COVID-19 Impact on US Small Businesses: Janitorial Services Hit Hard - Essay Sample

COVID-19 has had a significant impact on global public health since its outbreak in 2019. Additionally, it has resulted in a substantial shock to the world's economy. In the United States, small businesses, including the commercial cleaning businesses, have suffered from the impact generated by the coronavirus disease 2019. Companies that offer janitorial services have always associated with high-profit margins, but this has not been the case since the outbreak of COVID-19. Several factors have changed due to these effects, affecting the normal operations of the commercial janitorial businesses. One of the notable impacts has been reduced revenues that have hit these companies' central parts (Bartik et al., 2020).

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The decrease in customer demand has been one of the vital factors that have led to reduced revenue generation. Many people have shifted their demand for janitorial services to other crucial needs such as food, shelter, and disease treatment and control. It has been difficult for these companies to adapt to the new life brought by the COVID-19 outbreak. A&S Janitorial Services LLC is one of the commercial businesses affected by the COVID-19 effects. Bartik et al. (2020) say that "COVID-19 disruptions do not affect all businesses equally. Some are deemed essential and remained open, while others were required to close. Some businesses could shift employees to remote work, while others were ill-equipped for the transition."

The maintenance of cleanliness is one of the critical measures that need to address to prevent the coronavirus spread. Nonetheless, janitorial services fall among the top businesses that succumb to the coronavirus pain. According to A&S Janitorial Services LLC's books of accounts, it is clear that the company has experienced a significant drop in the net income since January 2019. When comparing the net income for 2019 and 2020, the values for 2020 are way lower than the ones for 2019. In 2019 (between January and March), A&S Janitorial Services LLC recorded a net amount of 2,650.46 US dollars. During the same time frame, the income amount in 2020 was recorded as 2,454.56 US dollars, thus indicating a reduced profit margin. In 2020 (between April and June), the recorded net income was 1,336.72 US dollars, while in 2020, the recorded amount was -1,918.19 US dollars during the same time frame. The negative net income in 2020 means that the company suffered a loss instead of profit.

COVID-19 spreads rapidly since the virus that causes it (SARS-CoV-2) can quickly spread through viral droplets. An infected individual can infect others faster than how the spread of common flu occurs. The only advantage that exists between COVID-19 and common flu is the easy inactivation of coronavirus. Thorough and proper cleaning disintegrates the virus, thus making it less effective. Due to this advantage generated from cleaning, A&S Janitorial Services LLC and other commercial cleaning services would be a perfect fit for the current fight over preventing the spread of COVID-19. However, instead of having an increased demand for these services, customers have a decreased rate of demand (Bartik et al., 2020). Some individuals have become paranoid and avoided the external services offered by commercial janitorial companies.

Being that most janitorial commercial businesses are small companies, they have suffered from problems such as limited capital to extend their services or to ensure stability. These companies have ended up laying off some of their employees to sustain their wage bills. Referring to A&S Janitorial Services LLC's accounting report, there are decreased salaries and wage bills in 2020 (April-June), estimated to be 1,715.23 US dollars. In January-March 2020, the amount paid for salaries and wages was higher at 7,639.34 US dollars. The amount paid for salaries and wages was higher in January 2020 than 2019 since there was a higher demand for janitorial cleaning services when COVID-19 spread just picked up. Many people ended up panicking, thus more increased demand for these services between January and March in 2020.

A&S Janitorial Services LLC paid more for utilizes in April-June than in January-March. The actual figures were estimated to be 2,221.43 US dollars in January-March and 3,671.25 US dollars in April-June. Utilities include things such as electricity, water, telephone, gas, and cable. Due to the increased demand for cleaning services, the costs for acquiring utilities rose, thus making the final figure to be higher with time. The spread of COVID-19 played a significant role in the increased cost. As utilities' cost rose, most businesses were forced to lay-off some of their employees to enable them to meet these costs, which is why there is a drastic reduction in the amount paid for salaries and wages in 2020 A&S Janitorial Services LLC between January and June.

Between January and March, the amount generated from sales can prove that the fear for COVID-19 spread was at its peak. From January to March 2020, A&S Janitorial Services LLC registered a record sales amount of 12,375 US dollars. The demand for these services was at the maximum, which is evident from the recorded sales figure. In April and June, there was a drastic fall in this figure. A drop in sales during this period might be due to the inability to afford the charged amounts. Some individuals also got used to the abnormal life due to the COVID-19 pandemic. Also, the laying-off of employees resulted in limited workers to offer services, thus reflected in the sales figures of the April-June period.

According to Murray (2019), there is no deduction of personal expenses, but other fees are paid to attorneys, independent contractors, and accountants. The Internal Revenue Service (IRS) mainly lists attorneys and accountants under the legal and professional fees category. Other professionals can also be recorded, though. A&S Janitorial Services LLC paid 24.95 US dollars for legal & Professional services only between April and June 2020. Legal and Professional fees are either paid for deducting or capitalizing (Murray, 2019). Capitalizing involves purchasing business assets while deducting costs in most cases, is paid for business tax return. Deducting or capitalizing these fees matters a lot. Mostly, the deducted fees form part of regular business operations. As a small business, A&S Janitorial Services LLC is a single-member LLC, therefore, shows the cost paid for legal and professional services in the section of expenses.

In conclusion, COVID-19 has affected many businesses, including the small and big ones making it challenging for everyone. Many organizations have played significant roles in helping reduce the number of affected parties. Proper management of the virus will help make things back to usual and enable businesses to return to their regular operation. People have to respect the health organization bodies' measures such as the World Health Organization (WHO) to help flatten the curve of infection cases. Small businesses such as A&S Janitorial Services LLC will also escape incurred losses when normal operations resume.

References

Bartik, A. W., Bertrand, M., Cullen, Z., Glaeser, E. L., Luca, M., & Stanton, C. (2020). The impact of COVID-19 on small business outcomes and expectations. Proceedings of the National Academy of Sciences, 117(30). https://doi.org/10.1073/pnas.2006991117

Murray, J. (2019, November 19). A Business Guide to Deducting Legal and Professional Fees. The Balance Small Business. https://www.thebalancesmb.com/deducting-legal-and-professional-fees-for-business-398955‌