Welcome to the Small Business Rundown. Each day, we bring you stories that impact small business owners and their workforce.
Small Business News Highlights for November 9:
- CARES Act provides small businesses with possible tax savings this year
- Research shows that moving during pandemic will result in pay cuts for many workers
- The battle over whether insurance should pay companies for COVID-19 closures
CARES Act and possible tax savings
“This large-scope disaster declaration that occurred in all 50 states opens the door for potentially big refunds this year.”
When Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March of this year, it included not only the highly-publicized loan programs and payroll tax credits, but also lesser known provisions designed to help small businesses.
For instance, there are temporary provisions that allow businesses operating a net loss this year to receive money back from the government related to the amount of taxes paid during the previous 5 years.
The law also expanded the types of deductions that small businesses can claim related to depreciating assets, which can cover construction and changes made to enhance worker and customer safety and promote social distancing.
Leaving cities could result in pay cuts
“Traditionally, wages almost never fall, but we are in an environment where I am basically predicting that wages will fall for a lot of jobs.”
The housing market continues to experience more demand than inventory as Americans seek to relocate due to changing work dynamics and concerns about ongoing lockdowns. New research shows, however, that moving has the potential to cost workers a significant amount in reduced wages.
For instance, tech workers leaving the San Francisco area can expect to see their pay cut by as much as 24%, while those leaving New York might see wages reduced by as much as 12%.
The Glassdoor survey found that it’s not just tech workers, though, who can expect to see a drop in pay. Account managers, analysts, and attorneys leaving big cities might also see pay cuts.
Should insurance should pay companies for COVID-19 closures?
“There have been huge insurable events in the past, with billions of dollars at issue. All of those involved situations that affected a discrete area and a discrete number of companies. This pandemic has affected everybody.”
Even before the orders to shelter in place were issued by state and local leaders, the insurance industry was discussing reasons to deny paying business interruption claims related to the COVID-19 pandemic.
Today, plaintiffs’ attorneys have already filed over 1,100 against insurance companies refusing to pay business interruption claims related to the public health crisis. While many business owners say that they face bankruptcy without the payments, insurance companies claim that paying out the claims could ruin them, with one source estimating that paying out the claims for United States small businesses with fewer than 100 employees alone would cost insurance companies between $52 and $223 billion.