Small business owners trying to keep up with all the rules and regulations involved in the administration of the Payment Protection Program have once again been thrown for a loop. In an about-face on December 21, 2020, Congress passed the Consolidated Appropriations Act, 2021. This Act was signed into law on December 27. It granted small businesses full deductibility of ordinary and necessary business expenses that were paid with a forgivable or forgiven PPP loan. This reverses the earlier mandate that stated that business expenses other than payroll expenses that were paid with PPP funds were not deductible.
Secret Information?
So why the change of direction and the delay in making this information widely known? We have no idea. It hasn’t been publicized by the major news outlets, nor have we seen anything about it in financial blogs. We dug this information up through the SBA Office of Advocacy. It’s part of our job to make sure you’re informed about everything that may impact your tax situation. Imagine our delight when we came across this information! It means our clients benefit.
Expenses Include More than Payroll
In spite of the delay in getting a hold of this information, it’s good news for businesses. Any business owner knows that keeping a business running – especially through an unprecedented pandemic situation – involves more than just keeping people employed. There are lots of other expenses incurred in daily operations.
Many companies suffered higher expenses than usual last year because of the pandemic. Mandated state and municipal cleaning procedures and social distancing measures resulted in increased costs for many organizations. Taking a deduction on these expenses in a year when revenues are down for nearly everyone is a huge boon, especially for smaller businesses.
It’s Not Too Late to Benefit
If you’re a small business owner who’s on top of your taxes, having them already prepared and filed, it’s not too late to take advantage of this new perk. Talk to your accountant and have him or her file an amended tax return. This is a year that everyone should be taking full advantage of the benefits of business expense deductions when eligible.
Adams Accounting Solutions Can Help
Here at Adams Accounting Solutions, we’ve been busy helping small business clients prepare and file their taxes. We help individual tax filers, too. We’re here if you have questions or need help sorting through the tax implications of PPP funding and the forgiveness process. Give us a call at 913-888-9100 to schedule a consultation for more information.
