At Tom Vignali CPA, Inc., we have worked extensively with our clients to address the devastating impact that COVID-19 has had on business finances. The immediate needs resulted from business suspension, partial or complete shutdown, and/or closure. We developed short-term plans and tactics to address the loss of business revenues. In some instances, this required the partial or complete closure of the business for a period of time, the partial or complete loss of a client’s customer base, and the need to fund short-term financial obligations to maintain some sort of viability to get to “the other side” of the COVID-19 pandemic.
Helping clients maintain viability
We were able to assist our clients with obtaining SBA Economic Injury Disaster Loans (EIDLs), Payroll Protection Program (PPP) loans, business loan extensions/suspensions, and a variety of other funding and grant programs. These loans and programs were instrumental to enabling clients to maintain financial viability.
With the onset of the pandemic, it was unknown how long or how extensive the impacts on businesses would be, but the immediate effects were devastating. For some of our clients, the impact resulted in a partial or complete loss of revenues, whereas for other clients there was no negative impact, and for others there was an opportunity to provide additional services and grow their business. Each client required an operational and financial plan that met their specific needs.
Short-term fixes give way to long-term planning
As time moved on and the pandemic continued, short-term plans began to convert into medium-term plans. Sources of funding and disaster assistance designed to meet immediate needs were exhausted. When the pandemic passed the six-month mark, it became clear that business as we knew it had been changed for the long term, requiring significant long-term plans and adjustments.
For some of our clients, we have leveraged opportunities to expand their business activities, revenues, and profits. For others, we have adjusted business activities to serve either a reduced or newer customer base. Each industry sector required a specific set of strategic goals and objectives. What was an urgent need in March 2020 has become a totally different requirement as we approach the fall. Short-term fixes and adjustments have run their course. It is clear that the COVID-19 pandemic will have a long-lasting impact on business, as federal, state, and local governments forecast pandemic-related rules and regulations for months to come.
What hasn’t changed, even in the pandemic
Despite all of the changes that have transpired during the past six months, some things remain the same:
Tax obligations: Federal, state, and local tax obligations remain in effect. Some changes and adjustments have been made to various tax obligations, but the basic tax obligations remain intact. Tax filing obligations remain in effect, although there have been some extensions to filing deadlines. Reporting changes regarding EIDLs and PPP loans will need to be addressed.
Debt service: Current loan payments might have been suspended for a short period of time, but eventually debt service payments will be required on a current basis.
Vendor debt (A/P): Although you may have negotiated a suspension of payments or extended terms, eventually a permanent arrangement will need to be established.
Rules & Regulations: Most federal, state, and local rules and regulations regarding the operation of your business and human resources will remain in effect. There have been some modifications and some additional pandemic-related regulations that you must comply with.
Financial Accounting and Reporting: Reporting requirements for tax purposes and lenders remain in effect. Now more than ever, accurate and periodic financial statements are critical to the continued viability of your business. The financial reporting process is critical in assessing the performance of your business and your ability to address current and potential risks.
What has changed
The things that have changed due to COVID-19 are too numerous to list here and different for each industry. However, some of the issues are related to:
Occupancy capacity for the hospitality industry (restaurants, bars, event facilities)
Product lines / services / sourcing
Customer base (reduction, expansion, changes, new)
Customer transaction processes
Marketing (format, venue, social media)
Financing (existing, new)
Regulations (pandemic-related rules and regulations)
Health requirements
Human resource requirements
Helping clients meet current and future needs
The COVID-19 pandemic has drastically changed many of the ways we do business. At Tom Vignali CPA, Inc., we have worked diligently with our clients to provide them with the plans and tools necessary to mitigate the negative impacts of this pandemic. Accurate and timely financial information and reporting have allowed us to provide our clients with realistic and aggressive plans to meet current and future needs and risks.
If you would like to further discuss this issue or any other accounting issues, don’t hesitate to contact us at: Tom Vignali CPA, Inc.
Contact Us:
Thomas W. Vignali CPA Inc.
118 Point Judith Road
Narragansett, RI 02882
T: (401) 415-0798
tom@tomvignalicpa.com
www.tomvignalicpa.com
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