All posts in category Stimulus Updates
05 / 18 / 2020 in Stimulus Updates

So, you got your PPP funding…Now what?

I know I have recently seen several of my clients and others receive their PPP funding. So, it was particularly important for me to jump in with a tool and a few tips to help you set yourself up for success with tracking these funds.

Please remember, information presented should not be construed as legal or tax advice. Consult your tax advisor about how this applies to your individual or business situation.

You can download a copy of the Google Sheet HERE– Please MAKE A COPY into your Google Drive OR download to EXCEL.

Some of the things I have added into this Proceeds Tracking Tool are:

  • Several examples of basic business expenses
  • Formulas set up to do the calculations for you
  • Your risk factors and other general “housekeeping” tips for tracking
  • Info on how your SBA Grant affects your PPP loan
  • As well as a special tab just for tracking EIDL Grant funds

One of the biggest ways we can begin to set ourselves up for success, in managing this, is to do all of the necessary paperwork and proper tracking to see how much could be forgiven and what will be needed to apply.

Download your own copy of my easy-to-use Proceeds Tracking Tool, then check out my latest video explaining how to use it!

Please note that this video was based on the most recent guidelines as of May 1, 2020. Any new updates may cause the information provided to change. If you see slight changes in the tool, please note that those may be a result of changes in the regulations.

If you are diligent and put in the work now, it will make it easier for you and your accountant to go back and allocate those expenses and provide better details and proof, so that you have a better chance of forgiveness.

I will be back soon with more information as I receive it.

 

 

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04 / 30 / 2020 in Stimulus Updates

4.23.2020 NYS Unemployment Update

Quick update:

 

New York State has updated the unemployment application to make it more streamlined and I wanted to take a moment to record a quick video to walk you through it.

 

This new system has made it MUCH easier for those of you who are self-employed. With this new system they are also able to clear up some of the backlog, so that more people are now getting paid the money they have been waiting for.

 

At this point, it is hard to know if those who are self-employed need to reapply with the new system. As this new streamlined application is designed with those with special circumstances in mind, it may be best to cancel your previous application and reapply. Although there may be a plan in place for transferring the applications already submitted, it may take longer then it would to just start over through the newer streamlined process.

 

That’s our thoughts, do what you feel is right for you.

 

Click below to watch my newest update regarding NYS Unemployment

 

***Information in this blog show not be construed as legal or tax advice. Please consult your tax advisor on how information presented applies to you.

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04 / 30 / 2020 in Stimulus Updates

STIMULUS 101: Mini-Series

This week I introduced a mini-series on Youtube on the current financial situation focusing on the PPP Loan. You may be wondering what all this means for you…

 

For those looking at unemployment, you’re probably wonder how to get your money or even the best thing to do with it. I recommend checking out the series of videos, but I am also going to summarize here the topics we covered.

 

If you are an employer, you may be wondering what’s the best option is at this time… Do you furlough your employees and let them collect unemployment or do you pay them yourself so you can apply for the PPP loan?

 

One of the biggest hurdles with the PPP loan is that there does not seem to be a clear-cut process for applying. I have had clients, using both small banks, as well as major banks that have been approved. I know a lot of people are stressed about the possibility of getting denied, but I do think, even though things may be delayed, there will still be some clients that will likely be approved. Once you do get approved, be aware that there may still be a delay between approval and when funds become available to you. There is not an action you can do to speed up the process, so the best advice I can give you is to just wait and remain positive.

 

That being said, I do want you to be careful about this PPP loan, the only free money right now is the Stimulus checks  being sent out to those who are eligible. The PPP loan, there are so many wrinkles. Forgiveness is not guaranteed, and I would imagine there may be more information that might not have been yet fully shared with us. I recommend giving both options a real hard look to figure out which one is best for you.

 

The money given with the PPP loan will not be taxable and is excluded from gross income, however there is a catch. Although this has not been finalized, this is most likely what will happen, according to experts in the industry. First of all, you will have to apply for forgiveness, this is not automatic. You also cannot deduct the expenses being paid for by the PPP funds; you will not pay taxes on the loan, but you will also not be able to deduct those expenses on your tax return like you have in years past. What I suggest from a mechanics standpoint, if you get funded, set up a block of accounts in your accounting system that will specify PPP expenses. Book your payroll, rent, or whatever is eligible as an additional expense. Keep these numbers separate and save yourself the headache later.

 

With a lot of people being furloughed or out of work, another big change is unemployment. This is a big change for both the employee and for the employer. There was a new 2 part program created for the state of New York.

 

The first part is the regular employment insurance you are already paying through your payroll tax every quarter. People who have already applied for unemployment do not need to do anything beside their regular weekly claims to get the additional funds or any back pay. They have increased the length of time that people can collect their funds.

 

For New York benefits only (though other states may follow suite), there is a second part created, due to how heavily it has been impacted by the virus. For the period between April 5th-July 31st, those receiving benefits will see an extra $600 a week. Be aware that unemployment benefits are taxable, so I would recommend having some tax withheld to ease paying it back later. For employers who are having to furlough their employees, I do recommend letting them know the benefits are taxable.

 

For those that are self-employed, you may be really confused about what options are available to you. There are only a couple things that have changed for you, for example if you do have employees, I recommend checking out the videos, in regard to furlough and unemployment.

 

You are eligible for the PPP loan even being self-employed. They decided to base it on the 2019 taxes schedule C form line 31. The formula for what you’re eligible for can be found by taking line 31, dividing it by 12 and multiplying by 2.5, that is the maximum loan amount. If you get funded, you would use that loan to pay yourself every 2 weeks or every 15 days a portion of that monthly average. You have 8 weeks from the date of loan funding.

 

Another thing applicable to those who are self-employed, if you are not eligible for the loan or are concerned about the forgiveness of it, I would recommend applying for unemployment. Although in the past those who were self-employed were not eligible, this has changed during the pandemic and may be a good option for you to keep you afloat until things return to normal. Right now, there is a lot of confusion about the best way to spend that money during the 8 weeks to guarantee the loan amount is forgiven. Talk to your tax advisor and wait for the best timing to take and use the loan so you make sure it is helping you instead of costs you.

 

In addition to those who are self-employed, there are those that deal with self-rentals. A self-rental is when you have a business and you rent a portion of a building, such as your home or something that you own, to the business and pay yourself rent. According to the PPP forgiveness, you can use those funds for rent, however it does not specifically address self-rentals. For this, tax advisors are recommending that you be careful and err on the side of caution. Right now, the care act is allowing up to 25% of the loan to be used for rent payments, but there is a concern that they may change the wording in the future. They may add a caveat in the future that self-renters are not eligible and then that amount you used to pay yourself rent will not be forgiven. Right now, the best recommendation is to wait and talk with your tax advisors to follow their best suggestion as to when or if to pay yourself.

 

Lastly, I just want to go over the basics on the forgiveness of the PPP loan. This is something that is going to be really important to pay attention to, as we fully expect that changes may be forthcoming that will change what is currently eligible for forgiveness. There are already a lot of contradictory statements about loan forgiveness so be careful.

 

First thing to keep in mind, once you get the loan you are not supposed to reduce your workforce. The second item is you are not supposed to reduce their salaries by more than 25%. As you can see this is going to create some confusion on payroll cost and how much will be forgivable. Pay special attention to this! Lastly, I wanted to again emphasize that forgiveness is not guaranteed. The banks are going to be in charge of making the decisions about these loans and what qualifies for forgiveness. The best advice I want you to take away from this series is to use caution, take it slow, and listen to your tax advisors.

 

The PPP loan can be very helpful, but there is a lot of misinformation that can create confusion and cost your business money. I will keep you posted as I learn more and will be there to help you figure it out together!

 

CLICK BELOW TO WATCH THE STIMULUS 101 MINI-SERIES ON YOUTUBE!

Stimulus 101: 4-17-2020 Update – 1 – Intro to Mini-Series

Stimulus 101: 4-17-2020 Update – 2 – the Non Taxable & the Non Deductible

Stimulus 101: 4-17-2020 Update – 3 – Unemployment Related

Stimulus 101: 4-17-2020 Update – 4 – For the Self- Employed

Stimulus 101: 4-17-2020 Update – 5 – Self Rentals

Stimulus 101: 4-17-2020 Update – 6 – Updates on a Few Basics

Stimulus 101: 4-17-2020 Update – 7 – Notes on Forgiveness of PPP

 

 

***Information in this blog show not be construed as legal or tax advice. Please consult your tax advisor on how information presented applies to you.

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