So coming to our discussion on PPP loans, this is also an important topic that I want to share with all the listeners who have businesses because this is the time to apply for the loan.
If you are a business owner and have employees, you had a payroll in 2019, or you have a higher payroll 2020 please and please go ahead and apply. It is very important.
The only qualifying standard is there is a reduction in gross income, and by the way, the SBA has come out with a lot of definitions of gross income and reduction.
What about documentation?
Bank statements and financial statement attestations are required.
There are new forms, new upgraded 3508.
This is a time to apply for PPP loan forgiveness with the new form 3508 s. Remember, if you recall, that 3508 s form was meant for borrowers having loans less than 50,000. It did not even increase from 50,000 to $250,000.
It's a straightforward form with only a few pieces of information required.
The most critical information that is required on that form is the number of employees at a time of getting the PPP loan, and a number of employees at the time of forgiveness when you're applying forgiveness. That's a significant line.
They have a lot of information on the instruction that they want you to retain regarding reducing employees or salaries and wages.
They want you to make sure that you keep documents and the SBA can ask for this document is essential not only to file for forgiveness but also to keep a proper record for that forgiveness. Connecting with a CPA or tax professional who knows about this to be the loan system is essential. Be aware of this whole equation; it's not that it's just going ahead and applying for PPP and getting those loans. It's also important how you use it and how you apply for forgiveness.
What about the PPP loan for people who NEVER applied in the first round? Can they apply now?
Yes, they can, under the first job of the second round of PPP, apply and get this loan. It's equal to 2.5 times the payroll value for the year, based on 2019 or 2020.
What about the people who don't have employees? What about them?
Can they get it?
That's the million-dollar question. People keep asking me, can I get this loan?
Yes, of course, you can get it if you're a 1099 sole proprietor. You can still get the loan based on your 2019 Schedule C profit. Let's say your profit was 80,000 divided by 12 and multiply by 2.5 times to give you that loan amount.
If your LLC, you don't need to run payroll single-member multi member LLC is based on key one from the others.
I am very confused. I came to the US in 2007. I started working at a gas station, and then I started my own business taxi business. But this pandemic, when I applied for unemployment, they are giving me $175. I don't get it. I'm 54 now, you know, and how do I maintain my retirement? What should I do? I don't understand what I do or not.
I'm looking for unemployment, they want to give me, but I refused it because $175 is nothing for me. If you know, go higher than how I pay tax what I do, you know?
See, if you're asking how to increase that amount, right for unemployment. Well, the government has extended the pandemic unemployment assistance for self-employed people like you.
You can get un-employment.
Federal unemployment assistance is providing an extra $400 per week. Now with Biden coming into the picture, he has promised us $1.9 trillion.
He's looking at unemployment and sending stimulus payment checks.
So when you're talking about PPP loans, second loans, and like when people are playing now, this is a time when people should apply and should not wait for more.
This money is going to go out very soon.
They have already done an audit of about 20% of the loan amount, PPP sanction limit has gone in two days. Basically, they started last week for small business owners like minority-owned and low-income community-owned businesses. They started last year, last week, and this already said 20% is gone. And people have not even started the process. So there will be a lot of demand for this kind of alone. If you have a restaurant or if you own a restaurant or own a hotel, hotel owners can go for the killing; they can go up to 3.5 times the payroll amount. And like I said in the case of LLCs
So we have to look into this and see if you qualify. A lot of people call us and ask I don't have employees.
Can I still qualify?
I ask them why they have an LLC?
By the way, many CPAs are not doing any updates.
Employee retention credit is another I'll say is like a money-making machine if you look at the ERC. It is better than PPP loans, but we can talk about that a little later.
If your business has made a lot of profit and is looking for ways to substantially reduce your tax liabilities by taking the full benefits available under TCGA and the cares act, then set up a consultation appointment before the 2020 tax year runs out. Call Sanjiv Gupta CPA today at 510-825-7563. That's 510-825-7563 or visit Sanjivcpa.com.