The coronavirus crisis
The operating environment for small businesses changed overnight when practically the entire EU was shut down. Many entrepreneurs’ revenue has plummeted, and no one knows how long the ongoing crisis will last. For entrepreneurs, this is a battle for survival, in which the primary goal is to quickly adapt cash flows. This mainly means postponing larger payments in order to move past the worst crisis period and to think about possible long-term operational adaptation measures.
Unfortunately, solutions are rather limited in this regard. Still, we have listed some ways for mainly our customers in Finland to be flexible, which include:
Removing or lowering advance tax. Even in normal conditions, there is no sense in paying excessive advance tax (as a company or an entrepreneur). When cutting expenses quickly, advance tax should be removed first and foremost. We are able to make the required changes electronically almost instantly. All you need to do is give us the assignment either by email at firstname.lastname@example.org or via DigibalanceApp. Please remember to always include your customer ID and your annual profit estimate. DigibalanceApp currently overestimates these figures, as the situation has quickly changed from earlier months. NOTE! We can also arrange a solution where advance tax for this year is suspended to only include what has been paid so far, i.e. payments for the rest of the year are removed. If the situation goes back to normal, the estimates should be reviewed later in autumn.
Mandatory pension insurance premiums. Large pension insurance companies have started offering slight flexibility regarding insurance payments. This mainly affects terms of payment. For instance, the insurance company Ilmarinen announced that penalty interest will not be applied to entrepreneurs’ pension insurance (YEL) payments that are due March 20th, 2020, and these will not be moved to collection at least until the end of April. The employment pension industry is currently drawing guidelines for pension payments, but all of them will likely revolve around more flexible terms of payment. We will monitor the situation.
Instalment-free periods. Banks are currently very understanding about instalment-free periods for loans. Interest must always be paid, but if you have instalments due soon, it is recommended to contact your bank and agree on an extra instalment-free period of six months. This applies to everything from corporate loans to mortgages. The solution is again to delay payments, but the relief is more efficient than with pension insurance premiums for instance. In this case, payments are postponed permanently.
Lowering rent. There have been recommendations in the media to contact your landlord and negotiate compromises. As entrepreneurs are well aware, this is a difficult equation if the landlord is another small business. In cases where the landlord represents the so-called institutional level, such as an insurance company or a bank, flexibility is more likely. Anyway it is recommended that you determine the situation if rent is a major part of your company’s expenses.
Sanctions for delayed tax payments. Finnish tax authorities have listed some small tax reliefs regarding doing business with them. The concrete message has almost always been that late fees for VAT will not be collected (the VAT itself will). However, this requires a separate application. You could also apply for a postponement for filing your tax report due to e.g. illness, but as it’s included in AutoAccount services, there is no need for it right now.
Make sure to keep your VAT reports up to date in the current situation. When turnover plummets, expenses will often continue as normal for some time. It is thus important that you send us your regular monthly information on time for us to process VAT reports. Doing so ensures that possible VAT reimbursements will be paid quickly.
Employee lay-offs. If you employ outside staff with a fixed salary, fast lay-offs are an unfortunate but realistic procedure. Lay-offs enable cutting off payment of salaries fairly quickly, but they require following statutory declaration procedure. Check with the union that drafted your collective agreement for further details. If you are not under any collective agreement and your payroll is handled by Digitase, you can ask about lay-off procedures from our payroll administration.
Finnvera/Business Finland/ELY centre According to government announcements, at least Finnvera’s financing potential has been increased significantly. The importance of this procedure in an acute financial crisis is unclear, but we will keep an eye on the situation. If you think e.g. extra loan funding would save your business in the current situation, we recommend following Finnvera’s, Business Finland’s and the Centre for Economic Development, Transport and the Environment’s (ELY) options, which are listed on their websites.
In summary: right now, the goal is to adapt expenses to the plummeted income, using the aforementioned procedures among others. When the situation begins to settle, it is prudent to think about your business comprehensively, i.e. to think about current expenses in relation to expected turnover on a long term. It remains to be seen whether the current situation changes the operating environment of entrepreneurship for good, or if it’s a temporary setback.
Note! If you catch coronavirus (COVID-19) yourself and/or you are otherwise ordered under quarantine, as an YEL entrepreneur you are eligible for KELA’s specific daily sick allowance. For more information about the subject and applying, visit KELA’s website.
We apologize for the heavy traffic in some of our operations earlier this year, which is due to the seasonal rush of financial statements and tax reports. In addition, there has been an unprecedented number of problems outside of our control in getting email through, as well as sending and receiving email. We have worked hard on the matter both ourselves and with the help of third-party service providers, and the worst is now over. Unfortunately, something similar may occasionally happen again. We recommend defining all emails addresses ending in @digibalance.eu and our invoicing address email@example.com as so-called trusted addresses in your own email. You should also add addresses ending in @digibalance.eu in your email application’s contact info. If you use our payroll service this concerns also address firstname.lastname@example.org
We highly recommend using DigibalanceApp in order for you to avoid possible email-related problems. More information and a download link are available at http://www.digibalanceapp.com/customership-1/. Note: you can also use the phone application on your computer browser if you so prefer. You can find the browser version here: https://digitase-mobile.herokuapp.com/login
Please note: if you continue to use the old link for reporting sales as an AutoAccount customer, we will automatically redirect your usage to DigibalanceApp’s mobile and web versions, starting this June!
Finnish tax returns are due either by the end of March or April. Since you are our AutoAccount customer the business tax return is a part of our annual closing service. You do not need to file the business tax return of your company or sole trader business income. We submit those electronically before the deadlines. You will also get a pre-filled personal tax return from the tax office. It is recommended that you check the information is correct but that involves only other income than business income.
Digitase AutoAccount has emphasized digital operations for its entire lifespan, which has included organizing operations to support remote work. Due to coronavirus, our entire staff is currently working remotely for the most part, and our operations are continuing as normal. For the time being, we will organize possible face-to-face meetings only as video conferences, using e.g. Skype.