The Pandemic Relief Provision You Are Probably Overlooking That Can Put 75K+ Into Your Business
Tim Fitzpatrick
MSP & B2B Professional Service Firm Marketing Consultant/Advisor | Fractional CMO | Build and manage your marketing engine to get where you want to go faster. | Remove Your Revenue Roadblocks
Have you used all the available small business relief provisions from the pandemic? I’m going to bet you haven’t and today we are going to talk about one in particular that so many businesses have overlooked. This is your opportunity to put a ton of cash into your business! Jamie O'Kane with Abundant Beans Tax And Accounting is going to tell you everything you need to know.
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The Pandemic Relief Provision You Are Probably Overlooking That Can Put 75K+ Into Your Business
Tim Fitzpatrick: Have you used all of the available small business relief provisions from the pandemic? My guess is you have not. And I have a special guest with me today who is going to talk about one in particular that so many businesses have overlooked. You do not want to miss this opportunity to put a ton of money back in your pocket. Hi, I am Tim Fitzpatrick with Rialto Marketing, where we believe marketing shouldn't be difficult. All you need is the right plan. I am super excited to have Jamie O'Kane from Abundant Beans back with me for a second time on the show. Jamie, welcome. Thanks for being here.
Jamie O'Kane: Thank you, my friend. Happy to be here again.
Tim Fitzpatrick: Yes. So we were talking before we jumped on air. The last time I interviewed you was episode 14 of the Rialto Marketing Podcast. We talked about business taxes and accounting and some of the secrets that you have that you shared. We are now shooting episode 114. I planned it exactly 100 episodes later.
Jamie O'Kane: I love this energy.
Tim Fitzpatrick: Yes.
Jamie O'Kane: Yeah.
Tim Fitzpatrick: Numbers people love them.
Jamie O'Kane: Yes. We love it.
Tim Fitzpatrick: So the last time I interviewed you, I was not asking rapid-fire questions to help us get to know you. I want to do that this time. So, when you're not working how do you like to spend your time?
Jamie O'Kane: Reading, knitting, or on the peleton.
Tim Fitzpatrick: Okay. Reading, knitting or on the peloton. Okay. What's your hidden talent?
Jamie O'Kane: My hidden talent is the ability to find the holes and....
Tim Fitzpatrick: Okay, I like it. Find holes. Find the opportunities and fill them. Love it. What's the best piece of advice you've ever been given?
Jamie O'Kane: Don't small stuff. It's all small stuff.
Tim Fitzpatrick: Yeah. Most of the things we think are big don't end up being all that big.
Jamie O'Kane: Yeah. I think the other one is like, make your own business rules. You get to to your business. You do it whatever the hell that you want.
Tim Fitzpatrick: Yeah. Yeah. That kind of gives you permission to do what you feel like you need to do and just do it.
Jamie O'Kane: Right, and I think, and I always say, like, when I do what I think I need to do, it gives permission for anybody who's close to me do that, like, see that to do it as well.
Tim Fitzpatrick: Yeah. What's one thing about you that surprises people?
Jamie O'Kane: I'm super creative.
Tim Fitzpatrick: Yeah. You don't normally think about that from a numbers person, do you?
Jamie O'Kane: Not from your accounting people, usually.
Tim Fitzpatrick: What does success mean to you?
Jamie O'Kane: Oh, wow. That's a good one. Success means success means flexibility. The ability to do what I want when I want.
Tim Fitzpatrick: I agree. Where is your happy place?
Jamie O'Kane: My shower or the peleton.
Tim Fitzpatrick: Or the peleton. Okay.
Jamie O'Kane: I'm part of the cult.
Tim Fitzpatrick: Do you have a steam shower?
Jamie O'Kane: I don't.
Tim Fitzpatrick: I've always kind of wanted a steam shower, but part of me thinks that, like, the novelty would wear off, and then it just becomes a total pain in the neck to clean.
Jamie O'Kane: It does. My uncle have one and I'm like, I mean, it's nice if you're sick or whatever but.
Tim Fitzpatrick: Yeah, other than that, it's kind of like gosh. That thing is like a breeding ground for mold. So last one, what qualities do you value in the people you spend time with?
Jamie O'Kane: Authenticity of an abundant mindset and critical thinking as one.
Tim Fitzpatrick: So for those people that are tuning in missed the last episode, tell us a little bit more about you and what you do at Abundant Beans before we jump into talking about this program.
Jamie O'Kane: So we are a tax planning-focused CPA firm. So people usually think HR black lots of quantity with tax repairs. But that's not what we do. We do low quantity boutique style tax planning implementation, and then tax returns and compliance on the back end. So we don't start with tax returns. We start with how can put my dollars in your packets through tax planning where you're trying to go, everything is goall oriented, because if you don't tell me where you want to go, I can't help you get there. Otherwise, I'm just giving you the boilerplate here. So you save dollars this way, which may not work into your goals. So we do some bookkeeping, but mostly tax planning based, goal based compliance.
Tim Fitzpatrick: So you don't put people into a box and prescribe things that you prescribe to everybody else?
Jamie O'Kane: Nope.
Tim Fitzpatrick: You figure out where they're at and create a plan to help them get to where they want to be.
Jamie O'Kane: Yeah, the example I like to use a lot is if you tell me you want to save as much cash as possible to go do real estate investing. I'm not going to ask you to put your money in a set plan.
Tim Fitzpatrick: Yeah.
Jamie O'Kane: Here put your money in some places you can't access it.
Tim Fitzpatrick: Yeah. This is really interesting, because although we are in two totally different businesses, we plan the same way. And I say planning is key to being effective all the time. And I'm not just saying that from a marketing standpoint, it's like, guys, whatever you're doing, you got to have a plan. So that's what Jamie does. She helps that you're planning together for your taxes so that you can keep more of what you make. It is super important. If you do not plan, you're never going to have long-term success.
Jamie O'Kane: Yeah, I think the big thing is, I ask people like, what do you want? And they're like to save taxes. I'm like, that's not a goal.
Tim Fitzpatrick: Yeah.
Jamie O'Kane: Saving taxes is not the goal. Saving taxes is the vehicle to get to the goal.
Tim Fitzpatrick: Yes. What is saving taxes going to enable you to actually do.
Jamie O'Kane: Exactly what are you going to do with that cash? Because that informs how we help you save.
Tim Fitzpatrick: Yeah, I love it. So let's talk about this pandemic relief provision that people are overlooking. Is it called the employee retention? What's the name of the program.
Jamie O'Kane: Yeah. So the employee retention credits.
Tim Fitzpatrick: Okay. So the employee retention credits. What the hell is this?
Jamie O'Kane: These are payroll tax credits available to businesses in a couple of ways. One either they had impact on their business through governmental restrictions. So either a partial or full shut down. And we can define that in many ways. Or there's a gross receipts test. So it's a 50% decrease for 2020 over 2019 or a 20% decrease for 2021 over 2019.
Tim Fitzpatrick: So if you can show that your business has to shut down for a certain period of time or and or is it one or the other? Or if you can show you a decrease in gross receipts, then you can qualify for the employee retention credit.
Jamie O'Kane: And this is where people get really hung up. Is they're like, oh, there was an decrease in gross receipt like that doesn't mean anything. We have businesses that have higher gross receipt quarter to quarter that qualify under the governmental provision.
Tim Fitzpatrick: So, you have to have a keen understanding of all these provisions to really determine whether you're going to qualify or not.
Jamie O'Kane: Yeah, you do. You have to know what were your restrictions. What are our restrictions look like? And how did that affect our business? Is that it has to be a partial impact, full impact on operation. A really good example is a coffee shop. We have a client who's coffee shop, but their indoor dining was shut down. That is a shut down, I mean, that's an obvious one, right? That is a shut down of their operation period. It's a partial shutdown. You know what? They made more money in 2021 that they've ever made. They're also sitting on a ton of credits. Because they can show that they fall by under the or the governmental shut down.
Tim Fitzpatrick: Can you claim more money if you qualify, let's say I qualify under the shutdown rules, but I also qualify under the gross receipts, am I better off claiming one or the other? Or does it matter?
Jamie O'Kane: No, it doesn't matter. The credits are the same.
Tim Fitzpatrick: It's just a bar you have to meet. Once you meet it, then you're actually determining how much you actually qualify for in credits.
Jamie O'Kane: And it's a quarter over quarter. So if just for, like, first quarter, I'm under governmental restrictions and I can claim it, then I can claim under that. And then the next quarter. I'm not under governmental restrictions, but I have the gross receipts, I can qualify under gross receipts. We're testing each quarter.
Tim Fitzpatrick: Got it. And this is for 2020 only?
Jamie O'Kane: It's for 2020 and 2021.
Tim Fitzpatrick: Got it. So you're going to be doing these for a little bit. So, 2020 and 2021 by quarter.
Jamie O'Kane: Yup.
Tim Fitzpatrick: Okay. 2021 by quarter.
Jamie O'Kane: They start like March 13th 2020, so second quarter, third quarter, fourth quarter. We're not really doing anything back into those days unless we think it's there.
Tim Fitzpatrick: Okay, so this leads me to my next question. Why are many businesses missing out on this opportunity?
Jamie O'Kane: So here's the big thing. The original CARES Act back in, I don't know, what was that May April last year looking all running together.
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Tim Fitzpatrick: Something like that.
Jamie O'Kane: So the original CARES Act made provisions also for the PPP loan. So it created the ERC provision and also created a PPP loans. In the original CARES Act, you couldn't do both. If you had a PPP loan, you couldn't do the employee retention credits. And everybody knows about PPP loans. So nobody was looking at employee retention credits at that time.
Tim Fitzpatrick: Okay.
Jamie O'Kane: So that's why they're missing out because they did PPP loans. They didn't know about this. Most people just didn't know about these. Oh, my gosh. It was one of the provisions either in December or January of this 2021, where they said, you can do both. You can do both employee retention credits and PPP loans. You just can't use the same wages for both of them. You have to we have to work around the PPP loans.
Tim Fitzpatrick: Got it. I'm also guessing, too, that there's just so many different things going on at this point. It's just easy for people to overlook. Right. We talk about PPP, and then it's like they got the PPP, and then they're just like, okay.
Jamie O'Kane: Yeah. So PPP, there was the EIDL loans. Those kind of all went up at the same time. And then there's these provisions. There the family first corona virus. There's the FFRCA credits for sick pay for employees. Like there's a lot of provisions that came down. The big reason, though, is because everything was about PPP loans, which are free dollars. We know now they're free dollars. And everybody was scrambling for PPP loans. Nobody ever consider the employee retention credits.
Tim Fitzpatrick: Yeah. One of the things that you touched on before we jumped on air. I know you will never talk bad about somebody you compete with. But one of the things you said was that you've come across people who have asked their current accountants about the employee retention credits, and they're just being told that they don't qualify. Why do you think that's happening? And actually let me take a step back that they don't qualify. And, in fact, some of these people actually do.
Jamie O'Kane: I think it's a combination of things. Look, tax repairers are tired guys, we have dealt with five or six that legislation in the last 18 months. We have every time we turn around, the IRS will not respond to anything. Our client, like the amount of mess that has been created by the pandemic for the IRS for your tax repairs for it's just a mad house, right now. We're all tired. We only do. I only did 30 tax returns this year. But the fact that every time I turned around, I had to learn something new. I had to learn how to do PPP loans. I had to learn how to do PPP loan forgiveness. I had to help our clients navigate the FFRCAs. There is a lot of things that prepares may just decide that they don't want to deal with and or they haven't taken the time to learn enough about it to advise.
Tim Fitzpatrick: Yeah.
Jamie O'Kane: And that is just the nature of the beast with all of these changes. I want to be 100% most tax repairs, most accounting firms work on quantity.
Tim Fitzpatrick: Yeah. The volume business.
Jamie O'Kane: They don't have time to do quality.
Tim Fitzpatrick: Yep. Got it. If we pay people's interest, what are some other important things for them to know about the employee retention credits?
Jamie O'Kane: So let's talk about how much the credits are, because I think that's important. So you can claim up to $5,000 per employee for 2020, and then it is $7,000 per employee for each quarter of 2021.
Tim Fitzpatrick: Okay. Say that again. So five K per employee for 2020 in total?
Jamie O'Kane: Yes.
Tim Fitzpatrick: And then 2021. It's seven K per employee per quarter?
Jamie O'Kane: So we're looking at up to $33,000 of credits per employee. Caveat. The Congress is working on tax stuff right now in the next whatever, budget reconciliation, whatever bills, guys.
Tim Fitzpatrick: Yes.
Jamie O'Kane: I don't follow any of this stuff until it's done. I just pay attention peripherally just to see what's going on. They might not. They might not allow fourth quarter PPP loan or ERC credits. But anyway,
Tim Fitzpatrick: So that may change but up to that point, whether they change that or not, you can still qualify up to third quarter of 2021.
Jamie O'Kane: Yeah.
Tim Fitzpatrick: So depending on how many employees you have, this can be a ton of money.
Jamie O'Kane: Yeah. And so the credits are, of course, it's never that easy. Right. So the credits are 50% of up to $10,000 of wages for 2020, 70% of up to $10,000 of wages per quarter for 2021. So if you have an employee that makes 40 grand a year, you can get $33,000 of credits on them.
Tim Fitzpatrick: Okay. And when we talk about a tax credit, how do tax credits work?
Jamie O'Kane: So these are payroll tax credits. So what they do is generally what we're doing is finally amend 941s. So they have to be filed with the IRS, and then the IRS will send you a check eventually. We don't know. We're looking at six months ish. At this point.
Tim Fitzpatrick: They are actually sending you a check?
Jamie O'Kane: Yup. If we can currently do it, then you can save your payroll taxes and then they'll pay you the rest later. But what these are, though, one thing I want people to make sure they understand is this is a reduction of your wage expense. So whatever you're getting in credits is really technically added back as taxable income. I don't know about you all, but I like money, and I'm happy to pay my tax rate on it. So if someone's going to hand me $100,000, I'm happy to pay $25,000 on it to keep the 75,000.
Tim Fitzpatrick: So this comes back to tax planning. As long as when that check comes in, you set a certain amount of that aside to pay your taxes. You will not have a surprise at the end of the year.
Jamie O'Kane: Yeah. I mean, all of our clients that are doing this, obviously, we're doing tax projections for them, so they understand what this is going to look like dollar wise, but just making sure that people understand that piece because I think because the PPP loans are free money, people really think this is free money, and it is free money up to a point. Right. You have to keep a lot of it, a large portion of it.
Tim Fitzpatrick: Who wouldn't take a 100 grand and have to pay 25 of it back out? Or whatever it may be for you.
Jamie O'Kane: Yeah. The other consideration is we're filing these back into 2020, usually because the returns are already filed. So we're going to need to do amended filing for those because it's whatever year those pertain to that we need to be claiming those dollars.
Tim Fitzpatrick: Got it. But they can still go back and do that.
Jamie O'Kane: Yeah. No problem. Happy to. Happy to do this.
Tim Fitzpatrick: So there's time for that.
Jamie O'Kane: So it's time for that.
Tim Fitzpatrick: Yeah. Got it. Anything else that we need to know about these credits?
Jamie O'Kane: So like I said before, there's an intersection with the PPP loans. So many of our clients and many of the people that we're looking at now, they've already filed for forgiveness on their PPP loans, which is great, which is fine. The thing is, we can't use the same wages, so there's different ways to file for forgiveness on the PPP loans. If you haven't filed yet, behooves you to have us look at it before we're filing because we can allocate more dollars to ERC if you qualify. If instead of just using 100% payroll, most people are just using 100% payroll on their PP loans application. That means we can't use of those wages, which is fine. Generally, it works out fine, but that's another moving piece potentially when we're trying to maximize ERC.
Tim Fitzpatrick: Got it. Because PPP, you had to use a certain percentage for payroll, but you could have used it for other expenses. So if they haven't filed already, if they can allocate some of that over to those other expenses, they're going to get more from ERC. Did I understand that correctly?
Jamie O'Kane: You got it.
Tim Fitzpatrick: Okay. Got it. This is a super cool program, and a lot of people are not talking about this.
Jamie O'Kane: It is super cool. I told you right before we hopped on. I just done one for a new client, $189,000 in credits.
Tim Fitzpatrick: Yeah.
Jamie O'Kane: I'm blown away by the dollar amount.
Tim Fitzpatrick: No, we need to say your actual results may differ. Everybody's in a different scenario, but there is a lot of money on the table here. You need to take advantage of this. And I know you won't say this. So I'm going to say it for you, guys, if you have any interest in this program. You need to reach out to Jamie, because, look, it's obvious that there are too many, there are way too many moving parts here. Most CPAs are not dipping their toe in this water. That should tell you something. If you want to maximize what you get, you need to work with somebody that knows what the hell they're doing and knows this legislation inside and out and all the rat holes that you could potentially go down. So it is worth the money to pay somebody to do this for you. Jamie can do it for you.
Jamie O'Kane: Honestly, these are super fun.
Tim Fitzpatrick: Yeah. And Jamie loves doing them.
Jamie O'Kane: I do. I love it. I think it's always funny because I am not your snake oil salesman. I am the person that's very conservative. If I'm doing something, it's because it's legit like we're not doing crazy tax deferral. We're not doing that. We do everything within the bounds of the code because there's a lot for us to work with there. But this feels like I know I was looking at this, and sometimes I'm like this just kind of feels like snake oil. It is real. It is real. It is real real.
Tim Fitzpatrick: So where can people if we got them hooked here, they are interested in at least finding out whether can they qualify? What might they be able to qualify for? You guys are offering a service that helps them do just that, right?
Jamie O'Kane: So we offer an analysis. It's $11.95 so you can go to Abundant Beans dot com slash erc. That's kind of our landing page. There's blog posts there. We have a free download of a spreadsheet where you can enter your info if you feel like you want to see if you qualify on your own. And we have podcast episodes and just a whole smattering of info on this because I'm trying to get this info out to people. It's just because, again, they're missing out. They just don't know it's a thing.
Tim Fitzpatrick: So go to abundant beans dot com foward slash erc, guys $11.95 to find out whether you qualify and how much you might qualify for, in my opinion, is well worth. It takes some of the PPP money that you got that were totally free and just spend $1200 of that to find out, because you could put a lot more money back into your pocket as well.
Jamie O'Kane: Yeah. I mean, it's just one of those things. I mean, really the people that we feel like if you're in this category, if you have a Ford customer facing store, if you are doing personal services, veterinary, dental. These are the ones that really are missing out on these coffee shops, restaurants, anybody that was open with people in it at some point during the pandemic with restrictions. So you know what, your restrictions are in your business. But these are the ones that are probably missing out on those because those of us that run virtual businesses like Tim and I like, we already work from home. There's nothing we can do about this, right? We were already virtual. We didn't have any restrictions. But if you have a client facing, you know, retail shop, business, service provider situation, you likely qualify just based on the government restyrictions between the government office. Like, I'm looking at one in a different state right now, and it happens to be their Supreme Court that did all this. I was like, I can't find yours, but it's the governors. It's the Health Department, it's the county health department. We got to have to kind of have to dig for these a little bit. But we are seeing people qualify through June of 2021, you know, from March of 2020 to June of 2021 because of all the restrictions and when they were lifted.
Tim Fitzpatrick: What about, like, contractors like HVC companies and electricians those types of places if they haven't. I mean, if they dealt with any kind of shutdowns or reduction in revenue, it might be worth looking at.
Jamie O'Kane: Yeah. And I think a lot of our it really kind of dawned on me, like, because I went to my dentist and they had to, like, schedule her in a way where she could change between she literally, like, change clothes between each appointment for a while. And they had to, like, I kept kind of like having to move my appointment around. And, like, they had to, like, very strategically, like, change how they do appointments. And they were doing less appointments per day because of this. And I was like, do you know about the employee retention credits? Because this is a partial reduction of operations. Right. And they went for cleaning and they couldn't do this that and the other thing. And they were longer appointments because everybody had to, you know, everything was they were doing less appointments and less stays with less people.
Tim Fitzpatrick: Yup. Oh, man. There's guys just reach out to Jamie, please.
Jamie O'Kane: I'd like to be like, it's super easy.
Tim Fitzpatrick: Yeah.
Jamie O'Kane: Nothing is ever super easy.
Tim Fitzpatrick: No, but there are a lot of businesses out there that obviously qualify for this that have not taken advantage of this. Just go to Abundant Beans dot com forward slash erc and have Jamie do a review for you to find out whether you qualify. And coming out of that review, you guys do a deep enough dive where you can give them a fairly good idea of what they qualify for correct?
Jamie O'Kane: Yeah. So we're doing, I'm an accountant. I have spreadsheets like, I'm doing a very in-depth analysis, generally. We're giving them a very solid estimate of what they think they can qualify.
Tim Fitzpatrick: Okay.
Jamie O'Kane: Our clients that we just did $189,000. I quoted him 180. I'm always going to under, quote, because I always want it to be more than I think it's going to be. I do that with tax planning to, you know, under promise over deliver.
Tim Fitzpatrick: That's right. Under promise over deliver. So any last-minute thoughts you want to leave us with on this employee retention credit program.
Jamie O'Kane: Yeah. So there's also a startup recovery credit that is an additional provision under this that is available for people who started up after, I can't remember the dates are, but it's early 2020. If you have started business or you started a business and have another business, there's an available credit for third quarter and four quarter of 2021. Basically, it's just another way to qualify, and it's up to $50,000 per quarter. So up to $100,000 in credits for those quarters. If you started a business in 2020, if you have other businesses or whatever, there's aggregations and stuff and things. But basically, if you started a business anytime between now, tomorrow and early 2020, you might be able to qualify under that provision as well.
Tim Fitzpatrick: Okay. Awesome. I love it. Jamie, thanks for taking the time.
Jamie O'Kane: You're welcome. Thanks for having me.
Tim Fitzpatrick: Yes. People just reach out to Jamie. I want you to put more money into your pocket.
Jamie O'Kane: That's what we do over here.
Tim Fitzpatrick: Yes, I can vouch for Jamie 100%. She is not a snake oil sales person.
Jamie O'Kane: Now we talk to around here.
Tim Fitzpatrick: Look, just do a Google search on employee retention credits. See what comes up. Reach out to Jamie and she'll fill in on all the other nitty-gritty details of this. So thank you for tuning in. Again, I'm Tim Fitzpatrick with Rialto Marketing. If you are struggling with your marketing, you're not sure what that next right step is you're trying different tactics and nothing seems to be working. Hop on over to our website, Rialto Marketing dot com that's R-I-A-L-T-O Marketing dot com. Click on the get a free consult button. Guarantee you will get a ton of value from that call and have some clarity on what your next steps need to be. Thanks for tuning in until next time. Take care.
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About the Host Tim Fitzpatrick
Tim Fitzpatrick is the President of Rialto Marketing. At Rialto Marketing, we help service businesses simplify marketing so they can grow with less stress. We do this by creating and implementing a plan to communicate the right message to the right people. Marketing shouldn't be difficult. All you need is the RIGHT plan.