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Main Street businesses hold their breath at every administration transition, and this one is no different. Business owners in Indianapolis, IN, wonder what the Biden stimulus plan means for small businesses. This article includes an overview of what the plan entails, how it could impact small businesses, and the likelihood of its passing. Edgewater CPA Group is available to help small businesses navigate the pending bill, along with other bookkeeping services.
What the Plan Entails
Biden’s “America Rescue Plan” comes on the heels of the $900 billion relief package passed by Congress in December. December’s package included $284 billion in available loans to small businesses, in addition to the $2 trillion plan passed in March 2020. The renewed Paycheck Protection Program is now available to small business owners. The new, proposed plan outlines $1.9 trillion in spending, proposing $15 billion in grants and $35 billion to support small business finance programs. The plan extends paid family leave through September 30, 2021. Additionally, it now requires companies with more than 500 and less than 50 employees to participate, whereas the previous plan did not. A recent CNN article states that companies with less than 500 employees will be reimbursed. The article doesn’t make the same claim for companies with more than 500 employees. Finally, the plan calls for a $15-per-hour minimum wage, which includes tipped employees. Thus, those earning the current minimum wage of $7.25 per hour would more than double their hourly rate. Servers would jump from $2.13 an hour to the new amount.
How the Plan Could Impact Small Businesses
On the one hand, this plan provides access to cash infusions to help businesses stay afloat. Additionally, the consensus seems that businesses can still write off items like mortgage interest and utilities even if PPP funds were used for those expenses. On the other hand, the minimum wage hike could mean the death knell for businesses who cling to their existence, especially restaurants. Restaurants in states who have imposed higher minimum wages have increased prices and eliminated jobs to compensate for the adjustment. Large companies and multinational corporations will likely use automation and robotics to replace some labor. In Indianapolis and Carmel, IN, businesses should partner with a payroll services provider, professional bookkeeping, and business tax services provider, who stay on top of this pending legislation.
The Likelihood of the Bill Passing
It is possible but not probable that the bill gains enough support for Congressional approval. The Senate would need all Democrats plus ten Republicans to support it. Even Democrat Joe Manuchin balks at portions of the bill. Senate Democrats could leverage the “budget reconciliation” process to fast-track the bill without the necessary votes, but that would discount some of its provisions. Experts are divided on whether or not the plan will pass; only time will tell.
Help for Indiana Businesses
Many small businesses continue to struggle as the pandemic unfolds and a new administration takes office. Whatever changes exist in the pipeline, businesses must have their bookkeeping in shape and understand tax implications. Call Edgewater at (888) 317-4835 or schedule a consultation online to determine how these changes impact your business and how we can help.