On October 2, 2020, the Small Business Administration issued a five page Procedural Notice 5000-20057 regarding “change of ownership”. This is a very concerning topic at this point in the game as many companies have changed ownership in one form or another due to the slow-down, since receiving their PPP funding. Here is what is considered a change of ownership; 1. 20% or more of the common stock or ownership interest is sold or transferred, including to an affiliate or an existing owner of the entity, 2. 50% or more of the assets (measured by FMV) is sold or transferred, whether in…
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Unless you live and work in one of the following nine states that do not tax wages, you are required to withhold state income tax on wages paid to your employees: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. While this may sound simple enough, there are a number of considerations that need to be made, and we will go over them here, including the COVID-19 wrench in the machine. The Form First up is the form itself. There are a few states that did not adopt their own state withholding tax form, so here is…
On August 8, 2020, the President issued an Executive Order (EO) to allow an employee to elect to defer their Social Security tax payment, on wages earned from September 1, 2020 through December 31, 2020, to a later date. Rightfully so, the EO lacked details on implementation, which would be up to the U.S. Treasury to determine. Late Friday afternoon on August 28, 2020, the IRS published Notice 2020-65, and while the notice does provide details, it is still lacking rules and guidance on many points. Most employers, since March 27, 2020, have had the ability to defer the deposit…
Both the SBA and the U.S. Treasury have been busy throughout the month of August. We have seen the loan approval process close on August 8, the loan forgiveness application process open on August 10 (sort of), forgiveness rules clarification with the August 11th update of their FAQs, and a new interim final rules published on August 24th. The closing of the PPP loan program is probably long overdue. After several extensions of the program, it appeared that the demand for the loan funds had come to a halt and there was not much of a demand for it in…
We have not seen much change in relation to PPP loan forgivness, although there are a few notable updates. Payroll costs includes the wages up to $100,000 of annualized pay per employee. For those using the eight-week covered period, that is a maximum of $15,385 per individual, and for those using the 24-week covered period, that will be a maximum of $46,154 per individual. A company does not have to wait the full 24-weeks to file for forgiveness if they meet the spending requirements sooner. Let’s say you spend 100% of the loan amount on payroll costs after just 10…
Yes, you have read that correctly. It is the PPP Flexibility Act of 2020. Why the need to include “2020?” Are they expecting a PPP Flexibility Act of 2021, 2022, and so on? The Paycheck Protection Program itself was not designed to last beyond 2020, so hopefully this is not a bad sign of what is ahead. Let’s take a moment to see how this latest Act impacts those who will be looking for forgiveness on their loan. I will assume you already understand basic PPP terms such as ‘payroll costs,’ ‘covered period,’ and FTE, but if you need a…
The Small Business Administration (SBA) has released the Loan Forgiveness Application, which has provided answers to many previously-vague conditions of forgiveness. One problem is that for many, these instructions come towards the end of their eight-week loan proceeds spending and may be too late. I saw one article state that the loan application failed to provide instructions as to how to build a time machine to go back in time to correct what might have already been done. We may see a spike in Delorean resales! Rather than repeat what I have provided in the first article https://blog.paymaster.com/sba-paycheck-protection-program-ppp-loan-forgiveness/ , I…
Did you change your bank account with your payroll service because of the PPP? That could be a costly mistake.
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This is super important to read and understand how changing the bank account normally used for payroll to a new bank account that was opened to solely hold your PPP funds is going to produce unwanted results. We have found that a large number of companies, over the past few weeks, have requested to change the bank account in which their payroll is drawn. Upon questioning, it is discovered that the change is the result of the business owner receiving their Paycheck Protection Program (PPP) loan proceeds into a brand new separate bank account and wanting their payroll to be…
The Paycheck Protection Program (PPP) of the CARES Act authorizes up to $349 billion in loans to small businesses to pay their employees and other expenses during the COVID-19 crisis. The loan amounts will be forgiven under Section 1106 of the Act as long as certain conditions are met, and knowing those conditions at the start of the loan process is crucial, because if you wait until the end of the process, it will be too late. There are four areas of concern to receive 100% forgiveness. 1. Let’s start with what the proceeds can be used for. Over the…
With the passage of the Families First Coronavirus Response Act, two new refundable payroll tax credits are available to employers with fewer than 500 employees. These refundable credits are designed to fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees. The Act allows two paid leaves for the employee’s own health needs or the care of family members. This will enable employers to keep their employees on payroll and ensure that employees are not forced to choose between their paycheck and the public wellbeing. Emergency Paid Sick Leave Companies with fewer than 500 employees,…