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Paycheck Protection Program Business Application is Out

April 01 - Posted at 11:04 AM Tagged: , , , , , , , , , , , ,
The is a time sensitive program, so you may want to consider applying ASAP.

Starting April 3, 2020- small businesses and sole proprietors can apply
Starting April 10, 2020- independent contractors and self-employed individuals can apply
 
The SBA has issued the application for the Paycheck Protection Program.  This is an SBA-administered loan and loan forgiveness program that allows business to borrow up to 2.5 times your average monthly payroll.
 
To apply, you will need to do the following:
  1. Contact your banker and confirm they can process the loan. 
  2. Fill out the application (SBA form 2483) 
  3. Gather the following documentation:
    • 2019 IRS Quarterly 940, 941 or 944 payroll tax reports.
    • 2019 Summary payroll report by person. 
      • Payroll report must show the following for the time period above:
        1. Gross wages for each employee, including the officer(s) if paid W-2 wages.
        2. Family medical leave pay for each employee.
        3. State and Local taxes assessed on the employee’s compensation for each employee.
    • 2019 W-3 and W-2’s filed. 
    • 1099s for 2019 for independent contractors that would otherwise be an employee of your business.
      • Do NOT include 1099s for services.
    • Documentation showing total of all health insurance premiums paid by the Company Owner under a group health plan.
      • Include all employees and the company owners.
    • Document the sum of all retirement plan funding that was paid by the Company Owner (do not include funding that came from the employee’s out of their paycheck deferrals).
      • Include all employees, including company owners

4. Available is also an excel sheet to help organize and calculate the loan amount. Please let us know if you need a copy of this.

 

Overview of the Program

 
Q: How large can my loan be?
Loans can be for up to two months of your average monthly payroll costs from the last year plus an additional 25% of that amount. That amount is subject to a $10 million cap. If you are a seasonal or new business, you will use different applicable time periods for your calculation. Payroll costs will be capped at $100,000 annualized for each employee.
 
Q: How much of my loan will be forgiven?
You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. You will also owe money if you do not maintain your staff and payroll.
  • Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount
  • Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019
  • Re-Hiring: You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020
 
Q: How can I request loan forgiveness?
You can submit a request to the lender that is servicing the loan. The request will include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments. The lender must make a decision on the forgiveness within 60 days.
 
Q: What can I use these loans for?
You should use the proceeds from these loans on your:
  • Payroll costs, including benefits
  • Interest on mortgage obligations, incurred before February 15, 2020
  • Rent, under lease agreements in force before February 15, 2020
  • Utilities, for which service began before February 15, 2020

Portion of Small Business Health Options Program (SHOP) Delayed Until 2015

June 18 - Posted at 3:19 PM Tagged: , , , , , , ,

On May 31st, the US Department of Health and Human Services (HHS) issued a final rule delaying the implementation of a significant portion of the Federal Small Business Health Options Program (SHOP) Exchanges until 2015.

 

The Patient Protection and Affordable Care Act (PPACA) calls for the creation and implementation of health Exchanges for both individuals and small businesses.  These marketplaces were to be operational by October 1, 2013 in time for the open enrollment period for a January 1, 2014 effective date.

 

The Obama administration announced that SHOPs will only offer one health plan now in 2014, instead of offering small employer groups a choice of several health plans. As reported in the Wall Street Journal, “For transitional purposes we have proposed that in 2014, a state may elect to have businesses choose one plan to offer employees, and in 2015 employees will be able to choose from the full range of plans in the marketplace,” said Fabien Levy, an HHS official.

 

This delay will apply to states in which the federal government will administer the Exchanges, and makes the requirement optional for state-run Exchanges. The administration cited operational challenges as the reason for the delay.

 

This announcement has been met with disappointment by many small businesses as it will limit the attractiveness of exchanges to small businesses. The vast majority of small employers want their employees to be able to choose among multiple insurance carriers so employees can pick the plan to best meet their personal needs.

 

Whether a similar delay will be announced for the individual Exchanges remains to be seen.

Reminder: How to Claim Small Business Health Care Tax Credit

April 09 - Posted at 2:01 PM Tagged: , , , , , , , , , , , , ,

One of the ways in which the Affordable Care Act helps bring down costs for small employers is through the tax credit available to eligible small businesses that provide health care insurance to their employees. The credit significantly offsets the cost of providing insurance and with the 2012 corporate tax filing deadline rapidly approaching (March 15th), you don’t want to let this valuable tax break pass you by.

 

What is the Small Business Health Care Tax Credit?

 

Currently the maximum tax credit is 35% for small businesses employers and 25% for small tax-exempt employers (i.e. charities and non-profits). This percentage applies to tax years 2010 through 2013. Even better, in 2014 the credit will increase to 50% for eligible small business employers and up to 35% for tax-exempt employers through the new Small Business Health Options Program (SHOP) Marketplace (also known as the Exchange).

 

The credit can also be carried back or forward to other tax years. Since the amount of the health insurance premium payments are more than the total credit, eligible businesses can still claim a business expense deduction for the premiums in excess of the credit.  That equals out to both a credit and a deduction for employee premium payments.

 

Who Qualifies for the Small Business Health Care Tax Credit?

 

To qualify for the credit, you must meet the following criteria:

 

  • You must cover at least 50% of the cost of single (not family) health care coverage for each of your employees

     

  • You must have fewer than 25 full time equivalent employees (2 half-time workers count as one full timer)

     

  • Those employees must have average wages of less than $50,000 a year

     

To help determine whether you qualify for the credit, follow this step by step guide from the IRS.

 

How to Claim the Credit

 

You must use the IRS Form 8941 to calculate the credit.. Then include the credit amount as part of the general business credit on your income tax return. If you are a tax-exempt organization, include the amount on line 44f of the Form 990-T. You must file the Form 990-T in order to claim the credit even if you do not ordinarily do so. Remember, you may be able to carry the credit back or forward. Be sure to talk to your tax advisor for more assistance.

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