Year End Reminders-Are You Ready For December 31?

California Hiring Credit Available for Some Small Businesses
California Senate Bill 1447 has been approved to allow a small business to take a hiring credit against income or sales and use taxes to a qualified small business employer. A qualified small business employer is, in general:

• a taxpayer that has 100 or less employees as of December 31, 2019, and
• that has a 50 percent decrease in gross receipts when comparing second quarter 2020 to second quarter 2019.

The credit amount is $1,000 for each net increase in qualified employees (as specified), not to exceed $100,000. The total amount of credit available for allocation to qualified small business employers is capped at $100 million.

California Department of Tax and Fee Administration (CDTFA) will accept applications for tentative credit reservation amounts through a reservation system that will be available at www.cdtfa.ca.gov beginning December 1, 2020. Tentative credit reservations will be allocated to qualified small business employers on a first-come, first-served basis.

Are you ready for December 31?
The New Year and is right around the corner and there are critical things you can be doing now to smooth the tax preparation that will soon be upon us…

• Review your large purchases for the year, gather receipts and make sure your bookkeeper has copies.
• Take stock of what your business owns. The Business Property Tax form (571-L) taxes the business property that you need to keep everything running. If you disposed of old equipment, tell your bookkeeper! We’ll get it removed from your return filing so you want pay tax on it.
• If you pay your own bills, make sure you’ve been collecting W-9s for any service providers. Keep a stack of blanks by your computer and don’t pay a vendor until you’ve received a form. It’s a lot harder to collect the form once they’ve cashed the check.
• Evaluate your current tax situation. This has been a “one-off” year to say the least. Schedule a quick call with your CPA to make sure you don’t need to adjust payroll or estimated taxes.
• Review your Point of Sale system. Depending on the POS you use, you may need to make manual adjustments to sales tax rates. Confirm they are all up to date for 2019. There are Sales Tax rate adjustments for individual California counties and cities that happen every quarter. Visit the CDTFA website where you can search for current rates and double-check your systems.
• Request that your CPA send the final tax return and adjusting journal entries to your bookkeeper. Now is the time to get your books in ready for the new year and last year’s tax returns contain information your bookkeeper will need.

A little planning and a few conversations with your financial advisors will go a long way in smoothing the path for 2021 tasks. Please reach out to your bookkeeper if you need assistance with any of these year-end tasks.