With the coronavirus on the rise and the possibility that the State of California may impose new stay at home restrictions, on Monday Governor Newsom announced a number of relief options for small businesses.
Main Street Small Business Tax Credit
The California Department of Tax and Fee Administration began accepting applications on December 1st for a tax credit available for small businesses that meet the following criteria.
- Employed 100 or fewer employees as of December 31, 2019; and
- Suffered a 50% decrease or more in income tax gross receipts (generally, all income less returns and allowances), when comparing to 2nd Qtr 2020 to 2Q 2019
Sales Tax Relief
The Governor directed the California Department of Tax and Fee Administration to provide sales tax relief to businesses. The tax deferment up to $1 million is automatic; no need to apply. Businesses can use the money they would normally pay in sales tax to float other expenses, interest free for three-months. This is how the sales tax relief would apply:
- Automatic three-month extension for taxpayers filing less than $1M in sales tax
- Extends the availability of existing interest and penalty-free payment agreements to companies with up to $5 million in taxable sales
- Provides expanded interest free payment options for larger businesses particularly affected by significant restrictions on operations based on COVID-19 transmissions
New Covid Relief Grant for Small Businesses
The Governor announced the creation of a $500 million COVID Relief Grant administered by the California Office of the Small Business Advocate (CalOSBA) at the Governor’s Office of Business and Economic Development for small businesses that have been impacted by COVID and the health and safety restrictions.
Funds would be awarded to established networks of Community Development Financial Institutions to distribute relief through grants of up to $25,000 to underserved micro and small businesses throughout the state by early 2021. Non-profits would also be eligible for these grants. CalOSBA is establishing the program and will make it available to small businesses as soon as possible – for updates on availability visit the links below.