic brought in 2020, we expect to see a very clear COVID exclusion being added to business policies, and we’ll be here to walk business owners through those or any other changes. Given the drastic reduced income for so many businesses in 2020, I expect to see large audit returns on liability and Workers’ Comp policies of a large number of our insureds, but unless there is a surprising change in the way judicial has been interpreting current policies with regard to denying COVID-related loss-of-income claims, I don’t see any extraordinary things happening in 2020.
In 2021, however, King Insurance warns businesses to expect an increase in both property casualty and health-insurance programs. With that in mind, he believes that more business owners that provide health insurance to employees are going to look into more high-deductible plans that are tied to health savings accounts.
“We will gladly review your current coverages for adequacy and cost,” Rick said. “We represent a carefully selected group of financially sound, reputable insurance companies, and we place your policy with the company offering the best coverage at a competitive price.”
Face Risks Head-On
As you look at end-of-year spending, it’s important that you have someone to help you analyze your risks in the marketplace—and inside your business. One of the largest privately held insurance-brokerage firms in the Midwest, North Risk Partners (northriskpartners.com) specializes in strategic insurance solutions for businesses and individuals. They are committed to helping clients face risk head-on with right-fit insurance coverage and attention to opportunities for preventing avoidable losses. For businesses, they offer programming and compliance support in the areas of human resources, safety, worksite wellness, and more.
“In addition to COVID damages in 2020, your business faces many threats—from natural disasters and data breaches to other risks specific to your industry or company,” said North Risk Partners President, CEO, and Partner Chris Meidt. “Our mission is to make you aware of coverage that every business needs, plus additional protection specific to your circumstances. We’ll help you address risks head-on and protect what matters to you most.
Most businesses require coverages such as Workers’ Compensation, property, and general liability. Some might also require business auto coverage, Employment Practices Liability Insurance, and business-interruption insurance. North Risk Partners, 8204 S 109th St. in La Vista, will help you pinpoint problem areas threatening your bottom line, help you implement money-saving solutions for your Workers’ Compensation coverage, and work with you and your insurance carrier to reach a point of agreement regarding claims settlements. Employee benefits are another top consideration, as they are one of the three priciest expenses for business owners.
“Whether your organization is small, large, or growing, our team has the knowledge and resources to support you in nearly all aspects of your property, casualty, and employee benefits program,” Chris said. “For companies with fewer than 10 employees, we supply access to large-company employee benefits solutions; for companies with 10-50 employees, we provide employee benefits resources that can adapt with change and growth; and for large employers, we are able to support the demands of a large workforce and the benefits strategy that comes with it.”
When it comes to health insurance, North Risk Partners offers multi-line and multi-plan programs, online enrollment, HR compliance and wellness support, and more. The firm’s employee benefits capabilities include medical, dental, life, and disability insurance, as well as flexible spending accounts, health savings accounts, health reimbursement accounts, and COBRA and Family and Medical Leave Act compliance. They even offer a digital resource portal for employers to access policy and form templates, HR and safety compliance guides, employee communications materials and an online platform for delivering virtual employee HR and safety trainings. Through it all, North Risk Partners continuously evaluates what it does as an organization based on its mission.
“Service is at the core of our mission at North Risk Partners,” Chris said. “Our team is guided by our commitment to service – to our clients, to each other, and to our community – and the unprecedented challenges of 2020 have emboldened us in that mission. For more information, visit northriskpartners.com.
When it comes to having enough cash fl ow to use toward purchases before the end of the year, collecting on accounts receivables is one of the best ways to make that happen. Whatever you do, there’s one thing is for certain: You truly need to hire a professional to walk you through it. To emphasize how important it is to work with a trusted CPA and/ or financial advisor, we spoke to Aaron Newell with AR Solutions (arsolutionsinc.com). AR Solutions is a licensed, bonded, and insured Nebraska Collection Agency with more than 30 combined years in medical collections. With AR Solutions, you’ll have someone dedicated to working on that aspect of the business, while you remain fully attentive to the other things you need to do prior to year-end.
“Do what you do best and pay for the rest!” Aaron said. “Spend your time and efforts in whatever your specialty is and employ a specialist to do the things that you aren’t an expert in. Time is more valuable than money because once it is gone, you never get it back!”
Cleaning up your past-due receivables is an important end-of-year task, too. AR Solutions has been serving clients as a trusted partner in handling past-due receivables for more than 15 years. They offer competitive fees that are contingent upon collection. You can trust that your accounts will be handled with the highest-quality services so you can focus your time and energy on what it is that YOU do best—running your business.
Beyond COVID-affected tax law, businesses have to strategize spending for marketing efforts every year, which is more important than ever when companies are struggling through the repercussions of the pandemic. You need to keep your brand relative and visible to keep other businesses and residents aware that you are operating and about the new products or services you are offering to get them back into shopping—and shopping locally. If you need to do some end-of-year spending, consider paying ahead on your advertising and marketing plans to ensure that they work for you throughout 2021.
At Strictly Business (strictlybusinessomaha.com), we offer affordable advertising rates for all sizes of businesses, and you get a lot more than a fabulous ad in a magazine that is distributed to over 15,000 businesses in and around Omaha each month! You’ll also get a free press release every month you advertise in our magazine to keep the community aware of the latest and greatest with your business—or you might choose to honor your employees and introduce them to Omaha with a personnel release. You can also be included in our monthly feature stories, with a headshot photo and quote about topics that are directly relevant to your business. If you run a nonprofit organization, you’ll get special, highly affordable rates for participation in our bi-annual Supporting Nonprofits feature—and you also get a free monthly press release throughout your contract.
What’s even better? We’ll do all the heavy lifting for you. If you just answer a few basic questions about your monthly announcement, we’ll take it from there. Our team of professional writers can draft your release for your review, and our graphic designer is always happy to design and build the advertisement you want, so you can stay focused on your own business. What’s more, everything we print in the magazine is also posted online on our website and we’ll send you links to your coverage to share on your social-media platforms. Our goal is to feature YOU as the expert in your field, and we share that information every time we get a chance. Don’t forget to include a Strictly Business partnership in your end-of-year business spending!
It doesn’t matter if you decide to partner with us or another one of the many talented media outlets/advertising firms in Omaha, what is most important is that you are continuing to reach your audience. This is especially true now during crisis times. Many businesses have had to undergo budget cuts due to COVID, but don’t completely throw all your marketing efforts out of the window. Your customers still need to see and hear you.