What Is a COVID-19 Surcharge? Business Experts Explain Why Small Businesses Charge Extra Tax
- Small businesses can introduce new COVID-19 supplements when they reopen during the pandemic.
- A Missouri restaurant made national headlines after a customer posted a photo of his receipt online.
- A small business expert explains why these fees may be on your bill.
Small businesses face new challenges during the new coronavirus pandemic, including large-scale home orders, which effectively maintains their overall business model. But the most troubling challenge may actually be ahead, as states strive to reopen non-core businesses despite encouraging people to stay socially distant, changing the way people buy and spend money. money in their communities. Some companies have already thought of a new way to deal with these overnight changes in their livelihoods – a COVID-19 supplement, which is usually added as a percentage to any invoice or order. Although some customers may not find it fair, this additional tax is likely to save the business from further pandemic-related expenses or to close their doors entirely.
“It’s good that business owners are hyper aware right now – it’s likely there may be supply chain issues or need to increase their investments in other areas, such as a remediation process much more rigorous, “says Pamela Slim, business coach. and founder of local business advocacy group K’é Main Street Learning Lab in Arizona, where she helps local entrepreneurs adjust to the new normal when the state reopens in early May. “Owners may come from the perspective of wanting to stay in business, but in some cases, if they don’t have enough room to be profitable – so don’t pass the rising costs on to customers – then they’re do not will be able to stay in business. “
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A Missouri restaurant recently made national headlines for instituting its own COVID-19 surcharge, which sparked a social media fire after a customer posted a photo of his receipt. According to TODAY, the sushi restaurant has encountered new demand in its supply chain, and rather than raising all of its prices on the menu, it has added an additional 5%; some customers complained, while others said it was a “small price to pay” to support local businesses.
Restaurants may be the first businesses in your area to experience economic pressures brought on by new needs to keep customers safe. But Slim says other businesses may soon charge extra to stay profitable – including salons, fitness centers and most retailers.
Why is there a COVID-19 surcharge on my bill?
Slim says there are several scenarios that can explain why companies should add a percentage-based fee to your total order, including all the essential services you can receive, from housekeeping to gardening. Remember in advance: Businesses aren’t trying to shoot you quickly, says Slim. All of them are doing their best to keep their livelihoods afloat and their teams are employed, especially for the next year or so, until the routines can resemble what they were. If you wish to pay additional charges on your invoice, do not hesitate to ask local businesses for their policy; Slim says that most business owners try to be as transparent as possible with customers as to why they need the extra income in the first place.
- Supply problems. Almost all businesses are under further pressure as the supply chain in America has been disrupted by closings and increased demand in certain sectors. Food prices and availability of ingredients could be an issue for restaurants in particular. Just as you saw the headlines about a spike in grocery prices, your local restaurants may turn to smaller suppliers who are more expensive than the large suppliers, who are currently hard hit.
- Investments in new procedures. For most businesses, quick cleaning a day has turned into several hours of deep sanitation to keep customers safe during the coronavirus pandemic – especially in areas where close contact is unavoidable. “They may need to hire more people to come in for massive hourly cleanups. It’s a whole different way of doing it,” says Slim. “These costs can go up entirely.” This could apply to new costs, such as securing personal protective equipment for employees, or having to ship orders by mail when they traditionally offer store pick-up only.
- Lack of pedestrian traffic. Profit margins are essential for businesses that cannot count on corporate assistance, and social distancing measures may have completely eliminated profit margins because demand for certain services – physiotherapy or hairdressing, for example – has dropped considerably. If these companies are allowed to reopen, they will either have to add a supplement or raise their prices to remain profitable, says Slim. “In some cases, if they stay open but do not change their profit margins, they will be in poorer condition than during the closure. They provide services at a profitable level,” she said.
If you find yourself faced with a COVID-19 supplement, remember that companies are adapting to a new normal, says Slim. The extra money could allow them to stay open to serve you again rather than staying closed for good.
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