Entrepreneurs have had to quickly realize the importance of adequate financial record keeping during the current coronavirus pandemic.
Many small business owners who desperately needed funding from programs such as the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) to maintain their business operations were denied due to lack of business processes to manage their payrolls, inadequate tracking of business expenses and lack of pre-existing relationships with financial institutions. These problems run across the spectrum of all small businesses but especially are detrimental to women run businesses and entrepreneurs of color. The New York Fed reported that black businesses were hit harder due to the pandemic and needed more aid since many of the businesses are financially fragile and, in the restaurant, and retail industries.
Some small businesses who managed to obtain PPP funds will not be eligible for forgiveness due to lack of sound accounting and financial practices to segment funds and clearly identify appropriate uses of funds in line with government regulations. Firms which are not able to report their payroll expenses run the risk of audit problems and may be required to repay funds.
Small businesses who have employees need to investigate the benefits of payroll reporting programs and providers to manage their reporting, tax filings and human resources benefits tracking.