Let’s be honest: If you’re reading this, you are not in the same place financially that you were two years ago.
In fact, chances are, you’re just beginning to start the climb back up. We can’t think about our companies in the same way we did in 2019, when the world was our oyster and the sky was the limit.
That’s not to say you can’t be successful! But it’s important to make use of the new tools, knowledge and wisdom we’ve gathered over the past nearly two years.
One great option is to connect with a trusted CPA or other expert who can help you not only with taxes, but with finances year-round. To get you started on the right foot, we spoke with Bill Caldwell, CEO of Caldwell CPAs to get his advice from the trenches:
Keep costs low. Now’s the time to look at unnecessary overhead and other redundancies. Maybe you don’t need to fly across the country for a couple meetings—Zoom will do just fine. Instead of spending time and energy on running group payment portals, rely on professionals and established resources, such as GroupCollect. Outsource bookkeeping to professional CPAs. You don’t have to always be the expert.
The PPP is an easy lifesaver. “So far in the travel industry, I have yet to see one PPP loan that has not been forgiven,” Caldwell said. “That was a free money infusion right into the artery.” If you haven’t taken advantage of it yet, do so now!
The Employee Retention Credit (ERC) is an overlooked lifesaver. The ERC presents an opportunity to get $33,000 per person by the end of this year, for essentially any business with employees making at least 10 grand a quarter. However, the fourth quarter of this year’s ERC may be eliminated due to the new infrastructure bill. Time will tell! Regardless, if your business is less now than it was in 2019, you should be eligible—that applies to nearly everyone in the industry.
Make the most of your returns. Caldwell says if companies are operating at losses, then the owners have an opportunity to carry back that 2020 loss and get some taxes back from 2018 and 2019. Let’s say you had a $100,000 loss in 2020—not tough to do—and you don’t have any other income. On your personal return now, you’ve got a negative income of that $100,000. Because it’s a business, you can carry that $100,000 to your 2018 personal return and get refund taxes. Ta-da!
Cash is king. If you want to prepare for future disasters and cancellations, it’s crucial to keep cash available, as well as keeping lines of credit and other opportunities to get cash available. “As we start to open up the doors again, restoring savings and opening up lines of credit is a really big deal.”
Prepare for refunds. “Now is a wonderful time to start to have conversations about best practices on how to deal with the refunds from an accounting point of view.” The pandemic was devastating to some of Caldwell’s clients, not just because of the lack of business, but the necessity of refunds. Some clients had to go in and remortgage their homes in order to get the funds to do that. And then some just went under, and no one got refunded. You don’t want to be in any of those positions, or for your own clients to have to deal with all that, so prepare your plans now.
Stay positive. Caldwell—who also works with other industries outside of travel—said that what he’s really learned from the past two years is how resilient and optimistic that travel industry is. “They are the most optimistic group of people I have ever met. And when the world was falling apart, they were there. They were smiling. They were talking about what they were building, and rebuilding their infrastructures, and talking about what they were going to do. None of my other industry clients shared that optimism.
“So, the optimism of that industry just warms my heart. And I am so proud to be just an ancillary component to it.”