SBA PPP and EIDL Small Business Loans (some money is forgivable)

[TravelSER]

Thanks, I'll try it.

[cgr]

No person can earn forgiveness on more than approx $15,325, However as I posted earlier it's possible that you are allowed to hire an additional employee and pay him, which would be eligible for forgivness

I like this idea though I want to have another go at those rules to verify.

The only drawback is that if you have no payroll previously- I'm assuming most Schedule C's don't (I actually heard of a few that have Schedule C and payroll, but only got approval for the payroll portion), you'd need to set up a payroll, file 941's, set  up a disability tax account, a UI tax account, etc etc all for 5k or less... but again, this is dansdeals...

[cgr]

General question re self-employed. If someone earned $100K+ on 1099 in 2019, they're eligible for the full $20K+ loan and the full $15K+ forgiveness. What if they earn some money during the 8-week period, albeit reduced? Does the forgiveness calculation take into account earnings by the self employed person during this time?

It does not. This isn't a UI program where employment is measure by wages earned.

[cgr]

Two questions.

I see on the forgiveness form a place to put in if you received the EIDL advance. But it doesn't say anywhere on the form where you include that amount in your calculations! Are you supposed to subtract the amount on line 9?

Line 11: Enter the smallest of lines 8, 9, or 10. Note: If applicable, SBA will deduct EIDL Advance Amounts from the forgiveness amount remitted to the Lender.

I am an S corp and I pay myself payroll. Am I considered owner-employee? Would that mean I can't include state and local taxes in forgiveness? If I cant, can I raise my salary? Or include distributions (that go on a K1) into forgiveness?

I'm pretty certain that you can't include SALT in forgiveness.
Haven't seen any clarity on what owner's can do if they received loans based on payroll but also have K-1 or Schedule C- if they can use 8/52 of that as well for compensation.
Check out https://www.forbes.com/sites/brianthompson1/2020/05/18/ppp-loan-forgiveness-application-guidance-for-the-self-employed-freelancers-and-contractors/

[joeberg]

Has anyone been funded by Dime?

[TBD]

Has anyone been funded by Dime?

I received already the final loan funding docs from Dime, I just need to decide if I want to send it back already to start my 8 weeks or to wait still

[cgr]

If you hire your spouse I dont think you need to set up workers comp etc, If you pay only commission on 1099's, you dont even need to file 941's

You won't get forgiveness unless it's straight up payroll. 1099 doesn't qualify for forgiveness.

[TBD]

I like this idea though I want to have another go at those rules to verify.

The only drawback is that if you have no payroll previously- I'm assuming most Schedule C's don't (I actually heard of a few that have Schedule C and payroll, but only got approval for the payroll portion), you'd need to set up a payroll, file 941's, set  up a disability tax account, a UI tax account, etc etc all for 5k or less... but again, this is dansdeals...

Or, call your accountant, (whom you still owe money for filing last years return ) and tell him that you wanna hire him as a w-2 employee he should file now your 2019 return, but he will need to file all payroll reports for this also in order he should get his money

[cgr]

Or, call your accountant, (whom you still owe money for filing last years return ) and tell him that you wanna hire him as a w-2 employee he should file now your 2019 return, but he will need to file all payroll reports for this also in order he should get his money

Oh man. I can't color that far outside the line of ethical.
But thanks for the 

[TBD]

I'm pretty certain that you can't include SALT in forgiveness.
Haven't seen any clarity on what owner's can do if they received loans based on payroll but also have K-1 or Schedule C- if they can use 8/52 of that as well for compensation.
Check out https://www.forbes.com/sites/brianthompson1/2020/05/18/ppp-loan-forgiveness-application-guidance-for-the-self-employed-freelancers-and-contractors/

SALT is included in payroll costs, if payroll costs is limited to 8/52 to the owner, whats the difference if you include SALT or not?


f. What qualifies as ‘‘payroll costs?’’
Payroll costs consist of compensation
to employees (whose principal place of
residence is the United States) in the
form of salary, wages, commissions, or
similar compensation; cash tips or the
equivalent (based on employer records
of past tips or, in the absence of such
records, a reasonable, good-faith
employer estimate of such tips);
payment for vacation, parental, family,
medical, or sick leave; allowance for
separation or dismissal; payment for the
provision of employee benefits
consisting of group health care coverage,
including insurance premiums, and
retirement; payment of state and local
taxes assessed on compensation of
employees; and for an independent
contractor or sole proprietor, wages,
commissions, income, or net earnings
from self-employment, or similar
compensation.

[cgr]

SALT is included in payroll costs, if payroll costs is limited to 8/52 to the owner, whats the difference if you include SALT or not?


f. What qualifies as ‘‘payroll costs?’’
Payroll costs consist of compensation
to employees (whose principal place of
residence is the United States) in the
form of salary, wages, commissions, or
similar compensation; cash tips or the
equivalent (based on employer records
of past tips or, in the absence of such
records, a reasonable, good-faith
employer estimate of such tips);
payment for vacation, parental, family,
medical, or sick leave; allowance for
separation or dismissal; payment for the
provision of employee benefits
consisting of group health care coverage,
including insurance premiums, and
retirement; payment of state and local
taxes assessed on compensation of
employees; and for an independent
contractor or sole proprietor, wages,
commissions, income, or net earnings
from self-employment, or similar
compensation.

They go on separate lines on the Forgiveness Application. Owner's cannot include (so it would seem) anything other than line 9- Owner Compensation. They cannot add on top of that SALT, Retirement, or Healthcare Benefits.
The hope was that they'd be able to add that on top of the 8/52- just like employees are limited to 100k but other benefits can be added on top of the 100k.

[beeweegee]

Now that it seems clear that an independent contractor will need to show documentation/proof of payment of 8/52 in order for that part to be forgiven, would only cutting a check work? Or would a bank transfer work just as well...?

[TBD]

Now that it seems clear that an independent contractor will need to show documentation/proof of payment of 8/52 in order for that part to be forgiven, would only cutting a check work? Or would a bank transfer work just as well...?

Documentation needed

In addition to the application itself, you will need to submit some documentation. You must also keep these documents for “for six years after the date the loan is forgiven or repaid in full, and permit authorized representatives of SBA, including representatives of its Office of Inspector General, to access such files upon request.”

Here's what you need:

For Payroll

Nothing! The SBA didn’t list any documentation needed for people without employees. You had to submit your schedule C with your application, so they have the document that they need to confirm what you pay yourself.


https://www.forbes.com/sites/brianthompson1/2020/05/18/ppp-loan-forgiveness-application-guidance-for-the-self-employed-freelancers-and-contractors/


Dont know if you also dont need to write the check, or you just dont have to submit the proof

[cgr]

Dont know if you also dont need to write the check, or you just dont have to submit the proof

So frustrating that they're releasing half-baked instructions.
Line 9 says "Paid" but no direction on what they mean by that... could mean you need to cut yourself a check/transfer, could mean 8/52 is a given regardless...

[beeweegee]

So frustrating that they're releasing half-baked instructions.
Line 9 says "Paid" but no direction on what they mean by that... could mean you need to cut yourself a check/transfer, could mean 8/52 is a given regardless...

Documentation needed

In addition to the application itself, you will need to submit some documentation. You must also keep these documents for “for six years after the date the loan is forgiven or repaid in full, and permit authorized representatives of SBA, including representatives of its Office of Inspector General, to access such files upon request.”

Here's what you need:

For Payroll

Nothing! The SBA didn’t list any documentation needed for people without employees. You had to submit your schedule C with your application, so they have the document that they need to confirm what you pay yourself.


https://www.forbes.com/sites/brianthompson1/2020/05/18/ppp-loan-forgiveness-application-guidance-for-the-self-employed-freelancers-and-contractors/


Dont know if you also dont need to write the check, or you just dont have to submit the proof

Thanks - yes, so frustrating. So then I'd imagine you both agree that a bank transfer is definitely enough (if not unnecessary) for an independent contractor, and that a check is certainly not required?

[cgr]

Thanks - yes, so frustrating. So then I'd imagine you both agree that a bank transfer is definitely enough (if not unnecessary) for an independent contractor, and that a check is certainly not required?

I don't think there's a legal difference between a cancelled check and a wire transfer confirmation from your bank.

[yitz1000]

I don't think there's a legal difference between a cancelled check and a wire transfer confirmation from your bank.

Transfers may not be a issue legally but cutting checks is definitely cleaner

[TBD]

Just realized something about PPP.

Many individuals with very small 1099/Schedule C held back from going for PPP because UI is more beneficial.

In NY (and this is even more lucrative in NJ) you can file for partial UI if you earn $504 or less, and work 3 days or less.
That means that someone with a 26k Schedule C can apply for a PPP of 5.4k, get 4k forgiven (comes out to $500/weekly) as 8/52 owner compensation, and use about 1.3k for other expenses. (Looks like all sole props will need to return that remaining 1%), and then would still be eligible for partial UI. Assuming he gets the minimum benefit rate on PUA, this is what it would look like for those 8 weeks:

PPP- $500/weekly
UI- between $136.50 and $45.50 depending on how many days you work for your Schedule C business (NY min PUA is $182- his rate gets cut by 25% for each day he works)
FPUC- $600
Total Weekly- between $1,145.50 and $1,236.50

You'd have to be willing to go through the process of applying for PPP and the forgiveness after, all in order to get that extra 5.3k... but hey, this is DansDeals we're talking about.

I didnt find it in the rules but according to what you need to answer when you certify for UI, the $504 limit doesnt apply if your income is from SE



2. How many days did you work, including self-employment, during the week ending 5/17/2020?
 
2a. Excluding earnings from self-employment, did you earn more than $504?
Yes No NA

[cgr]

I didnt find it in the rules but according to what you need to answer when you certify for UI, the $504 limit doesnt apply if your income is from SE



2. How many days did you work, including self-employment, during the week ending 5/17/2020?
 
2a. Excluding earnings from self-employment, did you earn more than $504?
Yes No NA

I'm aware but a) that's because you're usually not entitled to UI when self-employed only. Now with PUA it can't possibly be that you can earn your usual $ and certify for UI, otherwise it wouldn't be a UI program for the self-employed unemployed... B) https://www.labor.ny.gov/ui/claimantinfo/onceyouhaveappliedfaq.shtm#9

[TBD]

I'm aware but a) that's because you're usually not entitled to UI when self-employed only. Now with PUA it can't possibly be that you can earn your usual $ and certify for UI, otherwise it wouldn't be a UI program for the self-employed unemployed... B) https://www.labor.ny.gov/ui/claimantinfo/onceyouhaveappliedfaq.shtm#9

The question is not about prior employment, its about current employment.
You were an employee, fired from your job, they are asking are you currently working? Are you CURRENTLY receiving $504 from employment EXCLUDING CURRENT SELF EMPLOYMENT.



The attached link is only about working not about earnings. If you receive $600 a week from PPP SE without working you should be able to certify weekly for benefits