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Iowa providing assistance for employees, employers affected by COVID-19-related layoffs

StickyNews | , , |

Assistance for workers and employers affected by COVID-19-related layoffs in Iowa was announced by Governor Reynolds on March 16. Included in the guidance is information on unemployment insurance claims and available programs for employers like the Voluntary Shared Work program.

“Iowa has incredible employers accommodating the needs of Iowans during the disruption caused by COVID-19,” said Gov. Reynolds. “The state of Iowa is doing everything we can to ease the process and shorten the time it will take for Iowans to receive unemployment benefits. All of our state agencies continue to work as one team to lessen the impact COVID-19 will have on our economy and our people.”

For more information on the release, visit iowaworkforcedevelopment.gov.

For employers to avoid charges to their account from Iowa Workforce Development (IWD) for COVID-19-related lay-offs, follow these instructions:

  1. Send an email to uiclaimshelp@iwd.iowa.gov
  2. Subject line must include ATTENTION #60
  3. List your business name
  4. List the contact name (owner, president, etc.)
  5. Include a brief note that lay-offs are due to COVID-19, and you are sending this notice to avoid a charge on your employer account
  6. Provide a list of employees being laid off with first and last name and last four digits of their Social Security number

Additional resources from IWD:

Employee COVID-19 Q & A:

Employer COVID-19 Q & A:

VSW COVID-19 Flyer

Who else could use some normalization right now?

Succession & Exit Planning, Blog | , , |

By Martha Sullivan, CPA, CVA/ABV, CM&AA, CEPA
Partner, Succession Planning Practice Leader

Martha leads HK’s succession and exit planning services division and is a regular contributor to Wisconsin’s InBusiness digital magazine.

Normalization. What a word. What a concept! Especially these days.

Many of us are trying to decipher what normal looks like, especially if we are planning for the future of our businesses. If you are looking to understand the current value of your business, the question is similarly vexing. Where’s the crystal ball when you need one?

When determining the value of our businesses, there’s a part of process called “normalization.” It is a fundamental component of any value calculation analysis. This is the part of the process where the less-than-normal elements are adjusted for in the analysis of historical results, generally by adding or subtracting the adjustments from the bottom-line earnings before interest, taxes, depreciation, and amortization (EBITDA). These adjustments could be anything from a one-time windfall, like payment of an insurance claim, or a one-time, special expense such as professional fees associated with a legal matter. Adjustments are also made to account for owner-discretionary items such as what an owner’s compensation or the building rent might be if subjected to market rates rather than the discretionary levels set by the owners. The analysis will also remove owner-specific costs run through the business. The normalized, adjusted financial results are then used to calculate the value of the business based upon its risk profile, discount, and cost of capital rates and other factors.

That all is well and good in valuation theory, but what happens when there is no normal? What happens when the past, even as recent as seven months ago, is only a faint memory? Is the “baby tossed out with the bath water”? Does the historical analysis become irrelevant? Does all that work and success count for nothing, regardless of whether the business is currently experiencing either a downturn or uptick?

The good news is the answer is “No. Your history still matters.” The bad news is that it comes with a caveat of “It depends.” Regardless of whether your company is currently diving or thriving, your understanding of why the business is doing what it’s doing and whether it is sustainable will drive how relevant the historical data is.

For example, if you are in the cruise business, your prior history will be a very suspicious predictor of near term (as in maybe two years???) results. If you have an amazing balance sheet and a swift mind, you may be able to hang in there with serious adjustments. Regardless, the value is going to be based on a future view rather than historical. Normalization analysis will be needed throughout the entire set of financial statements rather than simply unusual and discretionary expenses.

On the flip side, perhaps your business is going gangbusters because you have been able to expand your product lines and/or volume — similar to how some adult beverage manufacturers have branched into manufacturing sanitizer, adding new sales on top of the recreational-therapy induced increase in beverage sales. Or maybe you make bikes and have always made bikes. But now the demand for bikes is off the charts since we are limited in our more socially oriented activities.

Normalization in these cases will also be future-focused and need to address questions such as is the increase in demand a one-time blip, like in the case of the bikes, that will eventually settle back down? Is the beverage company prepared to make the product line extension permanent or was it simply being a good corporate citizen in the face of a crisis? If it’s permanent, it’s one thing and should be factored into the assumptions for the going concern. If it was good citizenry, then it should be factored out and removed from the analysis to present a more accurate picture of “normal.”

While normalization is a part of any valuation process, it should also become a part of your routine planning and cashflow management process. Now is the time to up your game in that regard so you are in a better position to make the critical decisions you need to every day. Decisions made today directly impact your prospects for survival, growth, and business value tomorrow.

Some ways you can factor it in include:

  • As you maintain your 13-week rolling cash forecast, consider the volatility you may be experiencing and how likely is it to remain as such for the next four, eight, and 13 weeks?
  • What expenses are spiking or are artificially depressed? Have you instituted layoffs or across-the-board pay cuts to conserve cash? How long do you anticipate that continuing? Use what-if techniques for what it would look like to determine when you might adjust back to the previous normal or a new level and approach for staffing and other expenses.
  • What would the bottom line look like if owner-discretionary expenses did not flow through the business? This may be important if there are challenging conversations on the horizon with the bank. Note, many business owners do not run personal expenses through the company, preferring a more definitive line. However, for those business owners who do, you’re able to think this calculation through.
  • Envision that new normal. What other elements and factors should be integrated into or adjusted out of your data? What should be included in a projection of the future?

For those readers that do not have a formalized 13-week rolling cashflow or business plan, we need to talk ASAP. Strategic planning is no longer optional, nor it is still looking out three to five years. Right now, strategic planning may be a max of two years, depending on your situation. (Heck, it might feel like two weeks is strategic!) Having and working a plan is vital in times like this and, in fact, can help things return to feeling “normal.”

And that is how you do normalization.

IRS announced on Monday, June 29 that the July 15 tax filing deadline will not be postponed

News | , , |

The Department of the Treasury and the Internal Revenue Service (IRS) announced on Monday, June 29 that the 2019 tax filing deadline will not be postponed. The deadline remains July 15, 2020.

Additionally, individual taxpayers who cannot meet the July 15 due date can request an automatic extension of time to file until October 15. Keep in mind that the extension provides additional time to file the tax return, it is not an extension to pay any taxes due. Any taxes owed are still due on July 15.

“The IRS understands that those affected by the coronavirus may not be able to pay their balances in full by July 15, but we have many payment options to help taxpayers,” said IRS Commissioner Chuck Rettig. “These easy-to-use payment options are available on IRS.gov, and most can be done automatically without reaching out to an IRS representative.”

For questions or concerns, contact your account manager.

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