Here’s What Happened in the World of Small Business in June 2021
Here are five things that happened this past month that affect your small business.
1) There’s a tight labor market nationwide these days, and it’s giving workers more leverage.
The economy’s recovery is giving low-wage workers more leverage, as “ballooning job openings in fields requiring minimal education” combine with a shrinking labor force. For some, this means higher wages, bonuses, or competing offers. “Average weekly wages in leisure and hospitality, the sector that suffered the steepest job losses in 2020, were up 10.4% in May from February 2020.” (Source: The Wall Street Journal)
Why this is important for your business:
If you operate in an affected industry, you may already be experiencing some of these hiring difficulties. You aren’t the only one.
2) A surge in inflation may be around for a while – but it’s temporary.
Inflation has been a hot topic in the news this month, as the US sees rising prices on various consumer goods. According to two Federal Reserve officials, this period of high inflation “may last longer than anticipated but should still ease over time as the economy settles back to normal.” (Source: Reuters)
Why this is important for your business:
You may be feeling the pinch of higher prices from your suppliers, or perhaps you’ve had to raise prices for your customers to keep up with rising costs. Keep a close eye on this.
3) Business travel could be on the rebound.
Travel is way up nationwide, but much of it is leisure – for now. Signs indicate that business travel will continue to bounce back after more than a year of lockdowns and travel restrictions. The CEO of Hyatt Hotels believes things will be closer to normal in the autumn. “Most of the bankers, consultants and lawyers that I’m talking to are gearing up to be back on the road, so I think that will really take hold in a more affirmative way in the fall,” he said. (Source: CNBC)
Why this is important for your business:
It’s time to decide whether your business will resume travel for employees. If you’ve gotten by just fine with Zoom meetings over the past year, maybe you’ll decide not to travel as often going forward.
4) With no more PPP, struggling businesses must find funding elsewhere.
The federal government’s Paycheck Protection Program (PPP) has completed its second round, so businesses still struggling from effects of the pandemic are looking for funding elsewhere. “Small business loan approval percentages at big banks... climbed slightly from 13.4% in April from 13.5% in May 2021… Small banks’ approvals jumped higher from 18.2% in April, to 18.7% in May.” (Source: Forbes)
Why this is important for your business:
If your business is still reeling from the economic impacts of COVID-19, new PPP funds don’t look likely. You’ll have to seek funding elsewhere.
5) G-7 countries have reached a historic deal on global corporate tax reform.
Finance ministers of the G-7 countries – Canada, France, Germany, Italy, Japan, the U.K. and the U.S. – “have backed a U.S. proposal that calls for corporations around the world to pay at least a 15% tax on earnings.” If finalized, this would “represent a significant development in global taxation.” (Source: CNBC)
Why this is important for your business:
Companies with international operations would see changes to their taxation under this proposal – but it’s still a long way from being adopted. Stay tuned.
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Frequently Asked Questions
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You can prepare your taxes yourself, especially if your business is simple.
But once you have contractors, employees, business loans, equipment purchases, mileage, mixed expenses, or growing revenue, things get more complex. At that point, tax preparation becomes a way to make sure your business is reported correctly, your deductions are handled properly, and your records can support what you file.
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Send anything that shows what your business earned, spent, bought, paid, borrowed, or changed during the year.
That usually means your income records, bank statements, credit card statements, payroll reports, contractor payments, loan documents, mileage records, and prior-year tax return. Also tell me about anything unusual, such as buying a vehicle, hiring someone, opening a new location, or taking out a business loan.
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Messy books can slow things down. If expenses are in the wrong categories, transactions are missing, or personal and business spending are mixed together, your tax return may not show the right profit. We may need to clean things up before filing, so your return is accurate and easier to support.
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Possibly, if it was truly for your business and you have proof.
Still, it is much better to avoid this when you can. A separate business bank account and business credit card make everything cleaner. They save time, reduce confusion, and make your records much easier to defend if anyone ever asks questions.
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Most small business owners can deduct ordinary business expenses like software, advertising, supplies, insurance, rent, payroll, contractor payments, professional fees, travel, and some vehicle costs.
The question I usually ask is simple. Was this expense clearly for the business? If yes, we can look at how it should be handled. Personal expenses should stay personal.
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