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First, please don’t panic! As of today, April 16, 2020, some banks have TEMPORARILY suspended applications for the PPP. This is only temporary until they appropriate more money in Congress. Check with your bank weekly to see when they are accepting PPP applications again.
To read the full details of my analysis of The Coronavirus Relief Bill, The CARES Act, including the Paycheck Protection Act, CLICK HERE.
IMPORTANT UPDATE ON PPP. Gross payrolls paid are not forgivable, only a portion.
When you calculate your gross payroll, remember to use the Medicare Taxable figure, which would be the maximum payroll number before federal income taxable deductions.
The total amount of your PPP loan, may not be the total forgivable amount.
Not included: Employer and Employee FICA taxes, and Federal and State Income Taxes withheld from employees between February 15, 2020 – June 30. Please keep this mind when budgeting for these funds.
This means that businesses are eligible for loan forgiveness based on the after tax pay to employees (after FICA and income tax are withheld) not the gross pay made by the employer.
The possible trap here is that your loan may be based on 2.5 times your gross monthly average 2019 payroll, but the amount forgiven will not be that much.
At least 75% PPP loans proceeds must be used on payroll costs (whether or not used in the 8 week period eligible for forgiveness and to be eligible forgiveness such payroll cost must be paid during such 8 week period).
Independent contractors do not count as employees for PPP loan calculations or loan forgiveness.
Borrower Paycheck Protection Program Application (v1)
The amount that is forgivable under the PPP is NOT gross payroll, but certain “payroll costs” as defined by the Bill.
Sole proprietors can apply for the PPP based on their net Schedule C Income.
Much, if not all of this, is FORGIVABLE, if guidelines are followed.
This application should be brought to an SBA Lending Bank starting Friday, April 3, 2019.
Click to open and print. https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf
PPP Borrower Information Fact Sheet
Click to open and print. https://drive.google.com/file/d/1AfklMeG3SHHg4Z02Bdn0Wk3WCIb08h5m/view?usp=sharing
The following documents may be requested, if they exist, prior to your approval.
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- Articles of incorporation/organization
- Bylaws/operating agreement
- All owners’ drivers’ licenses
- IRS forms 940, 941 and 944
- Payroll summary report with corresponding bank statement (If not available, employee pay stubs as of February 15, 2020 with corresponding bank statement and breakdown of payroll benefits)
- 1099s (for independent contractors)
- Certification that all employees live within the U.S.
Questions? Concerns? Call me on (732) 673-0510.
Please reach out to me without hesitation with any tax, business or accounting question, and to schedule a consultation.
Click here to request a consultation or ask me a question.
Tax Laws are complex.
It is very easy to make mistakes that can incur penalties.
Do you have a Tax, Accounting or Business Question?
Call Me Immediately. (732) 673-0510.
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ignoring your Phone Calls and Emails?
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Remember,
“If We Aren’t Working For You, Then You Aren’t Working At Your Best”
Chris Whalen, CPA
(732) 673-0510
81 Oak Hill Road
Red Bank, NJ 07701
www.chriswhalencpa.com
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