The federal government shut down on December 22, 2018, forcing a range of government offices to cease or reduce their operations. The shutdown has now lasted over a month and is the longest in U.S. history. Whether or not it ends soon, your small businesses might be suffering its impact.
There are several ways the shutdown might be hurting you:
1. You rely on the Small Business Administration (SBA) for loans and other services.
Did you plan to cover operating expenses with an SBA loan? Were you hoping one could fuel new initiatives this year? For now, you have to look for money elsewhere. Even if you don’t have a loan stuck in processing because of the shutdown, it could take the SBA months to address its backlog as soon as the agency reopens.
2. You hoped to file taxes early because you’re counting on refunds.
Contrary to early reports, you can submit tax returns and get refunds during the shutdown. However, you might not receive them as quickly as you’d like. Nor could you have all your tax-related concerns addressed. The Internal Revenue Service (IRS) is continuing many of its operations, but their employees are not working at full strength and are working without pay.
3. You depend on federal organizations or employees for income.
Let’s say you run a store, shop, café, or restaurant near a national park or historic site in Nashville. You would not only see fewer customers because these tourist destinations are closed. You could also expect little revenue from federal employees themselves, as they have no disposable income during the shutdown, and aren’t dropping by during their lunch break.
4. You need other federal government services to keep daily operations rolling.
Perhaps you need a passport or visa for a business trip. Perhaps you need the input of food, drug, or environmental inspectors. Perhaps you need federal verification tools to screen prospective employees. With their respective agencies closed or impaired, it is trickier to accomplish your tasks as planned.
How can a CPA help?
Loans, taxes, revenue, payroll—as the above-mentioned scenarios show, the shutdown can hit your finances hard. Mitigate the impact by having your CPA do the following:
- Determine how exactly the shutdown affects your books and how these effects can linger for the rest of the year.
- Assess your balance sheet and cash flow, then suggest how you can manage your finances to compensate for the loss or delay of income.
- Handle tax filing requirements as necessary, so you can avoid penalties or acquire refunds to support your finances.
- Address any other concerns you may have about tax filing, in the absence of IRS agents who can answer your questions.
Evan Hutcheson, CPA, LLC can assist with these and help in other ways as you navigate, then recover, from the shutdown.
Sources:
Three Reasons the Government Shutdown Is Hurting Small Businesses, Forbes.com
9 Ways the Government Shutdown Could Affect Your Small Business, INC.com
Will the government shutdown affect tax refunds and returns? Maybe not. Vox.com
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