As retail shop owners, we have all struggled with the impact that COVID-19 has had on our businesses. There are so many questions to answer as we move forward, and the retail landscape changes. Here are six of the financial lessons I have learned during the pandemic. 

Have Your i’s Dotted and Your t’s Crossed With Your Business Filing

Shop owners must know the ins and outs of their businesses. That starts with having a tax identification number, called an Employer Identification Number, or EIN. 

This 9-digit number is like a social security number for your business. You need to have an EIN assigned to register your business, get a loan, open a business bank account, and much more. 

An EIN is particularly crucial for the financial health of your business. Every business needs a separate business bank account—your personal finances should never mix with your business finances. You can read more about why you should open a business bank account in this blog post

You can apply for an EIN on the IRS website. Make sure to keep a copy of the assignment letter, as the IRS will NOT supply a new letter if you lose it. 

Understand Your Business Structure

There are several ways to start a business, and it’s essential to know which one you picked! Understanding your business structure means you know how you pay yourself and what taxes you are responsible for. This will help you determine what loans you are eligible for. 

The most common for retail shops are LLC and S-Corp. As an example, both of my businesses are set up as LLCs, and I pay myself through Draws – NOT payroll. 

So why has this mattered over the past two months? If you are an LLC and have completed the Paycheck Protection Program application, you needed to include the number from line 31 of your Schedule C tax form. This number shows how profitable your business is and what your draw is from the business. If you’re an S-Corp, you most likely pay yourself through Payroll. If you’re unsure how your business is set up, check with your accountant. I encourage you to schedule a consultation with them so they can explain it to you. 

I’ve discussed the importance of paying yourself as a retail shop owner before, particularly on episodes one and two of the Savvy Shopkeeper Retail Podcast. Many shopkeepers couldn’t prove that they pay themselves through a draw or payroll. That meant they weren’t eligible for disaster loans—this frustrated and upset many shopkeepers. 

If you don’t know how you get paid through your business, now is the time to figure out how to change that going forward. 

Be Current On Your Taxes

One thing I found extremely helpful when this all happened is that we had already filed 2019 taxes. I completely understand that this is easy to procrastinate on. But filing my taxes earlier meant that I had every critical document that I needed for almost any application that came my way. 

Know the Value of Your Local Banking Relationship

The loan process was frustrating for MANY shopkeepers. However, it appears that those with local banking relationships or long-standing relationships with a company like Square (who offered PPP loans) were approved more often and more quickly. 

Don’t underestimate the value of your healthy relationships with these financial institutions. Our banker personally reached out to me on several occasions, and it was very reassuring. 

Understand How Your Employees Are Categorized

To put it simply, the IRS and the federal government value payroll employees much more than 1099 subcontractor employees. Why? Because taxes are paid, and employees are protected a bit more. Yes, 1099 subcontractors pay self-employment tax, but in the end, the IRS gives more weight to businesses with payroll employees. 

The preference for payroll employees became VERY clear with the small business programs implemented in the CARES Act. However, businesses with 1099’s DID qualify for PPP loans. I know this because I’m one of them! 

If you kept hearing that PPP was only for payroll employers, you were receiving lousy information. One of the very frustrating parts of the CARES Act and social media was the misinformation that was spread. I spent countless hours researching and trying to determine what was right and wrong. As if the CARES Act and the laws weren’t already confusing, you know? 

Also, your business formation affects your employee count! For example, most business owners view themselves as just that—a business owner. But when an application asks required the number of employees, many of us didn’t include ourselves. We should have. 

Apply ASAP for Assistance

When emergency or disaster programs are implemented, there’s a limit to funding. That means small business owners need to APPLY FIRST. 

It can be intimidating to realize you are unprepared, misinformed, or uneducated. I spent countless hours researching the PPP, EIDL, and other grant programs, and I was often confused. I saw so much misinformation on Facebook too. 

In general, I’m not a fan of recommending loan debt to small business owners. Because I am NOT a financial expert, I avoided giving too much guidance on this topic. I personally reached out to my own expert contacts and my accountant, and I encourage readers to do the same. 

Click here to read part 2 of this series. I share five more financial lessons I’ve learned as a retail shop owner during COVID-19.  



  • [2:31] Shopkeeper Shout Out to Karen Berg of Alluv Place
  • [5:09] Have your i’s dotted and your t’s crossed with business filing
  • [6:40] Understand your business structure & how you pay yourself
  • [9:40] Be current on your taxes
  • [12:06] Know the value of your banking relationship
  • [13:35] Understand how your employees are categorized
  • [16:50] Apply ASAP for assistance

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