1) The Ides of March, particularly if your name is Julius Caesar
2) Double Counting your payroll for PPP and ERC
Today is March 15, also known as the Ides of March. Now you know the question for another Jeopardy answer.
– The PPP and the ERC: Beware!
– Congress hears testimony to extend the expiration date of the PPP
– California Relief Grant adds four more rounds of funding (good luck with that)
– $1,900,000,000,000 American Rescue Plan Act Passes – yep, that’s what $1.9 trillion looks like.
The passage of the Economic Aid Act in late December changed the Employee Retention Credit (ERC) significantly to the point where I am focused on the impact of using payroll for PPP forgiveness and how that might be better used for getting a tax credit on your payroll taxes. The ERC is a tax credit of your payroll taxes which can significantly cut your payroll tax obligation, but there is some qualifying criteria. Generally speaking, you have to have had a 20% reduction in revenues when compared to the same quarter in the prior year, or have been impacted by Covid to the extent you have had to shut down or suspend/change operations fully or partially due to Covid. Check it out.
Ontario’s very own Hilda Kennedy testified before the House Committee on Small Business this past Wednesday. Ever polite, she made the case, along with three other colleagues from various parts of the country, to extend the deadline of March 31 for PPP funding. Let’s hope she and her colleagues were successful in doing so. Just as a point of reference, both the Chair and Vice Chair of the Committee are career politicians and have never owned or operated a small business. They are, however, very good at handing out other people’s money.
Due to a windfall California received from better than expected tax revenues, our Governor re-funded the California Relief Grant for another four rounds. I still don’t know of anyone that received funds from the first round, but hope springs eternal, particularly for free money, so if your revenues are less than $2.5 million, complete the application at www.careliefgrant.com . I’m still going to buy lottery tickets; the odds of winning are a lot lower, but the upside is huge.
$1,900,000,000,000. That’s a lot of zeros. It certainly makes my mortgage look tiny by comparison. I’ll bet you can’t wait for those funds to benefit your business. Well, at least indirectly benefit your business.
– If you run a payroll (as opposed to having two partners in an LLC) pay attention to the Family and Sick Leave Credits. If someone takes time off for Covid, you can claim their wages against payroll taxes you have paid or will pay to the feds. It’s a bit of work, but worth the money, up to $12,000 per employee.
– Schedule C, aka Sole Proprietors, can also benefit.
– Extends the ERC to the end of 2021.
If you applied for your first ever PPP loan in 2021 and you also experienced revenue shortfalls of 25% or more when comparing quarter to quarter 2019 to 2020, you can apply for your second draw as long as you can certify you spent your first loan by the time you get your second. Yes, you can get two PPP loans before March 31. How about them apples?