PPP Loan Forgiveness & Cash Flow Management Webinar Q&A
Can I hire one more new person into our payroll after the loan is approved and does it qualify for forgiveness?
Yes, this is fine.
Why do they give you only 8 weeks to spend the money if the calculation takes into account 2.5x monthly payroll?
It is mandated by CARES Act.
If my last payroll falls one week after eight weeks, can I wait for the next week to process payroll or shall I expedite the last payroll?
You must spend the money within the 8 weeks when funds are deposited into your account.
Can we raise pay for an employee for it to qualify for forgiveness?
CARES Act does not say no to give a raise to your staff.
When we applied for the loan, we were able to include FICA in our payroll calculations. Do you know whether or not FICA is an allowable payroll cost?
Employer portion should not be included in the calculation according to the CARES Act.
Can you verify the comparable time frames for FTE’s?
There are two categories, average FTE through 2019, and the second category is for businesses like restaurants that just started in December, but that’s prior to Feb 15th. Which the average FTE are based on the average of Jan & Feb.
So if our assistants don’t feel comfortable coming back yet, we have until June 30th to hire someone to still be forgiven even if the PPP money gets deposited on May 10th?
The funds still need to be spent within 8 weeks, you can hire a new person in order to be forgiven before June 30th
If we were to hit 74% payroll instead of 75% is the entire amount of the loan unforgivable or just the difference?
Just the difference.
In the Cash flow Runway - are the projected monthly collection and the expenses being calculated by prior financial information in QuickBooks or do those need to be calculated manually?
Yes, it is based on prior financial information; however, you can update the information on the cash flow runway on what your current inflow/outflow will look like. The version that was shown was for members of OneSelfClub, however there is a free version at www.OneSelfClub.com/resources/cash-flow-runway-tool
Can we pay utility bills early to make it within the 8 week period?
What is the consequence if the number of employees decreases because employees quit? We would have to hire on others?
Yes, you would have to maintain average FTE. You can’t force people to return to work, so you have all the way till the end of June to hire the number of people who quit in order to be forgiven. It doesn’t have to be the same people to be hired.
Our check was deposited directly into our business checking account. ADP does our payroll. Do we need to transfer the funds to a new business checking account and pay ADP to do the payroll for 2 employees from that account and pay ICs from our old bank account?
Yes you’re able to do that, it isn’t mandated. It’s a strong recommendation that you monitor the funds to make sure you spend 100% of those funds.
What if you can't spend all of the money within eight weeks? Can you just return the balance?
Yes, you would have to return the balance.
Can we tip employees so their income closely resembles their pay pre-pandemic? Can we reimburse employees for parking and uniforms with the PPP?
Yes, it is mentioned by CARES Act. Parking and uniforms is treated as a company expense, but not part of payroll costs.
Since we need to calculate full time equivalents to prove payroll. Wouldn't it be the same to give more hours to current part time employees to increase the hours worked instead of hiring more people?
Pay is not always the same from month to month (depends on hours). Can we just pay a bit extra to spend the 2.5x?
Yes, everyone will want more hours so they can get paid more.
Can some of this money go to profit sharing plan contributions or Safe Harbor retirement plan contributions?
Absolutely, that is part of compensation.
What additional requirements have you seen banks require of S-Corps in submission of their PPP other than the payroll report and 941 for approval?
There isn’t any additional requirement; we recommend that you try every bank you can get to. Some get approved by multiple banks, the golden rule is one person each business owner gets one approval. Only accept one, don’t accept multiple.
For Sole Prop, can money be used to pay company owners who don't take a routine salary? If yes, do we need to run it through our payroll processor?
As a Sole Prop, there should not be company owners because if you are a sole prop there should only be one owner. Afterwards it should be easy, you get the check, put your name, then memo that says, “owners draw”.
My business is an LLC, and I don’t take a salary and have no employees, but I qualify for the loan. However I am not sure how to show paying myself. Normally I take an owner draw. Do I just continue doing the owner draw and that is my payroll expense.
Yes, absolutely. This is the best and easiest criteria, all you have to do is write a check, your name, and write owner’s draw. Even if you have no customers, the government wants to pay you to stay in business.
I can use the loan for: Independent contractors, Commissions for independent contractors, my own payroll processed check, Right?
No, they are not considered part of your payroll. They have their own PPP to apply for.
Do we need to change our payroll date to match the 8 week period?
You don’t have to change the payroll date, you could create an additional pay period to utilize the funds throughout the eight weeks.
Can funds be used to pay corporate insurance?
Yes, it is part of utilities. 25% is rent, utilities, interest payments, and we believe insurance is actually part of the equation.
Our avg. payroll was higher than 100k yearly; do we need to pay the same or just 100k yearly since this is how much we can get the forgiveness? Just for the case, Can we hire a new person to pay him and then we will let him go after 3 months, so does his 8 week salary qualify for forgiveness?
They have a minimum, so the salary per person is capped at 100k. So yes, you’re not supposed to cut salaries beyond 25% or 100k yearly since this is how much we can get forgiveness that is applicable for eight weeks.
Remember the two rules of the PPP, you have to make sure to utilize the funds within eight weeks for payroll purposes. Second, you have to maintain the average FTE before PPP funds are approved when you apply for the PPP program.
Can S-Corp use part of the funds for dividends to owners?
No, dividend distribution is not on payroll.
There was a comment that if you received EIDL and PPP but the funds could not be used for the same purposes. What does that mean? Is there an 8 week time frame for EIDL fund usage?
They don’t want you to double dip, so the PPP forgiveness will be offset by the amount that you utilized from the EIDL. For EIDL you utilize it for purposes other than payroll, so for any rent, utilities, interest payments. You can use it for payroll as long it isn’t within the eight weeks you received the PPP since you want to use those funds first so you can ask for forgiveness within the 90 day period upon the expiration of the eight weeks.
Can you just increase hours of your part time people instead of hiring more people to meet the FTE requirement?
If the company is LLC S Corp and I am the owner, can I W2 myself as an employee instead of hiring back an employee that doesn’t want to come back?
Yes, if it’s your own S Corp then that payroll is for you to pay yourself W2.
What about the EIDL advance of 1,000 if you had one employee? Do we have to do anything about that?
Don’t worry, EIDL is for you to pay rent, utilities. Don’t bother using it for payroll, just use PPP for payroll.
Is it true that the business owner can get 8/52 amount forgiveness for 2019 net profit?
If you’re S Corp, don’t worry about the 8/52 rules as they’re not applicable to you.
We didn’t pay ourselves for April (we do payroll monthly). Can we do an extra payroll mid-May for April’s pay, and then divide the remainder into the next two payrolls?
Yes, absolutely. Cut yourself a check today.