Preparing your business for 2022
By Christopher Branson, Chair of Business Law Group at Murray Plumb & Murray
As 2021 is wrapping up, many businesses are thinking about how to plan for the year ahead, and that planning looks a lot different today than it did just a few short years ago. With businesses still feeling the effects of the pandemic, there are certain measures employers can take to be well-positioned for what comes next.
Consider opportunities for financial relief.
Most businesses could use additional financial support this year, and there are still opportunities to take advantage of pandemic-related assistance programs. The deadline for submitting a PPP loan forgiveness application closes 10 months after your covered period ends, so be sure to file that paperwork if your window is still open.
You may also want to take another look at the Employee Retention Tax Credit. The ERTC provides a tax credit to businesses that retained their workforce in 2020 and 2021. When this tax credit was originally created in 2020 as part of the CARES Act, businesses were not eligible to receive this tax credit if they also received a PPP loan. However, in 2021 Congress updated the law to permit “double dipping” – now, even if your business received PPP funds, it may still be eligible for the ERTC. Generally, there are two ways to qualify for the credit: either by demonstrating a reduction in revenues as compared to 2019 or being subject to a government order that restricts commerce in what is termed a ‘business disruption.’ Credits range from $5,000 per employee for 2020 to $7,000 per employee per quarter for 2021.
Make sure your policies and employment documents are up to date.
Before heading into the new year full steam ahead, take a moment to review the policies you have in place and ensure any documents are up to date. You may need to update wages to comply with increases in minimum wage, which will go from $12.15 to $12.75 per hour in Maine beginning January 1, 2022.
Additionally, you’ll want to review vacation policies to ensure they comply with the earned paid leave statute. Under Maine’s Earned Paid Leave law, employees working at a company with more than 10 employees accrue 1 hour of Earned Paid Leave for every 40 hours worked, up to 40 hours a year. This time can be used at the employee’s discretion, including reasons such as an emergency, illness, sudden necessity, or planned vacation.
Consider what your work environment will look like in the year to come.
As employees become used to non-traditional work environments, think about what that means for your business moving forward. It might make sense to reconsider workspace needs and expenses and determine if investing in a hybrid work environment makes the most sense for the future of your business. Some employers have been paying for little used office space for nearly two years as employees opt to work remotely. If you haven’t already, it makes sense to consider this as a long-term option for your business.
Prepare for a possible increase in corporate taxes.
The so-called social safety net legislation currently pending in Congress, if passed, could result in an increase in the corporate tax rate. At one time, there was discussion of a new top corporate rate of 26.5 percent. A more recent proposal under consideration includes a 15 percent minimum corporate tax. In any event, the possibility of an increase in corporate taxes is leading many to make adjustments now. To the extent a corporation can defer expenses to next year or recognize income this year, that may not be a bad idea.
If you need additional guidance in preparing your business for what comes next, our business and corporate law attorneys are available to provide support.