Business owners can now have peace of mind after Governor Gavin Newsom signed a bill that conforms state law to federal law concerning taxes on loans.
For entrepreneur Belen Sanchez, this news is exciting.
She's been an insurance agent for over 20 years and a broker for four.
Her business, Belen Sanchez Insurance Company, is one she's poured her heart into.
"I think there is a lot of pride in being an entrepreneur, and a lot of people just want to continue with their business even if it takes a loss," she said.
During the pandemic, staying afloat took double the effort, posing challenges like losing employees and customers.
The only thing saving her was federal and state grants like the PPP loans under the Cares Act and many others.
"All of that was able to help me hire people and keep the business going. Without that, I don't know where I would be," said Sanchez.
But along with that income came worry.
"A lot of us thought, 'Well, we are going to have to pay all these taxes on grants and money the government has given us, but we don't have money, so how are we going to pay the taxes?'"
SBDC Consultant Santino De La Cruz says under federal law, people don't have to pay taxes for all forgiven loans, and now business owners can take a sigh of relief when it comes to state taxes since Governor Newsom passed Bill A-B 80.
"It's going to allow businesses to use the grants they might have received to deduct the expenses that they paid with the funds," he said.
But this question might linger: what if you already filed your 2020 taxes?
De La Cruz says there is a way to change them and says final guidelines are still in the works but should be released soon.
"They will be able to go back and amend their taxes and take advantage of that," said De La Cruz.
His hope is for small businesses like Belen's Insurance Agency to continue getting some much-needed support.
For questions regarding your taxes, you can contact SBDC at (559) 324-6403 or email them at firstname.lastname@example.org
Peace of mind for small business owners regarding state taxes
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