How the Government Shutdown May Affect Your Business
January 30, 2019 by Gordon Advisors
Businesses Are Tightening Expenses and Hiring
The most obvious businesses affected by the shutdown are those that directly support or are contracted by government agencies, and of course the 800,000+ federal workers currently furloughed or working without pay. Beyond this group, thousands of ancillary businesses and individuals are suffering some hardship as well. Many businesses rely on government tools and websites, government programs and processes, government office proximity, acquiring loans – the list goes on and on – to keep their businesses operating smoothly.
Also at-risk are business protections offered by the government, including the FBI cyber security professionals, U.S. trade protection groups, Department of Agriculture and food quality inspection. The Associated Press writes about the ripple effect occurring across the nation. Businesses sentiment is reaching new lows and slowing hiring. Small businesses are delaying to take growth steps or acquire SBA loans. Fortunately, despite rumors of the next “recession,” economic experts say it’s unlikely, and businesses are urged to continue hiring and maintain business as usual.
Put Away Your Stamps and That Paper Tax File
Despite short staffing, USA Today and other sources report that tax returns will likely not be delayed, but they also strongly recommend avoiding the paper filing process.
“Almost nine in 10 tax returns were filed electronically last year, according to IRS statistics, while eight in 10 refunds were distributed to taxpayers by direct deposit. Nearly all tax professionals and tax preparation software will file your returns electronically,” USA Today reports.
As long as an error or glitch doesn’t occur and your file doesn’t require intervention, most businesses (and individuals) will likely notice your tax process is unaffected. If you do in fact represent the 10% of people who still file paper returns, let this be a strong recommendation to streamline your tax process and file digitally this year.
SBA Loan Applications Delayed
The Small Business Administration is also halting small business loans in progress, and some cities report they are “piling up.” If you are a small business with an SBA loan, be sure to continue paying your loans on your regular schedule, as it is expected, or you could damage your business credit or chances of future loan borrowing.
The SBA is not accepting new loans and more than $2 billion in SBA loans are on hold — and will remain on hold — until the government shutdown ends. There’s not much you can do to advance processing, but you can continue negotiations to keep deals alive, or if the need is more urgent, consider private loan sources.
What to Expect When The Government Re-Opens
The shutdown is bound to end soon, and government services will return, albeit slowly. Taxes will be repaid, but special cases or files requiring intervention could be delayed. If your business is currently affected by the shutdown, Gordon Advisors expert business consultants and accountants can help you wade through the transition. Contact Gordon Advisors today to learn more about business accounting, compliance and consulting services.