Updated: Aug 19
Author: Tanya Hilts, CPB
August 9, 2020
So it's been a while since my last blog, as unfortunately, COVID-19 has really had an impact on my workload, as it has most of us in the accounting industry. What I'd like to talk about today is the employers not taking advantage of the CEWS (Canadian Emergency Wage Subsidy) for their employees.
Some employers are absolutely using the subsidies available, and for that, I commend them. A lot of my clients are using it. The big deciding factor was, could our clients afford to pay out initially and wait for the reimbursement. If the answer was yes, we used it as a tool to create and keep employee loyalty.
Some things that we would do is work strategically with our clients, especially in retail and restaurant industries, for example, to have their employees split the shifts in a way that everybody was making under the $1,000.00 so the employee could still apply for the CERB (Canadian Emergency Response Benefit) and could still be on the CEWS use to help top them up to as close as a pre-COVID-19 pay as possible. We also have clients that have employees on commission in the health and wellness industry. And what we did in this case was to top the employees up to what their baseline, or their pre-COVID-19 baseline wage was (or the weekly max, if their baseline was higher). That was going to be their guaranteed minimum, and that would cover “X” number of clients for ”X” dollars of commissions, and anything above that they made regular commission on. That was again a really nice way of getting creative, and working within the subsidies and with the employees to create that employee loyalty.
On the flip side, there are employers that I know of, who are refusing to use the subsidies available to them because they've been told that it is taxable income. Now that's technically accurate. It is going to be taxable income to the company. However, at the end of the day, if I pay out $1 for my employee, and I get back 75 cents from the government. I'm writing off the dollar. And I'm claiming 75% back as income, which leaves me with a net of 25 cents as a deduction. So, why these employers are insisting, it is going to be taxable income and not looking at the other side to show it's going to be a wash, is completely beyond me, unless they cannot afford to pay for the payroll initially, and wait to be reimbursed. If that's the case, I completely understand as cash flow is huge, especially with such uncertainty these days.
What people should understand is that an employee is your business's most valuable resource. It costs a ridiculous amount of money to try to find the right person, make sure they're right fit and get them trained properly regardless of what business you are in. For example, with us, it's a one to two year training to hire somebody to have them working at a capacity, one year before they're actually earning their pay. Until then, I am paying someone to take the time to train them. So I'm actually paying two salaries to have the work of a quarter person, they're working at such a slow pace. So why employers don't want to take advantage of the subsidy that's out there to help through this time to keep their biggest, most valuable resource leaves me scratching my head.
Until next time,
About the author: Tanya has earned her Certified Professional Bookkeeper designation through CPB Canada, is an Advanced Certified QuickBooks Online ProAdvisor, and a Member of the Intuit Trainer Writer Network. To Tanya, being a forward-thinking entrepreneur means constantly increasing her own knowledge level and obtaining more certifications, education, and experience in order to not only increase the services and benefits she can offer her clients but to spread that awareness to other members of the accounting community. Tanya's passion for advancing the accounting profession has lead her to regular speaking engagements. Tanya's publically known enthusiasm for the industry has led her to become a current Director of CPB Canada. www.TanyaHilts.com