Independent, Fee-Only Financial Advisor

Independent, Fee-Only Financial Advisor

Friday, April 03, 2020

Protect your Payroll with (almost) Free SBA Funds

Twitter is one my my most used sources of information. It's a place for great minds and experts who wouldn't otherwise have a very big platform to share their best ideas. One of the most useful people to follow recently has been Jeff Levine, a CPA and financial planner who really gets into the details of any tax plan, announcement or otherwise dreadful 500 page government document.

I found this thread on the "Paycheck Protection Program" very useful. Essentially, the Federal Government is guaranteeing forgivable SBA loans that can cover payroll, rent and utilities for small businesses! This effectively turns the loan into a grant so long as the business keeps up its payroll throughout the Covid-19 crisis. If you find this useful, its just a summary of what Jeff has posted on his twitter page @CPAPlanner, give him a follow!

For those that want to dig into the rules themselves, you can find the Final Regulations on the Treasury website here.

  1. This is roughly $350 Billion dollars distributed through existing SBA infrastructure. A lot of due diligence requirements have been shed, so as he describes, it is essentially an honor system.
  2. Section 2 goes over eligibility. The business must be under 500 employees, but it can't be a "household employer" (such as a nanny) or an illegal business (so, keep that under wraps, y'all).
  3. This does not cover payroll in excess of $100,000. An arbitrary number that ensures that people aren't just lining their own pockets with inflated salaries. Employees with salary over $100,000 are still counted, but their compensation that exceeds the limit is not.
  4. IMPORTANTLY: You can only apply once! If you want to access this, write an application for the largest amount you might need. You can't come back to this watering hole.
  5. ACT FAST! It's first come first serve. Will there be more later? Call your congressmen.
  6. You must certify that the loan was necessary. It's free money, but only for those who need it. It's still basically the honor system, but Americans love following rules, and the punishment is severe if you don't.
  7. If someone tries to charge you to hep you apply - that is illegal! Agents may not charge the borrower, or keep any loan proceeds. If someone offers to help, make sure they are not scamming you for money.
This is a great program meant to keep small businesses afloat during what is sure to be a tough economic time. Importantly, this protects those who protect their employees payrolls. If you have a small business, or know and love a small business, look into this ASAP. The SBA and your local SBA lender has more information on how to apply.

Fisted hand

Thursday, March 26, 2020

The Ultimate Work From Home Resource

New Perspectives has been working from home for two weeks now! For our own safety, our clients and society at large, we are working from home and minimizing contact with other people.

I work almost exclusively on my tiny laptop anyway, and have taken my "office" to Hong Kong and Atlanta for stretches in the past, so setting up in my home office is a breeze. From anywhere in my house (or the back yard if the mosquitos would stop biting!) I have full and secure access to everything that I have in the office. Many of our partners are also working from home - on service calls with TD Ameritrade this week I have heard babies, cats and Mozart in the background as the work flows on!

Don't forget to take care of yourself first. My gym has been posting at home workouts that I still wake up at 5:45 AM for. Every evening, Blair makes a different single serving, chocolate chip cookie (this was our favorite)!

We've been conducting remote video meetings via Zoom for a some time, but these are more of a necessity now! While it is easy to get started with Zoom, there are a lot of features you can make use of, so check out their tutorials here. During a Zoom hangout with friends and family the other day, one friend learned that she could change her background as often as she wanted... so have fun with it!

Personally I found this the best article for adjusting to working from home. Particularly useful to me was the reminder to Communicate Fully and Frequently: Nancy and I are used to being able to yell at each other down the hall, now we keep a constant flow of text messages and the intercom feature of our landline phones. If you just want to kill some time reading other tips and tricks, here are 30 more, with links to other articles as well.

The McLaughlin Law Firm has compiled great resources for individuals and small business owners in Mississippi and surrounding states. Their blog also breaks down some of the latest stimulus bill and how it meets the needs of individuals and small businesses.

Do you have K-12 students in the house? The Parents Campaign has an excellent set of resources for all ages of student and their parents. They also have a good compilation of announcements from the State Department of Education and other State Agencies.

The National Alliance for Mental Illness has a wonderful list of resources for those who are too stressed or anxious about being cooped up or stepping foot outside. This is a resource that any of us may need at some point, so it is best to be comfortable with it now.

Tough day at the home office? Put on some Dolly Parton and look forward to a better day tomorrow:

What resources have you found useful in these times?

Wednesday, March 25, 2020

The Fiscal Stimulus Bill is in Process

The latest and biggest fiscal stimulus bill is not official, but we are close. Senator Chuck Grassley’s office has released a 6 page document containing synopses for each section. Below is what I gleaned:

I. Direct Payments

This is the part everyone is interested in. Each single person making $75,000 or less will receive a payment of $1200. This will gradually phase out up to a maximum of $99,000. Each married household making $150,000 or less will receive $2400. This will phase out up to a maximum of $198,000.

You qualify for these payments based only on your income level, not the source of the income. Self-employed? You qualify. Retired? You qualify. On disability? You qualify. No income at all? You qualify. Making a lot of money? No, you don’t qualify.

What do you have to do to get this money? Nothing. The IRS will be using our information on tax filings to send out the money. Watch your bank account and your mailbox. When will you get it? I don’t know, but April 6th is the date that’s been touted.

II. Expanded Unemployment Benefits

Those who have been laid off will file through the state for state benefits. IN ADDITION to the state amount, they will receive $600 per week from the federal government, and the one week waiting period is waived. An additional 13 weeks is added to the draw period up to 12/31/2020.

Self-employed people can apply for benefits. Independent contractors can file. People with limited work history can file. Even if you are only facing reduced hours or a reduced paycheck, you can file for a pro-rated benefit. EVERYBODY file!

Note these benefits apply to railroad people. If you’re not a railroad person, don’t ask. It’s a whole different system.

III. Required Minimum Distributions
NO RMDs this year. They’ve been waived. If you’ve already done this within the last 60 days, think about putting that money back.

IV. Retirement Accounts
You can take up to $100,000 out of your IRAs if you’re under 59 ½ and not have a 10% penalty. In addition, the tax due can be paid over the next 3 years. AND you have the option to put the money back in over the next 3 years. Note this withdrawal must be related to COV-19, but this is a broad definition.

V. Charity
Up to $300 in cash donations may be deducted from your 2020 income even if you don’t itemize. The limit on donations in relation to your income has been waived for now, so give away!

VI. Student Loans
Sorry, no debt relief in here, but there is still something for you. Employers can now pay $5250 of your student loans, and it will NOT be counted as income.

VII. Business Relief
A. A refundable payroll tax credit is available to employers for 50% of wages. This includes health benefits and is for March 13 through December 31. This is for companies whose operations have been fully or partially suspended or who have experienced more than a 50% drop in revenue compared to the same quarter last year.
B. Employers can defer their portion of the SS payment (6.2%) for 2 ½ years.
C. Net Operating Losses can now be carried back 5 years and can fully offset income.
D. Interest expense can be deducted for up to 50% of income for years 2019 and 2020.
E. Immediate write-off of any improvement to facilities.

Now, that’s the high points, and things are still in flux. We will update as we get more information and as the proposed bill becomes law. This is a great help to a lot of people. We expect more to be forthcoming.

Wednesday, March 18, 2020

Imagining the Worst

I got a call from a client nervous about the stock market. She had a list of questions for me. The one that stopped me was, “What is the worst that could happen?”

On the medical side, the answer was obvious. More sick people. More deaths. People I know and love suffering and dying. A healthcare system overwhelmed. As awful as those things are, I know there is an arc to the virus’ progression. At some point, one way or another, this will play out. The infection will run its course. The healthcare system will recover. New treatments will be used. Finally, a vaccine will be produced.

But she was asking about her financial situation. She is retired and dependent on a portfolio. The world is grinding to a halt. What happens economically? Will we recover? If so, how long will it take?

What is the worst that could happen economically?

If government officials don’t take this seriously; if there is a dearth of leadership; if there is no quick and drastic fiscal policy, then the worst happens. We are hearing about those drastic ideas now. Talk of cash appearing in our accounts to help plug the hole from lost earnings. Surprisingly, no one is objecting to this idea. The only debate is how much. It is good news that policymakers are getting bold and innovative.

Concerning this “instant cash,” some have asked, “But what if people spend it on dumb stuff?” Economically, it doesn’t matter! They just need to spend it to help spur the economy back to life. The quickest approach is to give people money regardless of their income. So get the word out. When the money fairy shows up, spend it!

When it comes to this virus, the best approach is to pull in and avoid contact. When it comes to the economy, the best approach is to throw the money around. Combining the two will require ingenious thinking, but we’re Americans!

Stay well!

Friday, March 06, 2020

Dispatches From Our North Carolina Office

When the pandemic arrives on your doorstep, the best defense is not to walk out the door. That’s what some health professionals are recommending. Stay at home. But how do you do that when work, school, and life keep rolling?

Amazon, Microsoft, and Twitter are among the companies encouraging employees to work from home. For many, remote working has been part of the landscape for some time. Many work remotely a few days a week, then travel to the office for the remaining portion of the week. Moving to a full remote operation is not that big of a stretch.

For a finance professional, work happens wherever there is a computer, a phone, and internet access. It’s the reason I can set up shop at our second home in North Carolina. My phone is an extension of the office line located in Mississippi. Our web-based brokerage and client information program allow me to have all the same information at my fingertips.

The only thing I can’t do is a personal meeting. That’s why it’s important to have competent staff manning the office. I’ve also found many clients prefer the convenience of a video conference, and, yes, I can even do those meetings remotely.

For me, working remotely means I’m often more productive. First, I’m up early, and I’m on eastern time. Long before my staff hit the Ridgeland office, I’m cranking! There’s no need for a shower and makeup when you’re operating alone. And my hair? Forget about it!

I didn’t come to the mountains to escape the coronavirus. I came to get some R&R while still taking care of business. But it’s nice to know I’ll be doing my part to put the brakes on its spread!