5 PPP Considerations That Won’t be Changing

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5 PPP Considerations That Won’t be Changing

Congress passed the Paycheck Protection Program (PPP) in a rush to provide urgently needed assistance to businesses and their employees. The ink had barely dried before guidance, regulations and potential new legislation clarified, changed and sometimes complicated the program. For example, according to the Journal of Accountancy, recent guidance by the Treasury Department and the SBA covered dozens of issues. As the PPP continues to evolve, the McGruder Group will be monitoring and advising clients on compliance. However, the PPP does have some aspects that won’t change. Here are five you should know.

  1. The PPP funds are a loan. Any funds received as part of the PPP will have to be repaid. The loan may be forgiven, but this will require an application to the lending institution.
  2. Accurate records required. With the guidance, rules and laws in flux, it will be difficult to remain compliant with the PPP. Loan forgiveness will be contingent on submittal of accurate, complete records, so be diligent.
  3. No need for a separate bank account. Good record keeping will be critical to establishing compliance with the rules. However, as long as the funds are correctly tracked through proper bookkeeping, there is no need to open a new bank account for the PPP funds.
  4. Freelancers and sole proprietors beware. Since freelancers and sole proprietors do not issue paychecks to themselves, they are subject to some complicated alternate rules. For example, the amount to count as “payroll” to qualify for loan forgiveness is a formula calculated using 2019 Schedule C income and not 1099 income.
  5. Retirement contributions are covered. All businesses can include retirement contributions in PPP expenditures and still qualify for loan forgiveness. However, those businesses with a SEP retirement plan need to make sure that they make the contribution during the duration of the program instead of the end of the year of the beginning of the following year.

The McGruder Group CPAs offers bookkeeping services as well as guidance to its clients on the PPP. If you have concerns or questions, contact us today.