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Patrick has been with Ross Buehler Falk (RBF) for more than two decades. He has devoted the entirety of his professional accounting career to serving RBF clients, joining the firm in 1996, shortly after graduating from college. He was welcomed to the firm’s partner group in 2010 and happily marked his 10-year anniversary as a partner this past January.

During his time with RBF, Patrick has developed a specialty working with nonprofit, healthcare, agribusiness, and gaming industry clients. He serves as a controller and accounting manager for both nonprofit and healthcare clients. Additionally, he was entrusted with managing a $300 million trust fund.

A graduate of Geneva College in Beaver Falls, Pennsylvania, Patrick holds a Bachelor of Science in Business Administration with a minor in law. While in college he played on the school’s varsity soccer team, spending three years as a starter. He appeared on the Geneva College Dean’s List.

Now a resident of Lancaster, Pennsylvania, Patrick has been married for 10 years and has four children. When asked to describe his favorite thing about the city where he lives, Patrick replied, “I think the conservative nature of the people and the great Christian atmosphere to live and raise a family.” He feels very blessed by his family, and when asked to name the best compliment that he has ever received, Patrick cited a time when someone described him as “a great husband and father.”

Patrick is extensively involved in both his professional and local communities. He is strongly devoted to furthering good causes and supporting the accounting industry. Professionally, he is a member of the American Institute of Certified Public Accountants (AICPA), the Pennsylvania Institute of Certified Public Accountants (PICPA), and the Associated Builders and Contractors (ABC). Patrick’s 16-year (and growing!) legacy of serving local nonprofits includes current service as the treasurer of the Pleasant View Retirement Community and membership of the YMCA board of directors. Formerly, he was a board member of both the Manheim Township Soccer club and the Seneca Gaming Corporation.

Want to get to know Patrick even better? We asked him a variety of silly questions, and here is what we learned:

• When asked to describe the most impressive thing he knows how to do, Patrick explained that beyond being an accountant, he is also something of a jack-of-all-trades. “I can just about fix anything mechanical or broken or out of wood.” In fact, if he didn’t have to sleep, in his extra time Patrick would “make furniture, exercise more, and teach myself to play the violin.”
• If Patrick could visit any fictional place, he would choose to travel to the lost city of Atlantis. In reality, the farthest he has ever been from home is Germany.
• Patrick is an avid sports fan. One of his proudest “silly” accomplishments is becoming a soccer referee. If he had a clock that would count down to any one event of his choosing, he would set it to count down to the day when the Buffalo Bills win the Super Bowl. Patrick would love to master the art of playing golf.

Since the escalation of COVID-19 cases, malicious activity from cybercriminals is also on the rise. Hackers are taking advantage of the coronavirus fear to carry out attacks. They are creating websites that claim to have cures for the virus and spreading emails that contain links to malware.

Consider this research by Check Point, where they found an increase in coronavirus domain name registration. Most of these scam websites allege to be selling vaccines against the virus.

At the beginning of this year, one of the reported cases was the Emotet malware that was used in a coronavirus-themed campaign in Japan. Phishing victims received an email purporting to report locations where the infection was spreading. Because the email appeared to be an official communication from the government, victims were likely to open it to find out more about the information. However, an attempt to open a .docx document will download the Emotet malware to the victim’s computer. Apart from a .docx, the attachment could be a .pdf or a .mp4 claiming to have instructions on how to protect against the virus or other related updates.

The case in Japan is among the first attacks on the public domain that came with the rise of the COVID-19. Since then as the coronavirus continued to spread, more data breach cases have been reported. According to Malwarebytes Labs director Jerome Segura, there is an increase in campaigns that use the coronavirus situation to trick victims. Segura reports that in March alone, there was a 26 percent increase in online credit card skimming as people did online shopping from the safety of their homes.

Even the World Health Organization has not been spared, as they recently reported a fivefold increase in cyberattacks. The attacks have increased such that there was a joint alert sent out by the United States Department of Homeland Security, the Cybersecurity and Infrastructure Security Agency, and the United Kingdom’s National Cyber Security Centre.

Unfortunately, the fact is it won’t get any better as more cybersecurity firms report an increase in attacks relating to the coronavirus outbreak. This is because attacks that are based on important events or occurrences such as the COVID-19 pandemic become effective as they leverage on the public’s need to know. In matters of life and death, people tend to be less careful; and in an attempt to stay informed, they end up becoming victims of cybercriminals.

Apart from malware, there are fears that work-at-home directives also have led to an increase in data breaches. If you have a business, you probably have policies to help guard against cyberattacks. However, since the work-at-home situation was largely unplanned and employees are having to work from home, data can be easily leaked from the devices they use to connect to the office network.

It’s important to keep in mind that hackers love to take advantage of current events to trick their victims. Because of this, it’s expected that these attacks will increase in frequency – and this calls for users to be vigilant.

Although security systems might already be in place, none of them have the ability to deal with ever-increasing threats that have grown in sophistication. Email security remains one of the hardest challenges for employers. However, taking precautionary measures will help reduce the possibility of successful attacks.

Here are 10 ways to keep safe:

1. Avoid clicking on promotional links in emails.
2. Be careful when you receive emails with subject lines that include coronavirus or COVID-19 and have a call to action.
3. Be careful when clicking on pages with special offers, especially pages claiming to sell or know about the cure for the coronavirus.
4. Check domain names to verify their validity.
5. Be careful about clicking on links found on SMS that claim to come from institutions such as your credit company or bank; such links could activate malware.
6. Make sure to use a virtual private network (VPN) – especially when working with sensitive data.
7. Enable remote wipe in case devices get compromised or lost, if you have a business and your employees are using corporate devices.
8. Limit the number of times you enter your credit card details online and confirm that the domain where you enter personal information is legitimate.
9. Keep an eye out for how hackers continue to adjust their tactics. Use trusted resources such as the Centers for Disease Control and Prevention for information on the coronavirus.
10. Use strong passwords.

So many checks and even more questions! There is a lot of confusion out there over the details surrounding the coronavirus stimulus checks, so below we’ve compiled a list of frequently asked questions and answers.

• How much will the check be for? Each adult will receive $1,200; if you filed as married jointly, you’ll get $2,400; with an extra $500 for each qualifying child.
• What if I didn’t make any money last year or I was on a reduced income? It doesn’t matter. There is no minimum income threshold you need to pass to qualify. However, if you did not file an income tax return for the 2018 or 2019 tax year, you’ll need to provide your information at the following link so the IRS knows where to send your stimulus money:

https://www.freefilefillableforms.com/#/fd/EconomicImpactPayment

• I heard that if I make too much money, I won’t receive a check? On the other end of the spectrum, there are income limits based on your tax filing status. If you are single and made more than $75k, married and earned more than $150k, or head of household with more than $112.5k in adjusted gross income, your stimulus check amount will start to phase-out, and many above these incomes will not receive anything.
• My income is under the threshold in 2018 but over in 2019. What are my options? In this case, you can wait to file your 2019 return and qualify to receive the check based on your 2018 tax return. This is easy to do this year given the automatic extensions granted for federal income tax returns.
• In 2020, my income is going to be higher than in 2019 and put me above the thresholds. Will I have to pay back my stimulus check? No, there is no claw-back provision in the law, so you won’t have to pay it back.
• Is my check taxable? No, it is not taxable income.
• I didn’t need to file a tax return in 2018 or 2019 because my only source of income is Social Security Disability Income (SSDI) and my income was limited; do I have to file a return now to get a check? SSDI recipients don’t need to file a return or take additional action. Their checks will be direct deposited or sent via mail – the same way they normally receive their benefits.
• I have a child in college who I claim as a dependent. Will either of us get a check? If your child is 18 years or older at the end of the tax year, you aren’t eligible for the $500 check due to his age – even if you claim him as a dependent. Your child likewise won’t get his own check since you claim him as a dependent – even if he works. There is a proposal to change this, but nothing firm currently.
• What about a senior parent whom I claim as a dependent? The same rules as above apply, so no. In order to get the $500 check per dependent, the person must both qualify as a dependent and meet the age requirement. Similarly, the senior parent cannot get his own check since you are claiming him as a dependent.
• We had a child in 2020. Will I receive a check for this child? Most likely not since the IRS would have no record of your new qualifying dependent based on your 2019 return.
• How soon will I receive my check? The government is planning on processing and sending out checks as soon as possible. Based on what the U.S. Treasury has said, as soon as possible means starting to process taxpayer information in April. How soon you’ll receive your money after this depends on whether you’ve set up direct deposit with the government in the current or previous year tax filings. For taxpayers who don’t have direct deposit set up, go here to input your information so the IRS knows where to send your stimulus money:

https://www.freefilefillableforms.com/#/fd/EconomicImpactPayment

• I heard I can get my stimulus check faster if I pay to have it processed. Is this true? No, and beware because this is a scam. There is no legitimate way to skip to the head of the line.
• What happens if I owe the IRS back taxes? The stimulus checks are generally exempt from seizure for existing tax debts. This includes if you are on an installment payment plan to settle a tax bill. The one exception to this possibly could be for child support in arrears.

IRS Source for Non-Filer/Direct Deposit Information:

https://www.irs.gov/coronavirus/non-filers-enter-payment-info-here

As part of the CARES Act, the requirement for older taxpayers to take required minimum distributions (RMDs) from their retirement plans has been waived for 2020. This is primarily due to the drop in value for most investments as a result of the economic effects of COVID-19.

RMDs are required distributions from qualified retirement plans and are commonly associated with traditional IRAs, but they also apply to 401(k)s and SEP IRAs. The tax code does not allow taxpayers to indefinitely keep funds in their qualified retirement plans. Eventually, these assets must be distributed, and taxes must be paid on those distributions. If a retirement plan owner takes no distributions, or if the distributions are not large enough, then he or she may have to pay a 50% penalty on the amount that is not distributed.

RMDs historically have needed to begin in the year when the retirement plan owner became age 70½, but a late 2019 tax law change (the SECURE Act) upped the starting age to 72 for years after 2019. The first year’s distribution can be delayed to no later than April 1 of the subsequent year. However, delaying the first distribution means taking two distributions in the subsequent year.

The CARES Act RMD waiver applies to:

• The 2020 RMD for taxpayers who turned 70½ before 2020.
• The 2019 RMD for taxpayers who turned 70½ in 2019 and chose to defer their first distribution to 2020.
• The 2020 RMD for taxpayers who turned 72 in 2020.
• The RMDs for beneficiaries.

RMD Rollover: The 2020 waiver for RMDs was not announced until the CARES Act was passed on March 27, 2020. Normally, an RMD cannot be rolled over, but the CARES Act essentially changed 2020 RMDs into eligible rollover distributions, which can be rolled over within 60 days of being received. Some individuals subject to the RMD requirements had already taken their RMD before the CARES Act was enacted and did not have the opportunity to roll the RMD back into their retirement account if the 60-day rollover period had already expired.

That issue was alleviated by the declared disaster provisions extending the rollover period. Thus, any 60-day rollover period that ends on or after April 1, 2020, and before July 15, 2020, is extended through July 15, 2020. This means that if you took a distribution after the end of January, you can roll it back into the retirement plan and avoid being taxed on it in 2020, if you do so by July 15, 2020.

Be aware, however, that any part of the distribution from a traditional IRA or qualified retirement plan that you don’t roll over will be taxed. This means that if federal and/or state income tax was withheld from the distribution and you want to roll over the distribution, you will need to use funds other than those from the distribution in order to fully roll it over. Regrettably, the withholding can’t be refunded when you make the rollover. Instead, the withheld tax will be claimed as a credit on your 2020 return. In this case, your 2020 estimated tax installments and/or withholding on other income can be adjusted.

One other caveat: only one IRA-to-IRA rollover is allowed within any 12-month period, so if you have already made an IRA rollover – even for a different account – during the prior 12 months, then you will need to carefully time the IRA RMD rollover so that it occurs beyond that period but is still within the extended time limit. Trustee-to-trustee transfers don’t count as rollovers, so, for example, if you moved your IRA from one brokerage to another by having the account directly transferred, that action won’t count as a rollover.

Unfortunately, those who took their RMD in January do not benefit from the extension to July 15, 2020 (unless the IRS provides additional relief).

And, unless further relief is provided, the RMD requirements will resume in 2021. If you have questions or wonder what the pros and cons are related to a rollover, please give our office a call.

To encourage charitable contributions to deserving qualified charities during these trying times, Congress has relaxed some of its restrictions related to how much a taxpayer can deduct as a charitable contribution in any given year.
Under normal circumstances, cash contributions are limited to 60% of a taxpayer’s adjusted gross income (AGI). However, as has happened in the aftermath of prior disasters such as 2017 hurricanes Harvey, Irma, and Maria, the CARES Act has increased the AGI limit to 100% for 2020. Any amount in excess of 100% can be carried over and deducted on subsequent years’ returns until the excess is used up or until five years have passed, whichever happens first.

The CARES Act also created an above-the-line charitable contribution for taxpayers who don’t itemize their deductions. This will allow for a charitable deduction for cash contributions to qualified charities of up to $300 made in 2020.

While generally, the increased charitable contribution limitations related to natural disasters have applied only to contributions to relief efforts specific to the disaster, the only requirement for the CARES Act provisions is that the donations be in cash.

Although not a special provision, if you are age 70.5 or older, you can make charitable contributions by transferring funds from your IRA account to a charity, which are referred to as qualified charitable distributions (QCDs). The only hitch here is that the funds must be transferred directly from the IRA to the charity, meaning your IRA trustee will have to make the distribution to the charity. No minimum amount needs to be transferred, but the maximum of all such transfers for the year is $100,000 per year per taxpayer.

This strategy allows you to make a charitable contribution without itemizing deductions; since these distributions are tax-free, you can’t also claim a deduction for them. Because QCDs are nontaxable, your AGI will be lower, and you can benefit from tax provisions that are pegged to AGI, such as the amount of Social Security income that’s taxable and the cost of Medicare B insurance premiums for higher-income taxpayers.

If you decide to make a QCD, check with your IRA custodian on the IRA’s rules for how to request the QCD, and be sure to give the IRA custodian ample time to complete the process if you are making the request toward the end of the year. Always get a written acknowledgment from the charity for tax-reporting purposes.

For these special 2020 provisions and a QCD, the contributions cannot be made to a private foundation or a donor-advised fund.

Don’t forget that cash contributions include those paid by cash, check, electronic fund transfer, or credit card. Taxpayers cannot deduct a cash contribution, regardless of the amount, unless they can document the contribution in one of the following ways:

1. A bank record that shows the name of the qualified organization and the date and amount of the contribution. Bank records may include:

1. A canceled check,
   b. A bank or credit union statement, or
   c. A credit card statement.

1. A receipt (or a letter or other written communication) from the qualified organization showing the name of the organization and the date and amount of the contribution.
2. Payroll deduction records.

Finally, be alert for scammers. These con artists often pop up after natural disasters, and they’ll no doubt attempt to take advantage of the current crisis by trying to coax people into making donations that will go into the fraudsters’ pockets—not to help victims of the coronavirus disease and those suffering during this time of economic emergency.

Unfortunately, legitimate charities face competition from fraudsters, so if you are thinking about giving to a charity with which you are not familiar, do your research so that you can avoid swindlers trying to take advantage of your generosity. Here are tips to help make sure that your charitable contributions actually go to the cause that you support:

• Donate to charities that you know and trust. Be alert for charities that seem to have sprung up overnight in connection with current events.
• Ask if a caller is a paid fundraiser, who he/she works for, and what percentages of your donation go to the charity and the fundraiser. If you don’t get clear answers (or you don’t like the answers you get) consider donating to a different organization.
• Don’t give out personal or financial information, such as your credit card or bank account number, unless you know for sure that the charity is reputable.
• Never send cash. You can’t be sure that the organization will receive your donation, and you won’t have a record for tax purposes.
• Never wire money to someone who claims to be from a charity. Scammers often request donations to be wired because wiring money is like sending cash: Once you send it, you can’t get it back.
• If a donation request comes from a charity that claims to help a local community group (for example, police or firefighters), ask members of that group if they have heard of the charity and if it is actually providing financial support.
• Check out the charity’s reputation using the Better Business Bureau’s (BBB) Wise Giving Alliance, Charity Navigator, or Charity Watch.

If you have any questions, please give our office a call.

As part of the stimulus package to help offset the financial damage inflicted on businesses as a result of the COVID-19 crisis, Congress restored the ability of businesses that suffer a loss to carry those losses back and recover taxes paid in prior years. The limitation on business interest deductions has also been relaxed, as has the business loss limitation for larger businesses. The legislative package also made a long-awaited beneficial retroactive correction to the treatment of qualified improvement property. These changes allow affected taxpayers to recover taxes paid in earlier years, thus providing badly needed cash during these trying times.

• Net Operating Loss (NOL) – An NOL occurs when a business or individual with a business activity has more allowable tax deductions than it has taxable income, resulting in negative income or a net operating loss.

  Prior to the tax reform that mostly became effective with 2018 returns (the Tax Cuts and Jobs Act – TCJA), NOLs generally could be carried back to the second prior year; that year’s income was reduced to zero, and as a result, the income tax for that year was also reduced to zero, which allowed the taxpayer to claim a refund of the tax originally paid. If all the loss was not used, the remainder of the loss was carried to the next succeeding year and forward until used up, but for only 20 years after the year of the original loss. The TCJA revised the law to eliminate the carryback of NOLs arising after 2017 and said that generally, NOLs were to be carried forward only, and removed the 20-year carryforward limitation but allowed an NOL to offset no more than 80% of the carryforward year’s taxable income.
  Now, the recently enacted Coronavirus Aid, Relief, and Economic Security Act, shortened to the CARES Act, has restored NOL carrybacks for losses incurred in years 2018, 2019, and 2020 and extended the carryback period. For these years, NOLs can be carried back five years, and the loss is not subject to the 80% limitation.

  Since the carryback provisions are retroactive to 2018, a taxpayer who incurred an NOL in 2018 should carry the loss back to 2013 by amending the 2013 return to recover tax paid in that year, then carry any excess loss forward to 2014. If there’s still loss remaining after amending the 2014 return, carry the remaining loss forward to 2015 and amend the 2015 return, and so on. If a loss was incurred in 2019, then the 2019 NOL gets carried back to 2014. If a 2018 loss was already carried forward to the 2019 return and the 2019 return has already been filed, it would need to be amended to carry the loss back to and amend the 2013 return. When the loss year is 2019, the carryback and amending process starts with the 2014 return. This whole process can become a bit complicated depending on the prior years’ situations but needs to be done in preparation for any losses incurred in 2020 as a result of business restrictions or shutdown as a result of the crisis.

  Qualified Improvement Property – The term “qualified improvement property” refers to leasehold, restaurant, and retail improvements. An unintended provision of the 2018 tax reform established the recovery (depreciation) period for qualified improvement property to be 39 years, which made it ineligible for the 100% bonus depreciation deduction that only applies to business property with a recovery period of 20 years or less.

  The CARES Act makes a technical correction to the original 2018 tax reform legislation by designating qualified improvement property as 15-year recovery property, thus qualifying for 100% bonus depreciation or, if preferred, a 15-year depreciable life. This can be a big benefit for businesses that have been adversely impacted by the crisis, especially restaurants and retail stores that have lost so much business due to the epidemic’s economic fallout and are struggling to survive. A taxpayer who made improvements to their eligible business property in 2018 can take advantage of this change by amending their 2018 return. This correction applies to all future years, so if the business made eligible improvements in 2019 and the 2019 return has already been filed, it can also be amended.

• Limitation on Losses – The 2018 tax reform imposed business loss limitations on taxpayers except for corporations. The CARES Act has made the loss limitation inoperable for businesses (including farming) through December 2020. Thus, this change is retroactive to 2018 and allows taxpayers who were affected by the limitation to amend their 2018 returns. This also applies to 2019 and 2020, so if the 2019 return has already been filed, it can also be amended.
• Limitation on Deductible Business Interest – Also as part of the 2018 tax reform, large businesses with incomes of $25 million ($26 million in 2019) or more were only allowed a business interest deduction of up to 30% of their adjusted taxable income. That limit has been changed to 50% for 2019 and 2020. Because income is expected to be lower in 2020, a special provision allows the 2019 adjusted taxable income to be used in figuring the 2020 interest deduction limit.

All this may seem a bit overwhelming, but if any of these provisions apply to you, they can be very financially beneficial and should be taken care of to get your returns squared away in preparation for your 2020 tax return. Please call if you have any questions.

The COVID-19 pandemic has seen a rise in remote working. Even organizations that have always been against it have their employees working from home. With some areas experiencing complete lockdowns, this means you may find yourself in an unfamiliar work environment.

Remote working means that you have to work outside a traditional office environment. Although some people already have experience working remotely, there are a good number of workers who might have a hard time getting anything done from home. This is particularly true for those with a family that includes young children.

But with the current epidemic, many don’t have much choice other than to agree with the concept that work doesn’t have to be done in a specific place to be performed successfully. Your employer may have already set a work-at-home policy, but how do you ensure you are productive? Here are a few tips to help you retain your employment.

Create a Workspace

If you don’t already have a home office, then it’s time to be resourceful and create a workspace. Unfortunately, since this is unplanned, you might not have an ergonomically friendly work area. This means you could hurt yourself while working; for example, sitting too long in an uncomfortable position. But think outside the box and utilize what you have, such as using pillows to create a comfortable posture. Also, ensure you take frequent breaks.

Don’t forget to choose a space with minimal distractions.

Establish a Routine and Stick to It

The fact that you no longer have to wake up early to get to the office might tempt you to sleep more. It is important to have a work mindset. To achieve a sense of normalcy that you were used to in the office, you need to plan a schedule for your work hours and stick to it. Failure to create a work routine may find you wasting work hours.

Remember, if you live with family or friends, let them know your work hours and ask them respect that.

Be Flexible

It’s important that you be flexible, especially if you have kids in the house. This makes it hard to work a 9-to-5 job. A lockdown means you probably do not have someone to come over and help with chores or childcare. The way out is to experiment with different plans. Try working late at night, early in the morning or when your children take a nap.

Use Time Management Apps

Your employer already set goals and roles for you. But achieving them while working at home is challenging. Use time management apps to track the amount spent working on tasks. Such apps, whether web or mobile-based, can help minimize distractions. 

Avoid Social Media

There is so much information on the coronavirus pandemic and there is a need to stay updated. But this can turn out to be a distraction that causes you to miss out on work time. Set a time to check such updates and stick to it.

Informal Communication Groups

Apart from official online meetings or discussions, it’s good to keep in touch with colleagues. If your company did not set up such meetings, then you should. There are many communication tools available today that you can use. Keep in mind, isolation can lead to depression, especially if you live alone and are used to an active social life.

Work-Life Balance

Don’t spend all of your day working. Set daily tasks and stick with them. Set a time to exercise; it’s good for productivity and helps you avoid getting sore, which will generally affect your health. Log off from your work and do a different activity.

Use Secure Connections

Cybercriminals are now more likely to target remote workers. There are already reported cases of coronavirus ransomware and malware. This not only affects your work but can put your company at risk. Ensure that you use a secure wifi and virtual private network (VPN). Most importantly, don’t ignore your company’s security policies just because you are working from home.

Final Thoughts

There is a lot of debate surrounding remote working. Employers may see the benefit of remote working and adopt it more. Whether this will be the case, only time will tell. But we should brace for unexpected changes in the workplace when things finally get back to normal.

The most important thing right now is to keep in mind that your productivity will depend on your self-discipline, time-management skills, technology skills (to use new apps) and adaptability.

According to the 2019 Small Business Profile, a project from the U.S. Small Business Administration’s Office of Advocacy, there are 30.2 million small businesses, making up 99.9 percent of all U.S. businesses. With 59.9 million of these small business employees making up 47.3 percent of workers in the United States, it’s clear that this is an important segment of the American economy. With small businesses striving for profitability, the following are some examples of how they can measure their revenue targets, helping them increase their chances of profitability.

Average Revenue Per User (ARPU) 

This ratio can also be referred to as an average revenue per unit. It measures how much revenue is generated by each customer, on average. The ARPU is calculated as follows:

ARPU = Total Revenue / Average Subscribers

As the name implies, Total Revenue is how much revenue a business earned over a certain period. Average Subscribers refers to the average number of subscribers over that same time frame.

A business can use this ratio to analyze how much revenue their business is generating per individual/customer over a month, a single year or over multiple years. To calculate how many Average Subscribers exist for a 12-month period, the business would measure their customer base at the beginning and end of the year. That summation would then be divided by two. The following would occur:

Year 1: $1,000,000 / (100,000 + 200,000 / 2) = 6.7

Year 2: $4,000,000 / (200,000 + 400,000 / 2) = 13.33

Based on this two-year analysis, the company has become more profitable over time. Along with a company comparing its internal statistics, this measurement can show investors or financial analysts which company is more profitable depending on which business has a better ratio.

Average Revenue Per Paying User 

Businesses use this ratio to determine how much revenue, on average, the organization receives from each paying patron. While this sounds close to the ARPU, the main difference is that with this ratio, only customers who have made a payment are factored. It shows a business how profitable the customer is and what the customer’s average contribution is toward the business’ revenue. It’s calculated as follows:

ARPPU = Total Revenue / Average Number of Paying Users

The top part of the metric consists of all revenue earned by a company over a set period. The bottom part is the weighted average of all of the paying users during the same time period. Depending on the time frame, it could be measured as average revenue per paying daily active user or the average revenue per paying monthly active user.

A real-world example illustrates the concept:

If a company has 1,800,000 customers for its total user base and 60 percent of these are a paying user base (or 1,080,000 have paid), the paying user base would be used to determine its ARPPU over a 12-month period. Assuming a company made $2,000,000 in total revenue for the same 12-month period, the calculation is as follows:

$2,000,000 / 1,080,000 = $1.85

Along with helping to determine how to increase sales to increase the average ARPPU, it also helps separate the non-revenue paying customers. This segment can be identified and targeted through emails, surveys, calls, etc. to see what’s holding them back from becoming a paying customer. Unmet needs such as new payment options or different subscriptions can be identified through customer inquiries.

Average Revenue Per Account (ARPA) 

This type of financial measurement helps businesses know how much revenue each client’s account generates over a specific period of time, generally done per month or every 12 months. This metric determines which account and the associated product or service related to the account loses money, breaks even or is profitable.

It’s noteworthy to point out that an individual customer might have more than one account. While it’s not recognized by Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS), this is usually included in a company’s financial statements and often goes into discussions with potential and existing investors.

This metric is calculated as follows:

ARPA = Total Revenue over a certain period (1 month or 1 year) / Number of accounts held over the same period

If a company is generating $2,000,000 in revenue per month and has 2,000 accounts, the ARPA is $1,000

Some considerations for this metric include measuring customer accounts accurately. For example, if a new product or service is introduced in the following year, it’s good to separate one year from the next to see if one year’s product is better than last year’s product, or if the new product is underperforming compared to the previous product generation.

While these are only a few examples of measuring profitability, it’s a good start to see how a business is performing on a regular basis.

Top of Form

Sources

https://cdn.advocacy.sba.gov/wp-content/uploads/2019/04/23142719/2019-Small-Business-Profiles-US.pdf

In the days ahead, the COVID-19 pandemic will likely be described in economic terms as a Black Swan. This phrase is used to describe an event that 1) was unpredictable; 2) caused severe and widespread consequences; and 3) in hindsight was determined to be wholly predictable.

What will be interesting going forward is how much the virus, and its impact on the economy and financial markets, ultimately affects individual portfolios. It’s worth noting that many economists spent the whole of 2019 cautioning that a recession and market correction was imminent. To what extent investors took heed and repositioned their portfolios is yet to be seen.

As predicted, the Federal Reserve might have already exhausted the tools it had available to prevent a further watershed in the markets. Initially, the central bank dropped the federal funds rate to zero and funneled money into the economy. In more recent weeks, its monetary policies have included aggressive purchasing of Treasury bonds and mortgage-backed securities, extending swap lines to foreign central banks, and propping up short-term corporate borrowing and money market mutual funds to help support lending to state and local governments. At first, these efforts appeared to do little to diminish the stock market slide, but the end of March saw a three-day rally with the Dow Jones Industrial Average seeing its biggest three-day jump since 1931.

On the fiscal policy side, Congress is rushing to pass monetary aid as well as stimulus and recovery funds for both individuals and businesses. However, these actions can do little to stop an airborne virus that continues to shutter jobs and businesses and threaten the viability of the country’s health care system and everyday life as we know it.

Portfolio Considerations

When it comes to your own financial risk, let’s look at first things first. For many investors, an initial reaction might be to panic sell holdings before portfolios drop any further. Unless your timeline for needing funds has accelerated, selling now is not generally advisable. What is important to bear in mind is that markets tend to recover quickly after the most significant market declines, so if you’re not invested during the recovery, any paper losses you’re experiencing now will be permanent.

It is worth taking a good look at your holdings to get an idea of what to expect. For example, companies that rely on global supply chains and offshore manufacturing will likely experience the most detrimental short-term impact from the pandemic. This means disruptions in technology, retail, auto manufacturing, travel and tourism, global delivery and oil prices.

On the other hand, the health care industry will likely see tons more investment and demand while the so-called FAANG stocks (Facebook, Apple, Amazon, Netflix, and Google) are poised for rampant growth – given the degree to which people are stuck at home using online and delivery services.

Bear in mind that if you make any changes to your portfolio in reaction to market volatility, take into consideration your long-term goals and financial security. The following are a few strategies to consider that could position your portfolio for subsequent growth – assuming you maintain a long-term perspective.

• Use either spare cash, asset allocation rebalancing opportunities or automatic investment contributions to bargain shop for stocks with a strong track record that are likely to recover but are well-priced right now.

• Consider converting (tax-deferred) retirement account assets into a Roth IRA. By doing so now, when prices are at their lows, you’ll owe less tax at the time of the conversion – which you won’t have to pay until next year’s tax season. By that time, the market may have recovered, positioning your Roth for greater potential for tax-free growth and tax-free income during retirement.

• Consider using a portion of your assets to pay a lump sum premium for an annuity contract in order to transfer market risk from your portfolio to an insurance company. An annuity is designed to provide insurer-guaranteed income during your retirement, so you can feel a bit better about maintaining an equity allocation during this volatile time until the rest of your portfolio recovers.

The spread of COVID‑19 is likely to continue to drive investor uncertainty over the short term. The long term, however, is another matter. Just like the saying, “What goes up, must come down,” history has shown that when it comes to the stock market, what goes down inevitably goes back up. The question is just how long that will take. For now, this is one of those times when it’s handy to have a three-to six-month emergency cash fund available to cover expenses.

If you’re a small business owner struggling financially due to the COVID-19 outbreak, there is help available. The SBA is offering Economic Injury Disaster Loans of up to $2 million – here are answers to the FAQs.

Q: How much funding can I get?

Small businesses that need support through the disaster recovery period can borrow as much as $2 million. The Economic Injury Disaster Loan (EIDL) provides an interest rate of under 4%.

Q. How do I know if I qualify for Disaster Assistance?

The best way to determine whether you meet the criteria for a “small” business is through the North American Industry Classification System Codes and the Table of Small Business Size Standards through the SBA. Keep in mind that in order to determine qualification, a business is gauged both on its own without affiliates and when combined with its affiliates. Affiliates is a term that is used broadly when it comes to Disaster Loans: click here to see the specific regulations.

Both with and without affiliates, to qualify the business is not allowed to go above the established standard for its industry, and the rule on whether to use the numbers for the business alone or with affiliation is based on whichever of the two is higher.
To get an idea of what would be considered small for different industries, the standard for the manufacturing industry dictates that for a business to be considered small it can’t employ more than 500 people. For a sit-down restaurant to qualify as small, it cannot average more than $8 million in revenues per year; and for retailers, the average annual sales can’t be over $7 million.

Q. Is there a maximum amount of assistance that I can get?

Yes. No more than $2 million is available under the program currently being used.

Q. Are there limits to what the loans can be used for?

The purpose of the loan is to help businesses survive through the disaster recovery period and to mitigate the economic damages that it suffers. The loans are explicitly only to be used for that purpose until things get back to normal. This means that businesses that have suffered financial injury can apply for an EIDL to cover their losses and to provide what they need to continue business operations to replace what they would have needed under circumstances prior to the crisis. The amount cannot exceed that threshold, and will be calculated based on three criteria:

• What your total debt is
• What your operating expenses are for the disaster recovery period and what will provide working capital during that time that puts you in a reasonable position
• What your working capital position and manageable expenses would have been had there been no disaster

When making the determination, the SBA will not necessarily determine that the amount of financial injury you demonstrate will be the same amount that you are eligible to borrow. Each decision will be based on the data and backup you provide as well as what they view as the reasonableness of your ask.

Additionally, the loans cannot be used to make improvements or grow the business beyond making repairs to damage caused by the disaster. The only exception is if there are local building codes that demand changes that result in expansion.

Q. Are the terms of the loans reasonable?

Terms will be dependent upon the availability of alternative sources of credit, and how much time it is likely for the business to need to repay the loan, but they can have interest rates of 4% or less and maturity of up to thirty years.

Understanding the Application Process

Q. Does my credit affect my ability to get a loan?

Your credit history will definitely be taken into consideration by the SBA. Additionally, you will need to demonstrate your ability to repay the loans when they come due, and you will probably be required to pledge collateral such as real estate to secure the loan, though lack of collateral will not preclude approval. For loans of $25,000 or more, whether for a physical business loan or an EIDL loan, collateral will be particularly important.

The SBA is required under the EIDL system to review the financial statement for the business, as well as for stakeholders including each officer, each partner and director, and each stockholder whose ownership stake is twenty percent or greater. Personal repayment will need to be guaranteed by the business’ principals, and those individuals may also be required to pledge additional collateral in order for the loan to be secured, though this requirement may be waived for loans relating to the COVID-19 crisis.

Q. What other information is required beyond credit history?

Your application must include a signed and dated IRS Form 4506-T, which will serve as notice to the IRS that your tax return information can be released to the SBA so that they can consider your loan. The application also requires current information on your finances, including:

• Most recent federal income tax returns
• Personal financial statement
• Schedule of liabilities listing all fixed debts
• Completed set of all SBA paperwork
• Year-end profit-and-loss statement and balance sheet for that tax year
• A current year-to-date profit-and-loss statement
• Monthly sales figures for increases in the amount of economic injury

43. When should I apply?

    The timing of your loan application is entirely up to you and your perception of need. The entire decision-making process generally takes two to three weeks assuming that all of the information has been provided in the application. Please note that though a decision may be made in less than a month, a congressional study revealed that actually getting the EIDL loan has historically taken 43.3 days.

    Q. What about my business’ previously existing mortgage?

    Can it be refinanced through the SBA program? Absolutely. Either all or a portion of previously existing business mortgages can be refinanced if no other credit for doing so is available. The SBA will also step in where uninsured damage involving 40 percent or more of the property has occurred, as long as the refinance plan includes repairs. For more information on this aspect of the program, speak with an SBA disaster loan officer.

    Q. I have an insurance claim pending – Should I wait for it to settle before filing a loan application?

    No. You should not allow anything to delay your application, especially because there is a filing deadline. When your settlement is finalized you can add it to your application. Keep in mind that if you apply and are approved for a loan for total replacement, you are required to apply the funds that you receive from your insurer directly to repayment of the loan.

    Q. Does the SBA require personal financial statements from stakeholders to process the disaster loan?

    To secure the disaster relief loan, stakeholders — including the business’ partners, officers, directors and any stockholders with 20 percent or more ownership — will need to personally guarantee repayment of the loan, in some cases will even be required to pledge additional collateral for security. They will also have to provide financial statements.

    Where Do I Start?

• Contact our office – There will be a huge backlog of applications. Sending in an incomplete package will slow down the approval process. Our experts will review what program is right for your business and help plan for the cash flow disruption so you can thrive once the economy takes off again. We can get through this together – all you have to do is notify us you’re considering an EIDL.
• Put together a forecast – One of the first things that you will need is a budget and financial forecast that looks forward for at least half of the year – going beyond six months would be even better. Having this forecast in hand will provide invaluable information upon which the SBA will base its decision about the impact that the disaster will have on your business and your worthiness for a loan. Even if the SBA turns you down, the information will support your case when you seek funding from other creditors.
• Start familiarizing yourself with the forms you’ll need to fill out and the documents you’ll need to assemble – In order to prove your need for a disaster relief loan, you’ll need a significant number of supporting documents. You’ll also be required to take a deep dive into the financial impact that the disaster will have on you. This is not a situation for estimates. The SBA will want to see your work.
• Check your work at least twice – When you’re completing the forms, go over it several times to make sure you haven’t skipped over anything. Any incomplete application packet is a packet that is not going to be approved anytime soon.
• Take the urgency of the situation seriously – You may think you’re okay in the moment, but things are going to get worse soon. Don’t delay – complete the application for the assistance loan ASAP.
• Be gentle with the SBA staff – You’re stressed and so are they. You can make their job easier by getting your paperwork in early and making sure you haven’t skipped anything, but even if you have done everything perfectly, they are still going to be frazzled and overloaded with work. Be patient.

If you keep in mind that everybody is struggling with the same issues and concerns, you will put yourself in a better emotional place. For assistance with this process or to discuss your options, contact us today.