Stimulus Packages Round 2

Over the holiday DC has been hard at work to get more funding to individuals and businesses. Here is what you need to know to make sure that you can get your loans and the funds you need to keep your business afloat into a hopeful 2021.

The PPP loan allows for businesses to have the government pay their payroll tax free. As well, businesses are allowed to claim the Employee Retention Credit against the wages paid with the PPP funds. Meaning as a corporate shareholder, I can pay myself a shareholder wage of $7500 and pay $1,147.50 in payroll taxes, $42 in Federal Unemployment, and approximately $189 in State Unemployment. Meaning the government essentially gave you and income and $7500 and paid $1378.50 in payroll taxes; to give you a net of 6121.50 corporate tax free. The employee retention credit is now saying that they are going to give you up to 50% of the payroll taxes back meaning that the PPP funds can go further for your business.

What you should do as an Employer, have all of your financial statements and records in order to be eligible for the loan. If you did not get a PPP loan in the first round, you can choose between 2019 or 2020 payroll costs to calculate your eligibility. If you did get a PPP round 1 loan the you will have to prove your loss of 25% of revenues in comparison of financial statements.

There will be also another round of EIDL grants and loans. grants will be given based on percentage of revenues rather than employees like the last round. EIDL loans will have additional funding for the SBA to give out as non forgivable business loans.

As a shareholder, if you choose to use your stimulus check to help support your business; put it on the books as a shareholder loan. You would want to do this, for when your business is able to pick back up, you are able to pay yourself back $2000 without having to be taxed on that income personally. So on, any funds that you have personally given the business to keep it open for 2020 shall go on your accounting records as shareholder loans.

When you go to file the PPP application, I recommend going with a smaller bank or credit union that is a SBA Creditor. I recommend this because smaller banks can help their customers a lot quicker than the mainstream banks can due to the mainstream banks having a plethora of customers to serve all together.