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Good recordkeeping and bookkeeping will be critical for getting your loan forgiven—you’ll need to keep track of eligible expenses and their accompanying documentation over the eight weeks. The following are the required documents you need to collect to support your PPP loan forgiveness application. They may ask for your Schedule C again and tax return again. You may have to provide documentation that you were in business before February 15, 2020. For second ppp loans you may need proof of a reduction of income such as bank statements or a book of record. Maybe you don’t have a business bank account, you just have a personal bank account which many people do.

If you have multiple needs, such as help with payroll and taxes, in addition to your day-to-day accounting, this could be a good fit. This post was reviewed byour team of accounting and financial experts. TGG’s mission is to make business owners’ lives better through excellent financial management. We strive to provide the most up-to-date and objective information on accounting-related topics so our readers can make informed decisions based on factual content. All posts undergo a review process with at least one member of our Leadership Team to ensure accuracy.

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Receive your first three months of the software at a discounted rate. Moreover, if you only want a bookkeeping setup, you can pay $50 for a one-time session with a QuickBooks Live bookkeeper.

You must compare the covered period to the most recent full quarter prior to the covered period. Let’s say you have three full-time employees and they each made $3,000 per month, meaning your PPP loan amount was $22,500 ($3,000 x 3 employees x 2.5). You had to lay them off in February 2020 due to COVID-19. You must maintain the number of employees on your payroll.

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Those who borrowed more than $150,000 must either submit SBA You may also be required to submit payroll documentation, bank statements, account statements, tax forms, receipts, and canceled checks… If you are using an 8-week forgiveness period, you can claim 8 weeks’ worth of your 2019 or 2020 net income or gross income as owner compensation replacement (or “proprietor costs”). The remaining PPP funds will need to be spent on other eligible expenses in order to be forgiven. Using a covered period of at least 11 weeks will let you take the full 2.5 months of net income or gross income. Thus, instead of managing your own books, Bench takes care of them for you, allowing you to monitor all correspondence and processes easily online. Round two of the PPP loan program is here, and more small business owners are getting the funds they need.

Refrain from posting overtly promotional content, and avoid disclosing personal information such as bank account or phone numbers. When they pay you directly, by making a check out in your name, it is not the same as paying the business. You can apply for up to two and a half months’ compensation.

Three Ways To Find, Hire & Retain Employees Right Now

Businesses in arts and entertainment received the largest PPP loan amounts of around 12.5% of their annual expense levels. While restaurants and bars saw PPP loan amounts of almost 10% of their annual expenses. If this or any other posts on the website were useful to you, and your financial situation permits it, please considercontributing to my tip jar. This allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.

At one point, if you received the $1,000 forgivable grant as part of the economic injury disaster loan , that did deduct $1,000 from your forgivable amount. Originally, that portion would have bench accounting to be paid back (but over five years at only 1% interest). The December legislation that opened everything up again changed that. Now the EIDL grant doesn’t impact forgivability at all.

Pay Reduction Beyond The 75% Threshold

But as a delivery driver for third party delivery companies like Doordash, Uber Eats, Grubhub, Instacart, etc., or a rideshare contractor with companies like Uber or Lyft, it’s really pretty much it. The bottom line is, the best way to spend your money for PPP forgiveness eligibility is, pay yourself.

• A lengthy explainer video by Certified Public Accountant Joshua Jenson explains the timing concerns in detail through the lens of how he is helping his own clients.
• Therefore, and as we’ll discuss in greater detail below, the way QuickBooks and Bench structure and price their services is directly related to this crucial distinction.
• Businesses such as bars, restaurants, gyms, and fitness centers received 50% of some form of COVID relief.
• Payroll-intensive businesses in hard-hit industries received the largest PPP loans relative to their annual expenses.
• So in this environment I always felt encouraged to voice my opinions and bring new ideas forward.
• The remaining PPP funds will need to be spent on other eligible expenses in order to be forgiven.
• You CAN be used UP TO 40% for certain business expenses.

An entity may take an alternate approach to accounting for a PPP loan and elect to treat the forgivable PPP loan as a government… 1-800Accountant offers full-service accounting services, including tax preparation and advisory to small businesses. Bench pricing is based on your average monthly expenses, and plans start at $139 a month for businesses with less than $1,000 in expenses.

1,735 PPP loans outstanding with a principal balance of $309.7 million and deferred SBA fees of $9.6 million. During the six-month period ended June 30, 2021, PPP forgiveness … Accountant on how to navigate the PPP loan forgiveness… We recently received PPP loan, but I’m wondering how to record PPP loan which can be forgiven. Assuming I received $30k PPP loan recorded as Since much is still unknown about the forgiveness how do you record forgiveness once it is received if the books closed for the fiscal year and the loan…

How Will Ppp Loan Forgiveness Affect My Taxes?

Bench also has excellent reviews from its users and has a user-friendly dashboard, so you’re always in the know when it comes to your business’s financials. And if you’ve fallen behind, Bench offers an add-on service that can help you get back on track, even if your books haven’t been updated in years. Bench uses 256-bit SSL/TLS encryption to keep your data safe. In terms of its bookkeepers and tax professionals, Bench has a rigorous screening process, including the use of criminal background checks and multiple interviews. Bench also partners with other companies for other business services outside of bookkeeping. Bench has a simple user dashboard that makes it easy to view your financial data, communicate with your bookkeeping team, or run reports as needed.

• Bench is secured using 256-bit SSL/TLS encryption to protect your data.
• In March of 2020, I had the opportunity to start our Client Relief consult team for our client base.
• For me, the hardest part of the process was finding out the exact US government work code that describes my business – freelance writing and editing.
• It’s when the account has been created using your EIN or Employer ID Number.
• I had my first few interviews at another company and was telling my friend about it.
• For these purposes, payroll does not include the employer portion of FICA taxes or any payments to independent contractors.

Once your PPP loan funds have been disbursed, it’s critical to keep track of how you spend these funds over the next eight weeks. For any borrowers that cannot use form 3508S or 3508EZ, there’s form 3508.

You enter your loan amount, loan number and when you got the loan. 22 weeks after disbursement (close to the end of the allowed 24-week period, my lender sent an email letting me know it was a good time to apply. The information provided above is for educational purposes only. Please consult the SBA’s website for actual rules and the most current guidance. A PPP loan is best for businesses with less than 300 employees who have been impacted by the pandemic and are applying for their first PPP loan. Previous PPP loan recipients with less than 300 employees can also qualify if they have more than a 25% drop in revenue quarter over quarter from the previous year. If applying for a second PPP loan, the full amount of funds from the first PPP loan must be used before the second is disbursed.

Ppp Loan Forgiveness Starts With Good Books

Since OCR amounts are used essentially as personal income, instead of for the business, it may be considered taxable income. If you plan to claim some or all of your PPP loan as OCR, we recommend reaching out to your CPA or tax professional for guidance. With up-to-date bookkeeping and organized financials, it’s easy to prove that your expenses are eligible for PPP loan forgiveness. With Bench, you get a dedicated bookkeeper to complete your monthly books and powerful reporting software for a crystal clear view of your finances. Having solid books allows you to easily track how you spend your loan—making forgiveness easier and less stressful than you think. All of our services are eligible expenses for PPP forgiveness. Bookkeeper.com is an all-in-one small business solution for bookkeeping and accounting services.

Bench is also not suited for businesses that require payroll, invoicing, accounts payable, or inventory management. However, you are not entitled to use the full amount to replace pay. Eight weeks worth of your 2019 net profit will be eligible for forgiveness. The portion of your loan granted to cover payroll will be forgiven as long as you continue to pay yourself that amount.

If you only hire back two out of the three employees, your workforce is 67% of your original headcount. For PPP loans distributed in 2020, any rehiring must have been done before December 31, 2020.

Llc Sole Proprietors And 1099 Independent Contractors Now Qualify For A Ppp Loan

And while Bench does have several important financial reports, its offerings are pretty basic compared to most accounting software. All payroll that your employees incur over the 8 to 24 week period is eligible for forgiveness, even if the actual payout date falls outside the covered period. Businesses with loans less than $150,000 use a one-page form 3508S. Since $20,833 is the maximum loan amount for a self-employed individual without employees, that includes all of us who drive in the gig economy.

• Bench gives you a dedicated bookkeeper supported by a team of knowledgeable small business experts.
• Then, they’ll prepare your financials—so you don’t have to.
• The only real difference here is if you’ve already established a business account.
• This post is to be used for informational purposes only and does not constitute legal, business, or tax advice.
• For example, if you had ten employees on payroll before and now only have eight employees, the amount of your loan that can be forgiven will be reduced by 20%.

There are three PPP loan forgiveness application forms available from the SBA. One of the most common questions businesses have about PPP loan forgiveness is when to file the paperwork for it. It’s complicated because a business may see more benefits by filing for forgiveness in 2021, depending on its circumstances. A lengthy explainer video by Certified Public Accountant Joshua Jenson explains the timing concerns in detail through the lens of how he is helping his own clients. Additionally, Fundera CEO Jared Hecht writes in Forbes that he would advise waiting on forgiveness as well.