Question of the Week
Happy New Year!
Happy Friday all!
What a tumultuous first week of the new year, huh? A pivotal Senate election, two Congressmen almost having a literal fist fight in session and an attempted insurrection at the Capitol building. What the actual fuck!? We were all so ready to get rid of the chaos of 2020, only to have 2021 show us we haven’t seen anything yet.
I can definitely empathize with all of the anxiety, resentment, anger, frustration and fear that I hear from you all. I’m also hopeful that this pain will make us stronger and get us to a better place.
In addition to all of these political events, we also got a new stimulus package in a bill that was over 5500 pages. The news is especially good for you business owners. So today I want to catch you up on all of that and leave you with a little inspiration as you start the new year.
The two provisions you’ve been waiting for
Let’s get the two big items out of the way.
First, Congress has resolved the debate around being able to deduct expense that you paid with your Paycheck Protection Program (PPP) loan. Those expenses are deductible, and the income isn’t included in gross income. So, a win-win here for business owners and all of the tax professionals who worried about having to figure out how that worked.
An additional bonus is that the EIDL advances are also received tax free and don’t have paid back through the PPP program.
The other big news is the simplified application for forgiveness of loans under $150k. Under the new bill, you just need to sign and submit to the lender a certification that provides:
- A description of the number of employees the eligible recipient was able to retain because of the covered loan
- The estimated amount of the cover loan spent on eligible payroll costs
- Attest that you accurately provided information, complied with the applicable requirements and retain records for four years for employment records and three years for other records.
The application won’t be more than one page and should be available within a few weeks. Additionally, you won’t be required to submit any additional records.
This is big news because this process applies to some 4.5 million of the 5.2 million loans. Those of you over $150k, you will still need to provide documentation and verification.
Second Draw PPP Loans
You may have missed the other news that they are offering second draw PPP loans for certain businesses. They slipped in the details on this at 11:30PM ET Wednesday night (as if there weren’t enough going on). If you’re counting, we’re approaching nearly 30 Interim Final Rules, along with over 11 pages of FAQs on PPP. Here’s what you need to know.
Eligibility requirements
To qualify for a Second Draw PPP Loan, you have to meet five requirements:
- You’re a business, independent contractor, eligible self-employed individual, sole proprietor, nonprofit organization, eligible for a First Draw PPP Loan, veteran’s organization, Tribal business concern, housing cooperative, small agricultural cooperative, eligible 501(c)(6) organization or eligible nonprofit news organization that:
- Have 300 or fewer employees, unless you’re a business that satisfies the North American Industry Classification System (“NAICS”) code beginning with 72 or an eligible news organization with more than one physical location.
- Experienced a revenue reduction of 25% or greater in 2020 relative to 2019 (more on this below).
- Received a First Draw PPP Loan
- Used, or will use, the full amount of the First Draw PPP Loan on or before the expected date on which the Second Draw PPP Loan is disbursed to the borrower
The SBA also lists those that don’t qualify for Second Draw PPP Loans, most notably Publicly Traded companies and any person the new grant for shuttered venue operators.
Quote of the Week
“Sometimes, struggles are exactly what we need in our life. If we were to go through our life without any obstacles, we would be crippled. We would not be as strong as what we could have been. Give every opportunity a chance, leave no room for regrets.” – Friedrich Nietzsche
Task of the Week
In a meeting on Wednesday, a client reminded me that the only thing we can do is stay focused on what we can control. And I couldn’t agree more. So, as we move into the new year, I would like to challenge all of you to do some internal work and find your enough.
What is enough? How do you even determine that? I explore the answers to those questions and why I believe knowing that should be a top priority in the new year here. I would love to hear what steps you’re taking to find your enough. Contact me at the links below.