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Small businesses that have been buffeted by the pandemic, inflation and shipping woes have another challenge to add to their plate: taxes.

Tax season can be complicated for everyone, but as the April 18 filing deadline looms, small-business owners, contractors, entrepreneurs and others face a raft of ever-changing rules and regulations.

Plus, many are dealing with delayed returns and refunds from prior tax periods. The Internal Revenue Service has warned of a backlog and says more delays are to be expected.

“It’s worse this year than last year,” said Gene Marks, owner of The Marks Group, a small business consulting firm in Bala Cynwyd, Pennsylvania. “It seems to get worse every year, and this year definitely worse than it’s been in prior years.”

The IRS said earlier this month it was hiring 10,000 workers to deal with a backlog of 23 million items triggered by limiting operations during the coronavirus pandemic. But with understaffing at both the federal and state government levels, CPAs have found it difficult to reach anyone if problems or questions arise.

“I’ve never seen this in my career, they’re all understaffed and all behind,” said Scott Orn, chief operating officer for the human resources and accounting startup Kruze Consulting.

Companies should keep an eye on their cash flow and make sure they have enough on hand to make more tax payments, if necessary, to avoid penalties.

“This year, there will be some surprise profitability, with companies ending up with bigger tax bills than they thought,” Orn said. “That’s actually a good thing. The thing to worry about for small business owners is making sure they have the cash-flow support to estimated tax payments – it could surprise you.”

Finally, small businesses should keep in mind any money received via the Paycheck Protection Program or other COVID-related programs does not count toward gross income at the federal level. Unlike other types of loans, PPP loans are tax-exempt whether or not they were forgiven. Businesses may have to report some information about the loan if it was forgiven and if they are deducting related expenses.

Small Businesses Face Tax Headaches on Top of Pandemic Woes

by The Associated Press time to read: 1 min
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