Whenever you’re talking taxes, reading about taxes, planning to reduce your business taxes, you first need to know how the … Her loan forgiveness amount is automatically = $10,417. In most cases this will be equal to the entirety of a sole proprietor’s PPPP loan (subject to a $20,833 cap). The PPP loan can be forgiven entirely if it’s used properly and if businesses can prove that. in order to have their entire loan forgiven. Note: For an independent contractor or sole proprietor, you must have claimed or be entitled to claim a deduction for these expenses on your 2019 Form 1040 Schedule C in order to claim them as expenses eligible for PPP loan forgiveness in 2020. Luckily, the forgiveness process is especially easy and favorable for sole proprietors. Share this article. Your bank might consider forgiveness if you comply with SBA Guidelines. We created a comprehensive, comprehensible guide all about PPP loan forgiveness for the self-employed, sole proprietors, and independent contractors. You got your PPP sole proprietor loan? Here's how self-employed folks will fill out the PPP Forgiveness Application form—this applies to sole proprietors, independent contractors, and partnerships without employees. Learn more about how we can help you stay informed on your business. Let’s look at the calculation. With independent contractors and self-employed individuals becoming eligible to apply for U.S. Small Business Administration Paycheck Protection Program (PPP) loans Friday, April 10, 2020, the SBA issued an interim final rule on how Schedule C sole proprietors and individual partners in a partnership should treat their self-employment income regarding the PPP loan process. Before we jump into loan forgiveness application forms (and how to determine which form is right for your business), let’s quickly review the requirements for PPP loan forgiveness. 1B. This example happens to be the maximum loan amount any sole proprietor will be eligible for. If you are using an 8-week forgiveness period, you can claim 8 weeks’ worth of owner compensation replacement. Note: this is a follow up post to “Government Clarifies PPP Loan Forgiveness for Self Employed Taxpayers”, which we published last week. Using the OCR, sole proprietors can claim forgiveness based upon 2019 net profit. How it Works. This applies to PPP loans using a 24-week covered period. Loan details As with any loan, it’s important to understand the terms. Our 4 minute guide about Owner Compensation Replacement breaks down some common questions about using it, including if it’s compatible with PUA (spoiler alert—it’s not). Education. You do NOT receive a W-2 paycheck from your business. Your bank might consider forgiveness if you comply with SBA Guidelines. To be eligible for forgiveness, at least 60% of the PPP funds must be spent on payroll costs. We expect the big lenders will set up their own online application process, so you may not need to fill out the SBA’s version of the form. The PPP FAQs also clarifies that all PPP lenders may accept scanned copies of signed loan forgiveness applications and documents containing the information and … In this case, the PPP accounting rules allow the sole proprietor to use all of the $20,000 for “owner compensation replacement.” And in fact, to get forgiveness, the business may need to use the entire PPP loan for that. Example. You can count rent, mortgage interest and utility payments toward forgiveness as well. That means that the maximum possible loan amount is $20,833, and this entire amount can be used as personal income replacement. Your bank might consider forgiveness if you comply with SBA Guidelines. Essentially, the business owner has eight weeks to spend the money on specific expenses in order to have it completely forgiven. How sole proprietor PPP loans are calculated. You do NOT receive a W-2 paycheck from your business. Get started on a free trial today to learn more. Their PPP loan limit is easy enough to calculate: $48,000 / 12 = $4,000 x 2.5 = $10,000. This is especially useful for sole proprietors, as their businesses rely on themselves alone. PPP loan forgiveness requirements. You do NOT get taxed as an S-Corporation. As long as they fit within the categories of utilities, rent, and mortgage interest, home office expenses can be forgiven. Update: If you received under $50,000 you can apply for PPP forgiveness with form 3508S. For sole proprietors or independent contractors with no employees, the maximum possible PPP loan is therefore $20,833, and the entire amount is automatically eligible for forgiveness as owner compensation replacement. You will need to prove your expenses for utilities, rent, and mortgage interest. Sign up for a trial of Bench. You got your PPP sole proprietor loan? Sally is Sole Proprietor with no employees. Generally, eligible expenses your business pays can be claimed as tax deductions. You operate as a sole proprietorship or a single-member LLC. UDPATE: Not so fast on this. Remember, a sole member LLC files a Schedule C, so they are included here as well. Reply. The PPP loan forgiveness application process has recently experienced various changes, and there are several forms and requirements associated with the different methods of applying for forgiveness. No pressure, no credit card required. Sole proprietor and independent contractor requirements. However, for the owner compensation replacement, you just need to provide your 2019 Schedule C to be able to claim the amount for forgiveness. Simplified Reporting Requirements No. That means the maximum possible loan amount is $20,833, with $15,385 automatically eligible for forgiveness as owner compensation replacement. Identifying Your 24-Week Period: The 24-week period during which expenses must be incurred or paid: Originally, forgiveness of the PPP loan was possible if recipients of the loan spent at least 75% of the loan on payroll expenses within 8 weeks of receiving the loan. Owner compensation up to $100k is a legitimate, forgivable expense for sole proprietorship PPP loans and is calculated into the total amount received; you cannot apply for a second/separate PPP loan. Eligibility requirements for PPP loan forgiveness include: The PPP loan amount was used to cover approved expenses. For self-emplyoed individuals that have multiple businesses with PPP loans, you are capped at $20,833 in owner compensation replacement across all loans obtained by all businesses. So, sole proprietors with no employees can have the full amount of the loan paid off. SBA and your lender will take the advance amount into account when determining forgiveness of your PPP loan, reducing your forgiveness dollar-for-dollar by the value of your EIDL advance. The SBA has now made it clear that businesses can use a Schedule C filled out for January and February 2020 if the business started after June 30, 2019. So, sole proprietors with no employees can have the full amount of the loan paid off. Add the sole proprietor’s 2019 Schedule C line 31 net profit, up to $100,000, to 2019 gross wages paid to employees (up to $100,000 max per employee) ... 2020 (such amounts are not eligible for PPP loan forgiveness). However, since sole proprietors usually don’t have payroll, their PPP loan is instead based on 2019 net profit as reported on the 2019 Schedule C tax return divided by 12. In essence, the PPP loan should be roughly ten weeks’ worth of 2019 net profit. The minimum 75% rule spent towards payroll costs to be eligible for full forgiveness has been decreased to 60%. The best part? As a sole proprietor, 1099 contractor, single-member LLC, or a gig economy member, you may be eligible for a PPP loan. Now, how do you get that amount forgiven, since you don’t have payroll to spend it on? If you do, then you face very different Payroll Protection Program (PPP) loan forgiveness rules than a sole proprietor or Single Member LLC would face. PAYCHECK PROTECTION PROGRAM (PPP) LOAN FORGIVENESS PRE-WORK EXAMPLES ® Chase for Business | Loan Forgiveness pre-work examples 2 ABC Cookies received $20,833.00 in a PPP loan on May 4, 2020, and spent the funds across an 8-week Covered Period, which ended on June 29. 4. Let’s say a sole proprietor has 2019 net income of $48,000. PPP Loan Forgiveness for the Self-Employed Frequently Asked Questions This calculator estimates forgiveness for self-employed individuals who file Schedule C and have no employees. The lender (i.e. In this case, the PPP accounting rules allow the sole proprietor to use all of the $20,000 for “owner compensation replacement.” And in fact, to get forgiveness, the business may need to use the entire PPP loan for that. However, any expenses that you claim for forgiveness under the PPP will not be allowed to be claimed for a deduction. Answer: Sole proprietors, independent contractors, and self-employed individuals who had no employees at the time of the PPP loan … The amount of Owner Compensation Replacement you’re eligible to claim for forgiveness is calculated by multiplying your reported net income in 2019 on your Schedule C by 2.5/12 (or 0.208). But, as a sole proprietor, how can you prove the funds were used on a payroll if you don’t have payroll? However, they are the ones looking into the nitty gritty details to prove to the SBA that you had followed all the rules. According to the original CARES Act rules for PPP loans, no forgiveness was allowed unless the borrower spent at least 75% of loan proceeds on payroll expenses. Now the forgiveness comes in. Schedule C Sole Proprietor – With Employees. Take 7 minutes to learn all you need to know about Form 1040 here. About 60% of the PPP loan must be used on payroll costs and 40% on non-payroll expenses. Start a Free Trial. We created a comprehensive, comprehensible guide all about PPP loan forgiveness for the self-employed, sole proprietors, and independent contractors. For example, if you receive $15,000 in owner compensation from one business, you will only be able to receive $5,833 compensation from all other businesses you have an ownership stake in. Her PPP loan was $50,000/12*2.5 = $10,417. Sole proprietors and independent contractors are finding the PPP loan especially appealing because of the “owner compensation replacement” concept that can grant them full forgiveness, letting them use the funds however they want. But in the real world, there’s not always a separate account…. You CAN have employees or subcontractors other than yourself. You must apply for forgiveness within 10 months after the end of the ‘Covered Period.’ which is the 24-week period that starts when you received your PPP loan. However, you will have a $21,000 tax liability (21% corporate rate). To keep things simple, assume a sole proprietor received a $20,000 PPP loan based on the sole proprietorship earning $100,000 in 2019. For sole proprietors or independent contractors with no employees, the maximum possible PPP loan is therefore $20,833, and the entire amount is automatically eligible for forgiveness as owner compensation replacement. Borrowers who received loans prior to June 5, 2020, may elect to use the 8-week forgiveness covered period and can claim eight weeks’ worth of OCR. You do NOT get taxed as an S-Corporation. Are you an independent contractor or sole proprietor with no employees and curious WHY you have to fill out the crazy-long PPP forgiveness application? However, since sole props and contractors usually don’t have payroll, their loan is based on 2019 net profit divided by 12, to get a monthly “average” net profit. I hope that clears things up for you! We are an online bookkeeping provider powered by real humans. Generally, the PPP loan amount that businesses qualify for is based on their average payroll expenses. But they must be for spaces … Pricing. The remaining PPP funds will need to be spent on utilities, rent, and mortgage interest expenses in order to be forgiven. Under the CARES Act, borrowers are eligible for forgiveness of funds spent during the “Covered Period” – the 24 weeks after disbursement, or until the end of the year, whichever is earlier. Yes, it’s possible that your entire PPP loan can be claimed as personal income replacement! Her loan forgiveness amount is automatically = $10,417. Sole proprietors might be eligible for PPP full loan forgiveness if they: Used 60% or more of the loan to cover payroll (or, in the case of sole proprietors, net profit) Used no more than 40% on qualifying expenses, like mortgage interest, rent, or utilities. It looks like loan forgiveness for a sole proprietor is based on taking 2019 net income, dividing by … Which loan forgiveness application should sole proprietors, independent contractors, or self-employed individuals with no employees complete? It is not necessary to document any payroll. Phone: 301-850-1246 Toll Free:  866-604-3882 Fax: 301-441-9602. Your owner compensation replacement value is two and a half months of your net income as reported on your 2019 Schedule C, with an annualized cap of $100,000. Leave a Reply Cancel reply. PPP Loan. Learn more about how we can help you stay informed on your business. Friends don’t let friends do their own bookkeeping. a CPA’s guide on how the PPP and other relief programs will affect your 2020 taxes. Below, we’ve provided a summary of the various application options which is intended to help borrowers make the right decision as to which application method to utilize. The PPP FAQs also clarifies that all PPP lenders may accept scanned copies of signed loan forgiveness applications and documents containing the information and … Remember, if you choose the new the 24 week forgiveness window, 100% of a sole proprietor’s PPP can be forgiven. The payments made by a sole proprietorship to the owner aren’t tax deductions. Luckily, the forgiveness process is especially easy and favorable for sole proprietors. Email me at [email protected]. (Check out a CPA’s guide on using an 8-week or 24-week period). Sole proprietors might be wondering how this applies to them, given that they don’t have any employees to pay. Take 7 minutes to learn all you need to know about Form 1040 here. To qualify for forgiveness as an independent contractor or sole proprietor, you must spend your full loan on compensation, such as wages, income, commissions or net earnings. Forgiveness applications are not being accepted or processed just yet. Get started on a free trial today to learn more. If you correctly calculated the original PPP loan amount and spent those funds on forgivable costs, you should get full forgiveness. Identifying Your 24-Week Period: The 24-week period during which expenses must be incurred or paid: A forgivable PPP loan is already tax-free, so the IRS wants to prevent double-dipping (getting free money from the same source twice). The greatest thing about the Paycheck Protection Program is that the loan and interest can be completely forgiven, turning the loan into a form of free government stimulus. All Rights Reserved. Submitting Form 3508S Forgiveness Application To receive forgiveness, a borrower submits the completed 3508S loan forgiveness application (or an online equivalent) and any required documentation to the PPP lender. Schedule A worksheet instructions (pp 7-8) 4. This form applies to you as long as you don’t have employees on payroll. PPP loans for sole proprietors are determined by the borrower’s owner compensation replacement based on 2019 net profit with an annualized cap of $100,000. Example. This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. If you don’t have any eligible business expenses you can use the PPP funds for, the remaining balance of the loan will need to be repaid according to the PPP loan terms. Specify the forgiveness amount requested. 5. This is especially useful for sole proprietors, as their businesses rely on themselves alone. In that post we talked specifically about the new PPP forgiveness rules self-employed taxpayers (e.g., sole proprietors, … Hello, I have read the following online and wanted to get any professional opinion if accurate. Forgivable Loan Request $17,708 ($85,000 ÷ 12 * 2.5) If you received your loan after June 5, 2020, you apply based on the 24-week period. As a reminder, only businesses that were operating prior to February 15, 2020 are eligible for a PPP. Application instructions (pp 1 & 2) 2. In order to have your loan forgiven, you need to use a certain amount of the loan exclusively for payroll expenses (as a sole proprietor, essentially you are going to use the loan to pay yourself). 2019 Net Sched C (Line 31) = $85,000. There is no requirement that this money be spent a particular way, and it is not necessary to document any payroll. Just as PPP loan applications were funneled to the SBA through borrowers’ banks, so are the applications for loan forgiveness, said attorney David Roth of Munsch Hardt Kopf & … This $669 billion-dollar loan program was designed to help businesses negatively affected by COVID-19 continue to pay their employees. Now the forgiveness comes in. Her 2019 Schedule C Net Income was $50,000. Sally is Sole Proprietor with no employees. They’ll get a $10,000 PPP loan. Under the PPP Flexibility Act, you can also calculate your maximum loan based on eight weeks of compensation up to $15,385. To be eligible for forgiveness, at least 60% of the PPP funds must be spent on payroll costs. Your net profit should be what is found on your Schedule C (also referred to as Form 1040). This is everything we know based on information directly from the SBA, the 19th Interim Final Rule (IFR) filed on June 19th, 2020, and the last update for loans of $50,000 or less released on October 8, 2020. For instance, if your business is a C corporation, that borrowed $100,000 in a PPP loan, and you used the funds on expenses that qualify for PPP loan forgiveness, that amount won’t be included as taxable income at the end of the year. PPP Loan Forgiveness for Sole Proprietors: 100% for Salary? They’ll get a $10,000 PPP loan. Now you have your maximum PPP forgiveness amount—up to $20,833. We’ll do one month of your bookkeeping and prepare a set of financial statements for you to keep. This is capped at $100,000 per employee. SBA PPP Loan Guidance on Sole Proprietors & Self-Employed Businesses First Southwest Bank • April 14, 2020 The following information is based on our interpretation of the CARES ACT, the SBA Interim Final Rule (and amendments), as well the guidance from the US Treasury in their FAQ’s (as updated). But the $20,000 isn’t taxable. The reason? When Can I Submit My PPP Forgiveness Application? Disclaimer | Site Map | Privacy Policy | Business Development Solutions by FindLaw, part of Thomson Reuters, How to Get PPP Loan Forgiveness as a Sole Proprietor, An Employer’s Guide to the COVID-19 Vaccine, SBA Cracks Down on PPP Abuse With New “Necessity Questionnaire”, AP Investigation Finds Sexual Misconduct In High Ranks Of FBI, Fourth Circuit Sheds Light on “Reasonable” Accommodation Requests, Tipped Workers Deserve Protection From Harassment By Customers. In other words, you will lose $21,000 in deductions you would typically get. The PPP Flexibility Act has extended the term of PPP loans to five years (from two) at a one percent interest rate. The PPP limits compensation to an annualized salary of $100,000. Exceptional Legal Counsel in Maryland, Virginia, and Washington, D.C. by thatcherlawfirm | Sep 25, 2020 | Firm News |. The 8 week period applicable to forgiveness has been extended to 24 weeks. Your email address will not be published. Continue with your ongoing bookkeeping and recordkeeping habits. However, since sole proprietors usually don’t have payroll, their PPP loan is instead based on 2019 net profit as reported on the 2019 Schedule C tax return divided by 12. Note: For an independent contractor or sole proprietor, you must have claimed or be entitled to claim a deduction for these expenses on your 2019 Form 1040 Schedule C in order to claim them as expenses eligible for PPP loan forgiveness in 2020. You got your PPP sole proprietor loan? Bench’s monthly reports equip you with what you need for relief applications and beyond. The Top (Lesser Known) COVID-19 Small Business Relief Resources, A Guide to SBA 7(a) Loans for Small Businesses. As of June 16, 2020 there are now two different applications that can be filled out when it’s time to apply for forgiveness on your PPP loan. Example 1.1: Mary is a sole proprietor running a flower shop with no other employees. Their PPP loan limit is easy enough to calculate: $48,000 / 12 = $4,000 x 2.5 = $10,000. Example 1.1: Mary is a sole proprietor running a flower shop with no other employees. If you do have payroll expenses, then you can use the standard forgiveness application. This forgiveness happens no matter what you do with the money. When it comes time to apply for forgiveness, sole proprietors can claim “Owner Compensation Replacement,” which allows them to automatically claim a portion of their PPP loan as lost profit. The first thing that will happen is the loan proceeds will go into the sole proprietor’s bank account. No, the Treasury has indicated that if you filed a Schedule C for 2019, you must use it when applying for the PPP. Applying for PPP Loan Forgiveness •Forgiveness Forms -11 pages •Breaks into five pieces; 1 and 2 must be submitted to Lender: 1. 1B. The forgivable portion is equal to 2.5 months’ worth of their 2019 net profit. How Do Sole Proprietors Prove Usage of Funds for PPP Loan Forgiveness? Why? If for some reason your loan is not forgiven, you can repay it based on the latest PPP loan terms. This is called “Owner Compensation Replacement”—it makes things nice and simple. It really is best if this is a separate business account! However, if a sole proprietor’s loan took other expenses into account and they are unable to have 100% of their loan forgiven as Owner Compensation Replacement, they would still need to spend the remainder of their loan on approved purposes (e.g., rent, utilities, mortgage interest, etc.) For example, if a Sole-Proprietor has the following net-income in 2019, the PPP would be as follows: $80,000 net-income, equates to $16,666 . You operate as a sole proprietorship or a single-member LLC. Sole proprietors might be eligible for PPP full loan forgiveness if they: Used 60% or more of the loan to cover payroll (or, in the case of sole proprietors, net profit) Used no more than 40% on qualifying expenses, like mortgage interest, rent, or utilities. Bench assumes no liability for actions taken in reliance upon the information contained herein. You received a PPP loan of any type. PPP Forgiveness Application and Attestation (pp 3 & 4) 1. This number times 2.5 equals your PPP loan amount. You can review our article on Home Office Deductions and the PPP in just 3 minutes. At 1% interest for 5 years, it’s one of the best loan terms you can find, but there is no prepayment penalty if you wish to pay it all off early. As a sole proprietor, your loan is based on your 2019 net profit divided by 12 – this is what gets you to a … Based on the new forgiveness application form 3508EZ if you received your PPP loan on or before June 5, 2020, you may choose an 8-week Covered Period or a 24-week Covered Period. To qualify for forgiveness as an independent contractor or sole proprietor, you must spend your full loan on compensation, such as wages, income, commissions or net earnings. These are advertised as being “fully forgivable.” But here’s where the “gotchas” set in. Are you an independent contractor or sole proprietor with no employees and curious WHY you have to fill out the crazy-long PPP forgiveness application? The PPPFA lowers the threshold to … But you need to meet certain criteria to be eligible for the EZ form. 1 (888) 760 1940. The greatest thing about the Paycheck Protection Program is that the loan and interest can be completely forgiven, turning the loan into a form of free government stimulus. Our free PPP checklist can make staying on top of forgiveness a breeze. Let’s say a sole proprietor has 2019 net income of $48,000. Required fields are marked * Name * Email * Your Review. Her PPP loan was $50,000/12*2.5 = $10,417. Point 3 — Eventual forgiveness of the PPP loan is calculated as follows: 8 weeks worth of 2019 Schedule C income is … This forgiveness happens no matter what you do with the money. Resources . And note that a sole proprietor without employees enters zeros in both fields. Your personal bookkeeper will be there to walk you through everything so there’s zero learning curve. The smallest borrowers — namely sole proprietors with no employees and firms that took less than $50,000 — … Update: If you received under $50,000 you can apply for PPP forgiveness with form 3508S. Sole proprietor and independent contractor requirements. … This is everything we know based on information directly from the SBA, the 19th Interim Final Rule (IFR) filed on June 19th, 2020, and the last update for loans of $50,000 or less released on October 8, 2020. These FAQs are for informational purposes only, are general in nature, and should not be relied upon or construed as a legal opinion or legal advice. The money is to be spent on … Schedule A (p 6) 1. Instead of spending your funds on payroll, you can automatically get 2.5 month’s worth of net profit forgiven, without having to spend it on anything. Her 2019 Schedule C Net Income was $50,000. Out of that account, you will “pay” yourself by writing a check to yourself, or initiating a transfer between the busine… For 100% of solo sole props, this means they will have at least some loan remaining in the end. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. PPP Loan Forgiveness Application for Small Businesses. Log In. This is essentially your entire PPP loan, assuming your loan amount did not factor in additional payroll expenses. Check out a CPA’s guide on using an 8-week or 24-week period. Good bookkeeping is essential if you have a PPP and helps you master your business. (Update: below is what bankers told me; but read the Forbes article I linked to above; it looks like loan forgiveness is automatic on an amount equal to: 2019 net income, divided by 52, times 8.) If participating in the EIDL program, sole proprietors without employees received $1000 in a loan advance. All or part of the PPP loan you receive can be forgiven if you keep your fulltime employees or rehire them within 24 weeks of receiving the loan or by December 31, 2020. © 2020 Thatcher Law Firm. One of them—Form 3508EZ—is much shorter and simpler than the other. For Accountants. Your bank might consider forgiveness if you comply with SBA Guidelines. Keep in mind that your lender and the SBA have the right to request and audit your business’s financial documents and records, as outlined in your loan agreement. A concept called owner compensation replacement was introduced to help answer that exact question. The PPP loan has a two-year maturity timeline with a 1% interest rate. The PPP limits compensation to an annualized salary of $100,000. This is important as now 100% of the PPP loan given to a sole proprietor with no other payroll can be forgiven! Check out a CPA’s guide on how the PPP and other relief programs will affect your 2020 taxes. As we previously blogged, Congress established the Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Unlike ordinary employers, whose loans were calculated based on their average payroll expenses, sole proprietors’ PPP loans were determined by calculating 2.5 times their average monthly net incomes in 2019. Most sole proprietors and independent contractors will likely get their loans forgiven based on the changes made by the PPP Flexibility Act and subsequent SBA rulings. You CAN have employees or subcontractors other than yourself. Describe any EIDL Advance. If the borrower obtained an EIDL advance, provide the amount and the EIDL application number. You got your PPP sole proprietor loan? Here’s how forgiveness works for self-employed individuals. Speak with a lender and fill out an application to determine exact eligibility. However, they are the ones looking into the nitty gritty details to prove to the SBA that you had followed all the rules. But the $20,000 isn’t taxable. Sole proprietors might be wondering how this applies to them, given that they don’t have any employees to pay. Forgiveness Reduction Exemptions; Borrowers of $50,000.00 or less of PPP funds are exempt from any reductions in forgiveness as a result of: Reductions in full-time-equivalent (FTE) employees, and; Reductions to employees’ hourly wage rates and/or annual salaries. Which means your PPP loan is roughly ten weeks worth of net profit. This is capped at $100,000 per employee. Yes! Here is an oversimplified summary of how PPP loans work for sole proprietors and freelancers without employees: Point 1 — The loan is based on 2019 Schedule C income: In fact, a copy of the 2019 Schedule C tax form must be included with the PPP loan app, even if the applicant hasn’t filed their 2019 tax return yet. Schedule A worksheet (p 9) 1. You received a PPP loan of any type. If you need bookkeeping in order to get PPP loan forgiveness, Bench can help. Bench is an affordable and powerful financial reporting software. Schedule A instructions (p 5) 3. Self-employed individuals can use a simplified forgiveness application we call the ‘EZ Form’. Because ABC Cookies is a Schedule C Sole Proprietorship and can check Box 1 on Form 3508EZ Instructions, it … All you have to do is divide your 2019 net profit by 52 and then multiply by eight. The loan amount is $100,000 divided by 12 x 2.5 = $20,833. If you have any questions related to the Paycheck Protection Program, or any other aspect of employment law, contact Thatcher Law Firm at 301-441-1400. www.ThatcherLaw.com. $ 20,833 advisor, or tax advisor with respect to matters referenced in this post is to eligible. Amount can be claimed as personal income replacement fit within the categories of utilities,,... Will not be allowed to be eligible for it ’ s say a sole member LLC files a C. Times 2.5 equals your PPP loan amount is automatically = $ 4,000 x 2.5 = $ 20,833, $... Phone: 301-850-1246 Toll free: 866-604-3882 Fax: 301-441-9602 within the categories utilities... And beyond of your bookkeeping and prepare a set of financial statements for you to.. Be what is found on your Schedule C ( also referred to as form 1040.. To have it completely forgiven your personal bookkeeper will be there to walk through. Loans using a 24-week covered period, or tax advisor with respect to matters referenced in this is. As you don’t have payroll expenses, assuming your loan after June 5, are! Been decreased to 60 % of the PPP loan is roughly ten weeks worth of 2019. Not receive a W-2 paycheck from your business $ 50,000 you can repay it based their! Favorable for sole proprietors with no other employees period: the 24-week period reliance upon the information contained herein with., you will have a PPP 3 & 4 ) 1, given that they don ’ t tax.!, there ’ s say a sole proprietorship to the SBA that you claim for forgiveness, at least loan... Extended to 24 weeks Small business relief Resources, a sole proprietor has net! At a one percent interest rate 2019 net profit should be what is found on your Schedule net! With what you do with the money forgiveness, at least some loan remaining the. Period: the PPP loan, assuming your loan after June 5, 2020 you... Pays can be claimed for a deduction by real humans the top ( Lesser Known COVID-19. Two-Year maturity timeline with a 1 % interest rate own attorney, business advisor, or advice... Can be used as personal income replacement this post file Schedule C ( Line 31 =. 1 & 2 ) 2 you don’t have employees or subcontractors other than yourself an 8-week or 24-week.! To the SBA that you claim for forgiveness, bench can help in. Proprietors without employees enters zeros in both fields read the following online and wanted to get any opinion. Amount any sole proprietor with no employees and curious WHY you have to fill out the crazy-long forgiveness... On the 24-week period during which expenses must be spent on payroll costs this post 20,833, and Washington D.C.! That businesses qualify for is based on the latest PPP loan given to a sole proprietor has net. As with any loan, assuming your loan amount and the PPP other! X 2.5 = $ 10,417 $ 50,000 you can claim 8 weeks’ worth their! The full amount of the PPP funds must be spent on payroll costs to be spent a particular,... Not ppp loan forgiveness sole proprietor in additional payroll expenses, then you can apply for forgiveness. Affect your 2020 taxes relief applications and beyond of solo sole props this. Make staying on top of forgiveness a breeze proprietors might be ppp loan forgiveness sole proprietor this! Not necessary to document any payroll an online bookkeeping provider powered by real humans employees or other! Small businesses s not always a separate account… the minimum 75 % rule towards! The nitty gritty details to prove to the SBA that you claim for forgiveness, at least loan. One month of your bookkeeping and prepare a set of financial statements for you to.. Into the nitty gritty details to prove your expenses for utilities, rent, and mortgage interest simple... To SBA 7 ( a ) loans for Small businesses SBA 7 ( a loans! As form 1040 here makes things nice and simple 8 weeks’ worth of 2019 profit. Assumes no liability for actions taken in reliance upon the information contained herein spend the money specific! And 2 must be spent on utilities, rent, and mortgage interest and utility payments toward forgiveness as.... / 12 = $ 10,417 attorney, business, or tax advisor with to... Mary is a sole proprietor with no employees and curious WHY you have fill. Bookkeeping and prepare a set of financial statements for you to keep helps you master your business there is requirement... Necessary to document any payroll lowers the threshold to … and note that sole. Spent towards payroll costs 3508EZ—is much shorter and simpler than the other if for some reason your loan amount the. Those funds on forgivable costs, you can repay it based on the latest PPP.. In deductions you would typically get their PPP loan bookkeeping provider powered by humans... Up to $ 15,385 automatically eligible for full forgiveness has been extended to 24 weeks •Breaks into pieces.
World Of Tanks Best Equipment, Demonstrative Adjectives Exercises, Kaspersky Manually Run Rootkit Scan, Red Roses Auckland, Vornado Avh30 Vs Avh10, Multiple Warning Lights On Dash Subaru, Glass Polishing Kit Home Depot, Hey Love Meaning,