Applying for PPP Loan Forgiveness
Oct 30,2020
If you received a loan through the Small Business Administration’s Paycheck Protection Program, your covered period has likely ended or will be ending soon. Whether your coverage period was for 8 or 24 weeks, it is time to think about loan forgiveness. Businesses have up to 10 months from the end of the covered period to apply for loan forgiveness but are encouraged to begin the application process early. Understandably, there is a lot of confusion around the PPP due to its complex reporting, but we are here to help you. Either full or partial forgiveness of a loan is possible, and naturally businesses will want to have the loan completely forgiven. To that end, several criteria have to be met. Your tax advisor is the best person to walk you through the process. To get started, you will need to have the pertinent paperwork available, including payroll information, full-time...
A Summary of the CARES Act and How it Benefits Small Businesses and Taxpayers
Sep 25,2020
The Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law on March 27, 2020 to help businesses and individuals deal with the financial devastation caused by the COVID-19 pandemic. This article outlines how the CARES Act may benefit you and/or your business by creating potential cash flow opportunities. Small Businesses Several components of the CARES Act are aimed at helping small businesses and are highlighted below. Paycheck Protection Program (PPP) The PPP proved to be popular because it promises full forgiveness of the loan for businesses that meet all criteria. Additionally, the PPP Flexibility Act of 2020 made some important changes to the terms of the loan for the benefit of businesses. To qualify for full forgiveness, businesses must spend 60% of the loan on payroll costs and can use up to 40% of the loan on qualifying non-payroll costs, such as mortgage interest, rent and utility...
Stability Amidst a Pandemic
Sep 23,2020
When the COVID-19 pandemic forced firms like Smith & Howard to close their physical office and implement across the board work from home (WFH) policies, there was naturally a lot of nervousness and uncertainty about what lay ahead. Many firms were forced to make difficult decisions about furloughs, layoffs and salary cuts. Smith & Howard has not been faced with these difficult changes. To begin with, Smith & Howard personnel had a smooth WFH transition because we already had the necessary processes in place. Many of our employees had periodically been working remotely and our IT group had been working for several years to create remote capability for our full workforce. We credit their foresight for the successful implementation of a technology plan that accommodates all employees working from any location as we continue to seamlessly serve our clients around the country. In addition to employees taking their technology equipment...
Executive Orders Signed by President Trump on August 8, 2020
Aug 11,2020
After Congress reached an impasse on the next round of stimulus related to the ongoing pandemic, President Trump signed Executive Orders on August 8, 2020 to provide some relief to taxpayers. The Executive Orders are described briefly below. It is important to note, however, that these orders are not in effect and have been challenged from a Constitutional and legal standpoint. Until such time as their standing is confirmed, the descriptions below are informational only. Disaster Relief This directs the Department of Homeland Security to use its Disaster Relief Fund and directs states to use their Coronavirus Relief Fund allocations to provide financial relief to the unemployed affected by COVID-19. Of note, it provides an up-to-$400/week supplemental unemployment compensation benefit. This is a decrease from the $600 provided until the original relief ended July 31, 2020. It also makes changes to eligibility for this unemployment relief, specifically: An individual must...
SBA and Treasury Publish Interim Final Rule on PPP
Jun 30,2020
Today, June 30, 2020, is the last day a business can apply for a PPP (Paycheck Protection Program) loan. Businesses will now need to focus on applying for loan forgiveness, if they have not already done so. On June 25 and 26, the Small Business Administration (SBA), in consultation with the Department of Treasury, provided additional guidance for businesses applying for PPP loans. There was also a Federal Register notice published on June 26 to finalize Interim Rules about PPP loan forgiveness and loan review procedures. Among the items covered by the Interim Final Rules: Early loan forgiveness Businesses may apply for loan forgiveness early, if they have spent all of the loan amount, but the interim final rule published on June 26 warns that those businesses may face some reductions in loan forgiveness. These two examples from the interim final rule illustrate how: 24-week covered period example: A borrower...
IRS Publishes Guidance on Rollover Relief for RMDs
Jun 26,2020
On Tuesday, June 23, the Internal Revenue Service (IRS) announced that taxpayers who have already taken their required minimum distribution (RMD) in 2020 from certain retirement accounts will now be able to roll those funds back into eligible retirement accounts. This is the result of a waiver for RMDs in the Coronavirus Aid, Relief and Economic Security (CARES) Act, benefiting those who do not need the money as they will not have to pay the taxes that would have been due on those distributions. Taxpayers who were supposed to take the required RMD in 2020 included anyone who turned 70½ in 2019 and would have had to take the first RMD by April 1, 2020. However, the CARES Act waives that requirement for the calendar year 2020. Rollover period According to the IRS guidance, the 60-day rollover period has been extended to August 31, 2020. Furthermore, an IRA owner or...
Net Operating Loss Deadline for 2018 Approaches
Jun 26,2020
The Coronavirus Aid, Relief and Economic Security (CARES) Act contains numerous provisions, including a change in net operating losses (NOLs), bringing some financial relief to taxpayers affected by the COVID-19 pandemic. This change allowed taxpayers who had NOLs to go back five years and offset those losses. This is an important reminder that NOL carrybacks for 2018, which can go from 2017 to as far back as 2013, are due June 30, 2020. What To Do Taxpayers need to determine if they had a loss in 2018 and income in any prior year to see if they are eligible for an NOL carryback. Eligible taxpayers may file an application for a tentative carryback adjustment of the tax liability for a prior taxable year that is affected by a NOL carryback. The tentative carryback adjustment procedure allows a taxpayer to obtain a tentative tax refund based on an NOL carryback. Taxpayers...
SBA and Treasury Update PPP Loan Forgiveness Application Form
Jun 19,2020
The Paycheck Protection Program (PPP) was very popular when it was introduced, particularly because of the prospect of the loan being fully forgiven if all criteria were met. However, the application forms were long and complicated. On June 16, the Small Business Administration (SBA), in consultation with the Department of Treasury, published a simplified version of the PPP loan forgiveness application form, implementing the modifications made by the PPP Flexibility Act of 2020. The SBA also published a new, EZ version for certain employers. The new application forms were published alongside revised interim rules on how to calculate employee and owner compensation for loan forgiveness as a result of the Flexibility Act. Revised Application Form The revised form incorporates the changes made by the Flexibility Act and include: eligible and non-eligible costs: S corporation owners cannot include their health insurance costs when calculating payroll, but their retirement costs are eligible....
Business Forecasting Amidst a Pandemic
Jun 16,2020
Planning and forecasting helps businesses plan for future growth while preparing for possible hurdles and changes in the economy. Developing a forecasting model can be difficult because even the most careful planning and calculations can be thrown off by unexpected events. The COVID-19 pandemic is a dramatic example. With the rate of economic recovery still very much up in the air, forecasting the next month, let alone the remaining half of 2020 or the next few years, is going to be far more challenging. Businesses must adapt and take advantage of available technology so that their forecasting becomes a more malleable tool that allows them to quickly update plans as new data points fly in from around the globe. Assessing Your Forecasting Tools One of the first action items to take when evaluating your approach to business forecasting is to assess your forecasting tools. Here are some questions to consider...
Guidance from the AICPA on Accounting for Forgivable PPP Loans
Jun 15,2020
Businesses, including nonprofits, that qualified for a forgivable loan from the Small Business Administration through the Paycheck Protection Program (PPP) have been given accounting guidance by the American Institute of Certified Public Accountants (AICPA). The guidance addresses how a borrower under the program should account for the loan. The guidance states that the legal form of the PPP loan is debt and may be accounted for in accordance with existing financial liability guidance. A business should: record the loan as a financial liability and accrue interest; not assign additional interest at the market rate; continue recording proceeds from the loan as a liability until the loan is either partly/fully forgiven or has been paid off; reduce the PPP liability by the amount of the loan that was forgiven and record a gain on the extinguishment when legally released from repayment of the PPP loan. If a commercial business entity expects...

Go back to Blog Home