What is it

This program will provide financing of up to $50,000 to eligible micro businesses in New Jersey whose annual gross revenues are $1,500,000 or less, and has 10 or fewer full-time employees at the time of application and three month prior to the date of application. Those who are eligible to apply for the loan include for-profit, non-profit, and home-based businesses registered to do business in New Jersey with a business location, including a home office, in New Jersey. The program has recently been updated to be broadened to enable support for more micro businesses. This consists of offering flexible loan terms and a generous forgiveness component. These changes have made the program more flexible and accessible to smaller, or micro, businesses.

What is required

To qualify for the Main Street Micro Business Loan, you must be a nonprofit, for profit, or home-based micro business that meets the following requirements:

• The annual gross revenue for the most current fiscal year must be less than $1.5 million
• At least one owner must have a credit score of at least a 600 from at least one of the major three credit reporting agencies – Equifax, Experian, or Transunion
• No more than 10 full-time employees who all must work in New Jersey as evidenced by WR-30 filings; part-time employees do not count
• Must be legally registered to do business in New Jersey and have a business location in New Jersey
• The business must have been in operation for at least six months prior to the date of application
• Must be in good standing with the New Jersey Department of Labor and Workforce Development (LWD) and New Jersey Department of Environmental Protection when applying for the loan
• Current tax clearance prior to approval must be provided to prove the applicant is in good standing with the New Jersey Division of Taxation

When completing the application, some sections will only appear if necessary based on prior responses. The process of applying will look different depending on your business. You will need to provide support of the use of funds with the prior three years of tax returns is available and if this is not possible for you, you will need to provide a financial profit and loss statement.

There is a nonrefundable fee of $100 at the time of application and a $400 closing fee. If you are paying via check, the application will be on hold until the state processes the check. Paying online will help expedite the review process.

Eligible vs Non-Eligible Uses

Eligible Uses

• Future operating expenses, which may be working capital to fund such future operating expenses
• Future inventory expenses
• Future purchases of equipment as long as installation and construction costs do not exceed $1,999.99

Non-Eligible Uses

• Refinancing of existing debt
• The reimbursement for expenses, costs, and/or purchases already paid by the business
• Personal non-business obligations or costs incurred by related entities
• Construction
• Equipment requiring installation or construction costs in excess of $1,999
• Rolling Stock – no cars, trucks, or vans can be purchased
• Home-based businesses cannot use loan proceeds for any residential cost; home mortgage, lease payments, etc.

Rates and Terms

The Main Street Micro Business loan has a standard 10-year term with a 2% interest rate that will be set at approval. During the first year after closing, no payments or interest will accrue and payments of principal and interest will begin year 2.

No payment term amendments are allowed before the end of the 5th year. All other modifications that are unrelated to the payment terms may be permitted throughout the term of the loan. If any payment terms are modified after the 5th year, the business will no longer be eligible for forgiveness.

To qualify for forgiveness for the balance of the loan at the end of the 5th year, the applicant must not be in default, current on all loan payments with no delinquency of more than 90 days, and be able to certify that they are still open and operating as detailed in the loan agreement

An informational session was held on Monday, September 26, 2022. If you were unable to attend and are looking for more information, visit the NJEDA’s page on the Main Street Micro Business Loan Program.

Cannabis businesses are currently not eligible for this loan program, but a program is currently being worked on to provide more options for cannabis dispensaries and businesses. To learn more about cannabusiness in New Jersey, sign up for the free virtual panel, The Business of Cannabis in South Jersey.

If you have any further questions regarding the Main Street Micro Business Loan, whether your business qualifies, and seeing if it is the right fit, contact an Alloy Silverstein advisor today!

The post Main Street Micro Business Loan Program Open for Applications October 6 appeared first on Alloy Silverstein.

Of the $15 million, 40 percent ($6 million) will be reserved for businesses and nonprofits located in Opportunity Zone eligible census tracts.

NJERA Small Business Improvement Grant (SBIG): The Details

Businesses may be reimbursed for 50% of eligible total project costs up to $50,000 for capital improvements, or purchase and/or installation of new furniture, fixtures, and equipment (FFE).

Only one award is permitted per EIN for the life of the program. Entities operating in multiple locations under a single EIN are limited to one application under the sole EIN, but a single application may include project costs across multiple locations.

Project must have commenced on or after March 9, 2020 and within the 2 years prior to your application date. Payment for the submitted costs must have been made within 2 years prior to your application date. You must have documentation to substantiate costs.

Grant recipients must remain in the location for at least two years for grants up to $25,000, or at least four years for all other grant award amounts.

Eligibility for the Small Business Improvement Grant

• Open to nonprofits and commercial small businesses (must meet SBA definition of a Small Business – determined by employee count and NAICS code).
• Total project cost must be at least $5,000.
• Applicant must rent or own facility being improved.
• Eligible applicants must be in good standing with Department of Labor and Department of Environmental Protection, are not in default of any other EDA or State assistance, and must provide a current tax clearance certificate prior to approval.

Who is Not Eligible?

Home-based businesses are not eligible for reimbursement for renovation or improvement projects, but may only receive reimbursement for new equipment purchased and/or installation. For purposes of home-based businesses, allowable furniture and equipment must be used exclusively for the business and must not be attached to the building.

Landlords are also not eligible. However, if applicant leases the space, then landlord’s permission to make improvements is required.

Per the NJEDA, “capital improvements” shall not include site acquisition; vehicles and heavy equipment not permanently located in the building, structure, facility, or improvement; any capital improvement for which the business received any grant financial assistance from any State source; costs of a lease, including any capital lease; or any soft costs. Any software required to operate the new equipment would not be considered eligible for reimbursement.

Grant Application

CLICK HERE TO APPLY.

Note, there is a $100 approval fee, payable at the time of approval and prior to execution of the grant agreement.

Click here for the NJEDA webpage with an applicant checklist, FAQ handout, and more details on the Small Business Improvement Grant.

As always, Alloy Silverstein is here to help your business learn of these opportunities and from start to finish in the application process. Reach out to an accountant and advisor today to discuss your options.

The post NJEDA Now Accepting Applications for Small Business Improvement Grant appeared first on Alloy Silverstein.

Revised NJ Business Alternative Income Tax Act (BAIT)

In late 2020, New Jersey enacted the Pass-Through Business Alternative Income Tax Act (NJ BAIT) in an effort to work around the $10,000 federal cap on individuals’ itemized deductions for state and local income taxes (SALT). This allowed partnerships, S corporations, and LLCs with at least two members to pay state tax on the entity level so that the owners receive a tax benefit through a deduction against their distributive share of income for federal tax purposes. The owners claim a refundable credit on their personal New Jersey return for their share of the state tax paid.

The new law signed by Governor Murphy this week revises and clarifies the NJ BAIT Act in the following five ways:

1. The source income for the BAIT calculation will be based on New Jersey income, not federal.
2. Permits a three-factor formula for allocation of income to New Jersey for all pass-through entities and clarifies that tax payments made in tiered partnership structures can be applied to upper-tier non-individual entities.
3. Eliminates the need for non-resident withholding on partner income if the entity has a reasonable basis that the BAIT tax will cover the withholding amount required.
4. In event of BAIT overpayment, allows the choice of a refund or application to future estimated taxes.
5. Expands the highest tax bracket to include distributable income in excess of $1 million.

This legislative update increases the number of New Jersey resident business owners that can benefit from the NJ BAIT Act. If you wish to take advantage of this election, contact an Alloy Silverstein tax advisor to help determine if this is applicable to you.

Higher Threshold for Non-Profit Audit Requirement

NJ Bill S844/2533 amends the state’s Charitable Registration and Investigation Act to raise the threshold at which smaller non-profit organizations must file audited financial statements and also allows exclusions of certain non-monetary contributions from the organization’s gross revenue for the purpose of requiring annual disclosure reports.

• Effective immediately, the minimum annual gross revenue required for a not-for-profit to undergo an audit is raised from $500,000 to $1,000,000.
• The bill now excludes non-monetary in-kind donations directly related to the mission of the charitable organization from gross revenue. Examples include food donations for food pantries or supplies for a shelter.
• In addition, for the purpose of determining if an audit is required, gross revenue will no longer include: one-time bequests, fundraising campaigns for capital property in a single fiscal year, the value of services performed by volunteers, or items purchased by other entities for the use of the charitable organization in situations in which ownership of the item is retained by the original purchaser.
• Though an audit may no longer be required, the law does provide that charitable organizations with annual gross revenues in excess of $25,000 but less than $1,000,000, must file an annual financial report that is certified by the organization’s president or other authorized officer.

The intention is that the expenses that would normally be incurred for an audit could otherwise be used to further the charitable mission of these smaller but impactful organizations.

New NJ Misclassification Penalties Effective January 1, 2022

Originally signed into law in July along with a bundle of laws aiming to mitigate employee misclassification, NJ Bill A5892/S3922 instills higher penalties for misclassification if it’s determined through an investigation that the misclassification was a purposeful means of evading payment of insurance premiums. As of January 1, 2022, this law now makes it a violation of the New Jersey Insurance Fraud Prevention Act and is subject to fines starting at $5,000 for the first violation, $10,000 for the second, and up to $15,000 for each subsequent violation.

Should you have questions or need to discuss these matters further, your Alloy Silverstein Accountant and Advisor is just one phone or video call away.

The post NJ Governor Signs New Laws that May Impact Your Business or Non-Profit appeared first on Alloy Silverstein.

New Jersey Businesses

NJ Economic Development Authority (EDA) Grants & Loans

The New Jersey EDA approved a suite of new initiatives designed to support businesses and workers facing economic hardship due to the outbreak of the novel coronavirus COVID-19.

• Small Business Emergency Assistance Grant Program: A $5 million program that will provide grants up to $5,000 to small businesses in retail, arts, entertainment, recreation, accommodation, food service and other services — such as repair, maintenance, personal and laundry services — to stabilize their operations and reduce the need for layoffs or furloughs.
  • Note: The New Jersey Economic Development Authority (NJEDA) will launch the application for its Small Business Emergency Assistance Grant Program on Friday, April 3, 2020 at 9:00 am. A link to the grant program application will be posted on the State’s COVID-19 Business Information Hub.
• Small Business Emergency Assistance Loan Program: A $10 million program that will provide working capital loans of up to $100,000 to businesses with less than $5 million in revenues. Loans made through the program will have 10-year terms with zero percent for the first five years, then resetting to the EDA’s prevailing floor rate (capped at 3%) for the remaining five years.
• Community Development Finance Institution Emergency Loan Loss Reserve Fund: A $10 million capital reserve fund to take a first loss position on CDFI loans that provide low-interest working capital to microbusinesses. This will allow CDFIs to withstand loan defaults due to the outbreak, which will allow them to provide more loans at lower interest rates to microbusinesses affected by the outbreak.
• CDFI Emergency Assistance Grant Program: A $1.25 million program that will provide grants of up to $250,000 to CDFIs to scale operations or reduce interest rates for the duration of the outbreak.
• NJ Entrepreneur Support Program: A $5 million program that will encourage continued capital flows to new companies, often in the innovation economy, and temporarily support a shaky market by providing 80% loan guarantees for working capital loans to entrepreneurs.
• Small Business Emergency Assistance Guarantee Program: A $10 million program that will provide 50% guarantees on working capital loans and waive fees on loans made through institutions participating in the NJEDA’s existing Premier Lender or Premier CDFI programs.
• Emergency Technical Assistance Program: A $150,000 program that will support technical assistance to New Jersey-based companies applying for assistance through the U.S. Small Business Administration. The organizations contracted will be paid based on SBA application submissions supported by the technical assistance they provide.

Learn more here→  and at cv.business.nj.gov →

You can also check out the NJ Emergency Assistance Eligibility Wizard at https://assistance.business.nj.gov/ →

Burlington County, NJ

The Burlington County Bridge Commission and Burlington County Freeholders are offering small businesses located in Burlington County, NJ with working capital loans for up to $10,000 for each job the employer retains, up to a maximum of $50,000. In addition to covering wages and salaries of employees, the loans can be used to pay for inventories, accounts payable and operational activities. Interest rates are 2.4375%, which is 75% of the prime rate currently set at 3.25%, and have a maximum payback period of 10 years. During the COVID-19 pandemic, the Freeholders will: (1) Expedite the review of loan applications, (2) expedite settlement of loans for eligible applicants, and (3) waive all application fees.
Learn more→

Pennsylvania Businesses

Philadelphia Small Business Relief Fund: Loans & Grants

Administered by the Department of Commerce and Philadelphia Industrial Development Corporation (PIDC), the Philadelphia COVID-19 Small Business Relief Fund offers one-time grants or zero-interest loans to Philadelphia small businesses impacted by the COVID-19 pandemic. The Relief Fund includes three programs (and you can apply for all three in one application). A committee reviews all applications on a weekly basis and, after approval and completed paperwork, funds can be available in 1-2 business days.

• Microenterprise Grant: A $5,000 grant for Philadelphia micro-businesses with an annual revenue under $500,000. To apply, provide a signed tax return and a description of the impact of COVID-19 on your business, along with your recovery plan.
• Small Biz Grant: Up to $25,000 grant (determined by review of application) for small businesses with annual revenue between $500,000 and $3 million. To apply, provide a signed tax return, 2019 financial statements, proof of insurance, verification of cash flow, and a description of the impact of COVID-19 on your business, along with your recovery plan.
• Small Biz Zero-Interest Loan: A loan for $25,000—$100,000 (determined by review of application) for businesses with annual revenue between $3 million—$5 million. To apply, provide a signed tax return, 2019 financial statements, proof of insurance, verification of cash flow, and a description of the impact of COVID-19 on your business, along with your recovery plan. There are no collateral requirements.

Learn more→

Pennsylvania Working Capital Access

The Pennsylvania Industrial Development Authority (PIDA) launched a COVID-19 Working Capital Access (CWCA) Program for Pennsylvania for-profit businesses with fewer than 100 employees. Businesses can apply for up to $100,000 to put towards critical working capital financing (which for purposes of this program is considered capital used by a small business for operations, excluding fixed assets and production machinery and equipment).

Learn more→

Not-for-Profit Organizations

Southern New Jersey

Community Foundation of South Jersey’s South Jersey COVID-19 Response Fund: The CFSJ’s Response Fund will support local 501(c)3 non-profit agencies as they adapt internally and programmatically to assist neighbors and continue to deliver on their missions during this turbulent time. To do so, CFSJ will award a limited number of one-time program support grants to organizations operating in the Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Ocean or Salem counties. The grant amounts are a minimum of $3,000 to 501(c)3 non-profit organizations providing critical services tied directly to the economic security of South Jersey residents.
Learn more→

South Jersey & Philadelphia Counties

United Way of Greater Philadelphia and Southern New Jersey’s PHL COVID-19 Fund: Eligible 501(c)(3) nonprofits in Bucks, Chester, Delaware, Montgomery and Philadelphia counties in Pennsylvania and Atlantic, Burlington, Camden, Cape May, Cumberland counties in New Jersey can apply for grants, with amounts calculated based on the organization’s operating budget. Grants will be made on a rolling basis to address the most immediate needs first, keeping in mind that some needs likely will emerge over time.
Learn more→

Business Advice You Can Trust

We’re here for you. Contact an Alloy Silverstein Accountant and Advisor for tax and business guidance during these trying times. Contact us today.

The post Additional Resources For South Jersey Employers Impacted By COVID-19 appeared first on Alloy Silverstein.

1. Financial monitoring system.

Prepare a detailed annual budget to establish expense guidelines. Record and allocate expenses to general ledger accounts in the same manner in which they were budgeted.

2. Segregation of duties.

Different people should be given responsibility for authorizing and recording transactions and for maintaining custody of assets. This reduces any one person’s opportunity to both perpetrate and conceal errors or irregularities.

3. Conflict of interest policies and ethics statements.

Many nonprofits have a conflict of interest policy or ethics statement in place. These policies call for employees and officers to disclose any interests they have in companies doing business with the organization. Any contracts entered into with the related parties should be reviewed and approved by board members and officers not involved in the transactions.

4. Controls over cash receipts.

Consider using a bank lock box service to process receipts. In addition, assign someone unrelated to the accounting process to open the mail, restrictively endorse all incoming checks, and prepare a list of the checks received. This list should be compared to deposits made.

When a nonprofit receives numerous cash receipts (such as registration fees at an event or Sunday collections at a church), two or more people should handle and count the cash receipts and certify the total together.

5. Bank statement review and reconciliation.

Reviewing and reconciling bank statements will reveal any unusual cash disbursements or evidence of check fraud. Unopened bank statements and correspondence should be sent to someone outside the accounting function to allow an extra set of eyes to review these critical documents.

Establishing adequate internal control procedures is the best deterrent to internal fraud and embezzlement. Please contact us if you would like assistance establishing or reviewing your procedures.

The post 5 Steps Non-Profits Can Take to Avoid Internal Theft appeared first on Alloy Silverstein.

Provisions within the Tax Cuts and Jobs Act (TCJA) will affect charitable giving and directly impact tax-exempt organizations. Here are some ways we will see these changes.

Effect on Charitable Donors

– Individuals

Individuals can claim an allowable charitable deduction if they elect to itemize their deductions for the tax year. Starting in 2018 through 2025, the percentage limitation on the charitable deduction contribution base is increased to 60 percent of an individual’s adjusted gross income for cash donations to public charities.

Though the increased limit for cash contributions is intended to encourage individuals to provide monetary support, the increased standard deduction amount will reduce the number of taxpayers who elect to itemize and thus reduce tax incentive to donate.

– Estates

The TCJA has doubled the estate tax exemption amount, which potentially could significantly reduce the incentive to make charitable bequests as a way to reduce estate taxes.

– Corporations

Corporations, on the other hand, may increase charitable giving as a result of a lower corporate tax rate.

Effect on Tax-Exempt Entities

– Unrelated business taxable income

Exempt organizations with more than one unrelated business will be required to calculate unrelated business taxable income separately for each unrelated trade or business, and will not be allowed to use business losses from one activity to offset gains of another.

Prior to the TCJA, an exempt organization could use a deduction from one unrelated trade or business to offset income from another thus reducing total business taxable income.

On the other hand, non-profits will pay a new rate of 21 percent on their unrelated business taxable income.

Unrelated business taxable income will be increased by the nondeductible amount of certain fringe benefit expenses paid or incurred by an exempt organization after December 31, 2017. These include qualified transportation fringe benefits, parking facility, on-premises athletic facility.

– Executive compensation

The TCJA establishes a 21 percent excise tax on the compensation paid to a covered employee in excess of $1 million and any excess parachute payments made to certain highly-compensated employees by a tax-exempt organization.

– Investment income of private colleges and universities

A new 1.4 percent excise tax applies to the net investment income of certain colleges and universities that have at least 500 students, are private educational institutions, and have assets with an aggregate fair market value of at least $500, 000 per student.

Alloy Silverstein is proud to have been a longtime partner and ally to many not-for-profits throughout the Greater Philadelphia Region. If you would like to discuss these details more in-depth, please contact us.

Author: Radmila Salmanova

The post Tax Reform’s Impact on Non-Profits appeared first on Alloy Silverstein.

Tax breaks for donating still exist

As before, charitable deductions are only available when you itemize your tax deductions (as opposed to claiming the standard deduction). However, even if you itemized in the past, you may decide not to under current law.

Certain itemized deductions have been reduced or eliminated, while the standard deduction has essentially been doubled to $12,000 for single filers and $24,000 for married joint filers. This means you could donate $10,000 to charity this year without realizing a charitable deduction, if you don’t have other itemizable deductions. The changes are effective for 2018 through 2025.

But don’t give up on donation tax benefits just yet. Depending on your situation, you might boost charitable donations to the point where you will still itemize deductions.

Consider these ideas:

Give away appreciated property.

If you’ve owned the property longer than a year, you can deduct its full current value — instead of your cost — without ever paying any tax on the appreciation.

Use a donor-advised fund (DAF).

With a DAF, you designate charities that will receive contributions from a general pool. You can deduct your lump-sum donation immediately even though money may be paid out to charities over time.

Bunch your donations in years you expect to itemize deductions.

Cut back or skip contributions in some years so you can double your donation amounts for other years.

Roll over funds from an IRA.

If you’re age 70½ or older, you can transfer up to $100,000 directly from an IRA without any tax consequences. You get no tax deduction, but the distribution isn’t taxable either. The payout counts as a required minimum distribution (RMD). In other words, you had to take an RMD anyway, so you may as well give it to charity.

Give us a call if you have questions or would like help with your 2018 charitable giving plan.
Contact Alloy Silverstein for guidance and application to your individual situation.
© MC 2018 | “Tax Tips” are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.

The post Charitable Giving After Tax Reform: Yes, There Are Still Tax Benefits appeared first on Alloy Silverstein.

If your organization ends up missing the due date for filing its return for the third year in a row, the revocation of its tax-exempt status takes effect immediately on the due date of the third-year return, with severe consequences following. Losing your tax-exempt status means donors will no longer be able to deduct contributions to your organization. Additionally, you’ll have to file a federal tax return, such as Form 1120, U.S. Corporation Income Tax Return, and pay any tax due.

To reinstate your tax-exempt status after an automatic revocation, you’ll need to go through the process of filing an application for exemption, in addition to paying a user fee. This is true even if your organization was not originally required to file for exemption. You also have the ability to request retroactive reinstatement by attaching a letter to the application explaining why the required returns weren’t filed. Remember that when you are requesting retroactive reinstatement for your organization you must be able to prove there was reasonable cause for nonfiling. Reasonable cause means you must have exercised ordinary business care and prudence over the entire three-year period but were still unable to file your return.

How can you avoid all this trouble? The good news is that filing is probably much easier than you think. A nonprofit with annual gross receipts of $50,000 or less can file Form 990-N, known as the “e-Postcard.” Form 990-N has eight questions and is filed electronically. Nonprofits with gross receipts of less than $200,000 and assets under $500,000 can use Form 990-EZ, while larger organizations are required to use the standard Form 990. If your nonprofit runs a business to help raise funds, you may also need to file Form 990-T to report and pay tax on income from those sales.
 

To verify that your nonprofit organization is tax compliant, and to mitigate the risk of your tax-exempt status being revoked, do not hesitate to contact the professionals at Alloy Silverstein today. Our professionals are well versed in non-profit tax and accounting procedures and would love to help your organization thrive.
 
Contact us →
 

The post Are you Putting your Non-Profit’s Tax-Exempt Status at Risk? appeared first on Alloy Silverstein.

Net Asset Classes

• Net assets are no longer classified into three categories (unrestricted net assets, temporarily restricted net assets, or permanently restricted net assets).
• Net assets will now be classified as either net assets with donor restrictions or net assets without donor restrictions.
• If the not-for-profit entity has any underwater endowment funds, the ASU requires additional disclosures in the notes of the financial statements.

Liquidity and Availability of Resources

• Additional disclosures are required to provide qualitative information on how a not-for-profit manages its liquid resources to meet cash needs for general expenditures within one year of the balance sheet date.
• Additional disclosures are required to provide quantitative information on the availability of a not-for-profit’s assets to meet cash needs for general expenditures within one year of the balance sheet date.

Investment Returns

• Investment returns must be presented net of all related external and direct internal expenses.
• The disclosure of netted expenses is no longer required.

Expenses

• Expenses must be presented by nature and function.
• An analysis of expenses by nature and function must also be presented.
• Presentation may be done on the face of the statement of activities, as a separate statement, or in the notes of the financial statements.

Statement of Cash Flows

• The statement of cash flows may continue to be presented using either the direct method or indirect method.
• If using the direct method, the ASU eliminates the requirement to present a reconciliation of operating activities.

These changes are effective for annual financial statements issued for fiscal years beginning after December 15, 2017. In other words, if you are a calendar year not-for-profit entity you are not required to reflect ASU 2016-14 until you issue your financial statements for the year ended December 31, 2018. Early adoption of the ASU is permitted, but you must keep in mind that these changes must be applied retrospectively.

Should you have any questions on ASU 2016-14, please contact me or one of my associates at Alloy Silverstein.

The post Significant Changes Announced to Not-For-Profit Financial Statements appeared first on Alloy Silverstein.