SME CPA https://www.smecpa.com Mon, 21 Sep 2020 11:52:47 +0000 en-US hourly 1 https://wordpress.org/?v=5.3.4 https://www.smecpa.com/wp-content/uploads/2019/07/cropped-logo-32x32.png SME CPA https://www.smecpa.com 32 32 Welcome to the SME CPA family. https://www.smecpa.com/welcome-to-the-sme-cpa-family/ https://www.smecpa.com/welcome-to-the-sme-cpa-family/#respond Mon, 31 Aug 2020 15:02:40 +0000 https://www.smecpa.com/?p=1425 Join us in welcoming our newest team members. Whether they are complete new hires or interns that were offered full time positions we are so happy that they have decided to join our family.

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Join us in welcoming our newest team members. Whether they are complete new hires or interns that were offered full time positions we are so happy that they have decided to join our family.

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How Non-Profits can Benefit from a CPA Firm https://www.smecpa.com/how-non-profits-can-benefit-from-a-cpa-firm/ https://www.smecpa.com/how-non-profits-can-benefit-from-a-cpa-firm/#respond Mon, 31 Aug 2020 13:50:22 +0000 https://www.smecpa.com/?p=1421 Non-profit organizations are valuable businesses that serve to further a social cause or provide a public benefit. They are great at driving economic development in virtually every sector of society. However, non-profits face rigorous accounting, reporting, and regulatory requirements. Meeting these stipulations can often be burdensome and if you’re left doing this alone, it can…

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Non-profit organizations are valuable businesses that serve to further a social cause or provide a public benefit. They are great at driving economic development in virtually every sector of society. However, non-profits face rigorous accounting, reporting, and regulatory requirements. Meeting these stipulations can often be burdensome and if you’re left doing this alone, it can take you away from running your business. Limited budgets can make it even more stressful.  By teaming up with a CPA firm, you will not only alleviate a lot of extra stress, you may also avoid making costly mistakes.

Non-Profit Requirements

Something that makes non-profits stand out among other businesses is their unique tax treatment. Most non-profits are given tax exempt status and achieving this is a big milestone. Because of this privilege and many others, the IRS holds non-profits to a high standard and lists a set of requirements that must be maintained to keep this status.

In addition to this, non-profits are required to disclose certain information such as specific tax forms, financial documents, board meetings, meeting notices, and minutes if the organization is covered by state sunshine laws. Forgetting to disclose the required information could be detrimental to the business. It’s important to note that there are many types of non-profits and each has different reporting and regulatory requirements. Knowing what’s required is crucial; but don’t think you have to do it alone, because a CPA is well equipped to assist you.

What are some specific ways a CPA firm can help?

There are a plethora of ways a CPA firm can help your non-profit. The following are only a few examples  of the resources a CPA firm has to offer.

  • Ensuring your tax return is filed accurately and timely. Each year, the IRS publishes a list of organizations whose tax-exempt status was automatically revoked due to failure to file the required forms for three consecutive years. Falling behind on filing can be expensive as penalties and interest can quickly escalate.
  • Determining whether your non-profit is required to conduct an independent audit. Throughout the lifetime of a non-profit, federal, state, and local governments may request a copy of the organization’s audited financial statements. In other cases, some contracts with state and local governments may require the non-profit to conduct an independent audit. The CPA firm you choose may be able to conduct the audit or recommend a qualified firm who can.
  • Helping you understand what’s required to run your business. Depending on what type of non-profit you are, there are numerous requirements and restrictions on how the business is run. A CPA who has experience with non-profits may be able to help you better understand what’s required.

Why does a non-profit need a CPA firm?

A CPA is one of the most widely-recognized and highly-trusted professional designations in the business world. These professionals have spent countless hours doing research and extensive continuing education to maintain their certification. They are qualified to assist your non-profit in challenges that may arise and make sure your business is up to date with the tax reporting standards.

In addition to this, CPA’s are more than number crunchers. They are trusted advisors and provide many services aside from filing tax returns. This includes, but is not limited to, consulting, advising, preparing audits, and maintaining clean financial records which are the backbone to any successful company.

CPA’s who deal with non-profit organizations understand that each non-profit is unique whether it is a charitable organization, religious organization, private foundation, or another type of non-profit. Whether you are a start up or have years of experience, you can trust an experienced CPA to help keep your non-profit going and guide you toward achieving your goals.

Finding a CPA

We suggest that you do your research on CPA firms who have experience working with other non-profit organizations. This can be done by navigating a firm’s website or giving them a call and meeting with a CPA to discuss how they can benefit you. Before your meeting, think about your goals, where you see your non-profit going, and what topics you would like to learn more about. Hiring a CPA will alleviate a lot of stress and help you be a better business owner. Get on the phone and make that call today.

-Darian Betosky, SME CPAs

Resources:

https://www.councilofnonprofits.org/nonprofit-audit-guide/need-independent-audit#:~:text=Not%20all%20charitable%20nonprofits%20are%20required%20to%20conduct%20an%20independent%20audit.&text=Federal%2C%20state%2C%20and%20local%20governments,subject%20to%20special%20audit%20requirements.

https://www.irs.gov/charities-non-profits/public-disclosure-and-availability-of-exempt-organizations-returns-and-applications-documents-subject-to-public-disclosure

https://www.councilofnonprofits.org/tools-resources/public-disclosure-requirements-nonprofits

https://www.councilofnonprofits.org/tools-resources/federal-filing-requirements-nonprofits

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SME CPA listed on INSIDE Public Accounting nationwide largest 400 accounting firms list. https://www.smecpa.com/sme-cpa-listed-on-inside-public-accounting-nationwide-largest-400-accounting-firms-list/ https://www.smecpa.com/sme-cpa-listed-on-inside-public-accounting-nationwide-largest-400-accounting-firms-list/#respond Mon, 31 Aug 2020 13:30:12 +0000 https://www.smecpa.com/?p=1417 It was announced that SME CPAs is in the ranking of the nation’s largest 400 accounting firms by INSIDE Public Accounting. The INSIDE Public Accounting (IPA) Survey and Analysis of Firms, is the longest-running, up-to-date ranking of the nation’s largest accounting firms. IPA’s annual rankings of the 400 largest firms in the U.S. are listed from the…

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It was announced that SME CPAs is in the ranking of the nation’s largest 400 accounting firms by INSIDE Public Accounting. The INSIDE Public Accounting (IPA) Survey and Analysis of Firms, is the longest-running, up-to-date ranking of the nation’s largest accounting firms. IPA’s annual rankings of the 400 largest firms in the U.S. are listed from the multi-billion-dollar Big 4 to firms of roughly $5.5 million in net revenue. The list includes firm headquarters, MP, net revenue, ranking in the previous year and percentage change. The rankings are compiled from data gathered in the annual IPA Survey and Analysis of Firms, which attracts participation from other firms.

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Main Street Lending Program https://www.smecpa.com/main-street-lending-program/ https://www.smecpa.com/main-street-lending-program/#respond Mon, 03 Aug 2020 15:57:14 +0000 https://www.smecpa.com/?p=1409 It is an understatement to say that businesses and individuals all over the world have been affected by Covid-19. This has caused considerable financial stress on many businesses forcing them to seek creative ways to stay afloat during this volatile time. Small to medium-sized businesses are a crucial part of our economy and are responsible…

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It is an understatement to say that businesses and individuals all over the world have been affected by Covid-19. This has caused considerable financial stress on many businesses forcing them to seek creative ways to stay afloat during this volatile time. Small to medium-sized businesses are a crucial part of our economy and are responsible for creating jobs for millions of Americans. With that in mind, the Federal Reserve has recently developed a new program called The Main Street Lending Program which is designed to provide relief to eligible small and mid-sized businesses, including nonprofits.

This program helps companies who were in sound financial condition prior to the Covid-19 pandemic. The Program encourages banks to loan money more freely to businesses in need of a loan. They do this by purchasing a large portion of the loan from the bank, which then frees the bank from the risk.

More specifically, once your company gets its loan, the Federal Reserve will buy 95% of the loan from the bank, leaving the bank with only 5% of the originated loan. The term of these loans is five years, and amounts generally range between $250,000 and $10 million. It is important to note that these loans are not forgivable and cannot be used to pay off any other existing debt the borrower has.

Five Parts of the Main Street Lending Program

The Program consists of five separate parts, three of which are related to the business lending program and two of which are related to nonprofits. Those related to businesses are commonly referred to as Main Street New Loan Facility (MSNLF), Main Street Priority Loan Facility (MSPLF), and Main Street Expanded Loan Facility (MSELF).

The remaining two facilities are referred to as Nonprofit Organization New Loan Facility (NONLF) and Nonprofit Organization Expanded Loan Facility (NOELF). The facilities for non-profits are not yet operational and the Federal Reserve is currently working to get these up and going soon.

The following is an overview of the facilities related to the business loans being offered. There is a great amount of detail on each and we encourage you to do your research before determining if one of these is right for you.

  • MSNLF: Eligible lenders can extend new five-year loans to eligible borrowers ranging from $250,000 to $35 million. The maximum size of the loan cannot exceed four times the borrower’s adjusted 2019 earnings before interest, taxes, depreciation, and amortization (EBITDA). To learn more about this click here: https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200608a1.pdf
  • MSPLF: Eligible lenders can extend five-year loans to eligible borrowers ranging from $250,000 to $50 million. The maximum size of the loan cannot exceed six times the borrower’s adjusted 2019 EBITDA. There are more unique features to loans originated in connection to the MSPLF. To learn more about this click here:

https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200608a2.pdf

  • MSELF: Eligible lenders can increase an eligible borrower’s existing term loan or revolving credit facility. This is a five-year term loan ranging in size from $10 million to $300 million. The maximum size of the loan, when added to the borrower’s existing outstanding debt, cannot exceed six times the borrower’s adjusted 2019 EBITDA. More features of this loan are outlined here:

https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200608a3.pdf

The opportunity to take part in this program is from now until September 30, 2020, unless the Program is extended by the Board and the Treasury Department. The Federal Reserve will be purchasing up to $600 billion in loans and each comes with a repayment term of five years.

Am I an eligible business?

To be eligible to borrow funds under the program, a business needs to satisfy the following:

  1. Must have been established prior to March 13, 2020
  2. Must not be ineligible – for more information see this list of ineligible businesses https://ecfr.io/cgi-bin/text-idx?SID=fa53a93b56da0512f225f4fbcf044d0c&mc=true&node=se13.1.120_1110&rgn=div8
  3. Must meet at least one of the following two conditions:
    1. Has 15,000 employees or fewer
    1. Has 2019 annual revenues of $5 billion or less
  4. The business must be a U.S. business
  5. Must only participate in one of the Main Street facilities (MSNLF, MSPLF, or MSELF) and must not participate in the PMCCF as well
  6. Must not have received support pursuant to the Coronavirus Economic Stabilization Act of 2020
  7. Must be able to make all of the certifications and covenants required under the program

Other Details

If you are approved for the loan, no payments of principal will be required for the first two years of an MSNLF Loan, MSPLF Loan, or MSELF upsized tranche. Payments of interest are not required until after the first year, then they will be made payable in accordance with the loan agreement.

I’m interested, what’s next?

If you are interested in this you should contact your lender for more information on whether your lender plans on participating in the program and to request more information on the application process. Borrowers will not automatically qualify for a loan, and it’s up to the lender to assess your financial condition. Or if you just have questions SME CPAs is here to help as well.

Darian Betosky, Staff Accountant SME CPAs

Credits:

https://www.federalreserve.gov/monetarypolicy/mainstreetlending.htm

https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200728a3.pdf

https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200728a2.pdf

https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200728a5.pdf

https://ecfr.io/cgi-bin/text-idx?SID=fa53a93b56da0512f225f4fbcf044d0c&mc=true&node=se13.1.120_1110&rgn=div8

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SME CPA Promotions https://www.smecpa.com/sme-cpa-promotions/ Wed, 24 Jun 2020 16:24:16 +0000 https://www.smecpa.com/?p=1403 Join us in congratulating our employees that received a promotion. They all deserve and earned it. SME CPAs would not be where we are today without our team.

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Join us in congratulating our employees that received a promotion. They all deserve and earned it. SME CPAs would not be where we are today without our team.

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Revised PPP loan forgiveness applications released. https://www.smecpa.com/revised-ppp-loan-forgiveness-applications-released/ https://www.smecpa.com/revised-ppp-loan-forgiveness-applications-released/#respond Mon, 22 Jun 2020 14:43:11 +0000 https://www.smecpa.com/?p=1396 The U.S. Small Business Administration (SBA), along with Treasury, released Wednesday, June 17th, 2020, a revised loan forgiveness application for the Paycheck Protection Program (PPP). The SBA also unveiled a new EZ application for forgiveness of PPP loans. Revised PPP Loan Forgiveness Application (https://content.sba.gov/sites/default/files/2020-06/PPP%20Loan%20Forgiveness%20Application%20%28Revised%206.16.2020%29.pdf)and instructions (https://home.treasury.gov/system/files/136/PPP-Loan-Forgiveness-Application-Instructions_1.pdf) EZ PPP Loan Forgiveness Application (https://content.sba.gov/sites/default/files/2020-06/PPP%20Forgiveness%20Application%203508EZ%20%28%20Revised%2006.16.2020%29.pdf)and instructions (https://home.treasury.gov/system/files/136/PPP-Loan-Forgiveness-Application-Form-EZ-Instructions.pdf) The…

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The U.S. Small Business Administration (SBA), along with Treasury, released Wednesday, June 17th, 2020, a revised loan forgiveness application for the Paycheck Protection Program (PPP). The SBA also unveiled a new EZ application for forgiveness of PPP loans.

Revised PPP Loan Forgiveness Application
(https://content.sba.gov/sites/default/files/2020-06/PPP%20Loan%20Forgiveness%20Application%20%28Revised%206.16.2020%29.pdf)
and instructions (https://home.treasury.gov/system/files/136/PPP-Loan-Forgiveness-Application-Instructions_1.pdf)


EZ PPP Loan Forgiveness Application
(https://content.sba.gov/sites/default/files/2020-06/PPP%20Forgiveness%20Application%203508EZ%20%28%20Revised%2006.16.2020%29.pdf)
and instructions (https://home.treasury.gov/system/files/136/PPP-Loan-Forgiveness-Application-Form-EZ-Instructions.pdf)


The releases Wednesday came after the SBA issued a new interim final rule providing guidance on how to calculate employee and owner compensation for loan forgiveness in the new 24-week covered period created by the Paycheck Protection Flexibility Act.

Congress passed the Paycheck Protection Flexibility Act to make it easier for small businesses and other PPP borrowers to qualify for full loan forgiveness. Among the changes in the act are an expansion of the “covered period” for loan forgiveness from eight weeks to 24 weeks, a reduction of the proportion that must be spent on payroll costs from 75% to 60%, and the establishment of a safe harbor for businesses that have been unable to return to the level of business activity they had before the COVID-19 pandemic due to compliance with health and safety guidelines for slowing the spread of the virus.

Application highlights:
The revised PPP Loan Forgiveness Application and instructions include a number of notable items. Among them are:

Health insurance costs for S corporation owners cannot be included when
calculating payroll costs; however, retirement costs for S corporation owners are eligible costs.

Safe harbors for excluding salary and hourly wage reductions and reductions in the number of employees (full-time equivalents) from loan forgiveness reductions can be applied as of the date the loan forgiveness application is submitted. Borrowers don’t have to wait until Dec. 31 to apply for forgiveness to use the safe harbors.

Borrowers that received loans before June 5 can choose between using the original eight-week covered period or the new 24-week covered period.

New EZ application details
The EZ PPP Loan Forgiveness Application requires fewer calculations and less documentation than the full application. The EZ application can be used by borrowers that:

Are self-employed and have no employees;

Did not reduce the salaries or wages of their employees by more than 25% and did not reduce the number or hours of their employees; or

Experienced reductions in business activity as a result of health directives related to COVID-19 and did not reduce the salaries or wages of their employees by more than 25%.


New interim final rule published
The SBA issued rules Tuesday night for determining payroll costs and owner compensation in calculating PPP loan forgiveness under the new 24-week covered period.

The Paycheck Protection Flexibility Act tripled the duration during which PPP recipients could spend the funds and still qualify for loan forgiveness a span of time called the covered period. The interim final rule for calculating loan forgiveness under the original eight-week covered period.

The PPP allows loan forgiveness for payroll costs — including salary, wages, and tips for up to $100,000 annualized per employee, or $15,385 per individual over the eight-week period. The new interim final rule establishes the 24-week maximum for full loan forgiveness at $46,154 per individual.

Owner compensation replacement calculations
While the employee compensation limit for the 24-week period is three times the eight-week limit, the interim final rule does not do the same with the owner compensation replacement for businesses that file Schedule C, Profit or Loss From Business, or Schedule F, Profit or Loss From Farming, tax returns. For those businesses, forgiveness for the owner compensation replacement is calculated for the eight-week period as 8 ÷ 52 × 2019 net profit, up to a maximum of $15,385. For the 24-week period, the forgiveness calculation is limited to 2.5 months’ worth (2.5 ÷ 12) of 2019 net profit, up to $20,833.

The owner compensation replacement calculations are structured to prevent owners from reaping PPP windfalls that Congress did not intend, according to the interim final rule. Specifically, the SBA and Treasury, which oversee the PPP, want to prevent the following scenario, which is made possible by a provision in the Paycheck Protection Flexibility Act that provides a safe harbor from loan forgiveness reductions to any borrower that is unable to return to the same level of business activity it was operating at before Feb. 15, 2020.

Because the maximum loan amount for a business is generally based on 2.5 months of the borrower’s average total monthly payroll costs during the one-year period preceding the loan, a borrower with one other employee would receive a maximum loan amount equal to five months of payroll (2.5 months of payroll for the owner plus 2.5 months of payroll for the employee). If the owner laid off the employee and availed itself of the
aforementioned safe harbor, the owner could treat the entire amount of the PPP loan as payroll, with the entire loan forgiven.

“This would not only result in a windfall for the owner, by providing the owner with five months of payroll instead of 2.5 months, but also defeat the purpose of the CARES Act of protecting the paycheck of the employee,” the interim final rule says. “For borrowers with no employees, this limitation will have no effect, because the maximum loan amount for such borrowers already includes only 2.5 months of their payroll.”

Other provisions
The interim final rule also modifies earlier guidance to account for changes included in the Payroll Protection Flexibility Act.

The minimum term for PPP loans is raised to five years for all loans made on or after June 5. For loans made before June 5, the two-year minimum maturity remains in effect unless both the borrower and the lender agree to extend it to five years. The proportion of PPP funding that must be used on payroll costs to qualify for full forgiveness drops to 60% from 75%.The application deadline for PPP loans remains June 30. The PPP in brief Congress created the PPP as part of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136. The legislation authorized Treasury to use the SBA’s 7(a) small business lending program to fund loans of up to $10 million per borrower that qualifying businesses could spend to cover payroll, mortgage interest, rent, and utilities.

The forgivable loans were designed to help support organizations facing economic hardships created by the coronavirus pandemic and assist them in continuing to pay employee salaries. PPP loan recipients can have their loans forgiven in full if the funds were used for eligible expenses and other criteria are met. The loan forgiveness amount

may be reduced based on the percentage of eligible costs attributed to nonpayroll costs, any decrease in employee headcount, and decreases in salaries or wages per employee.

PPP funds are available to small businesses that were in operation on Feb. 15 with 500 or fewer employees, including not-for-profits, veterans’ organizations, Tribal concerns, self-employed individuals, sole proprietorships, and independent contractors. Businesses with more than 500 employees in certain industries also can apply for loans.

Congress approved $349 billion in PPP funding. After that money was quickly exhausted, Congress authorized another $310 billion, bringing the program total to $659 billion. As of 5 p.m. ET Tuesday, the SBA had approved more than 4.6 million loans totaling $513 billion.

If you need help navigating the PPP loan, SME CPAs can help. Call us at 706.722.5337 or email us at info@smecpa.com.

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PPP Flexibility Act UPDATE https://www.smecpa.com/ppp-flexibility-act-update/ https://www.smecpa.com/ppp-flexibility-act-update/#respond Tue, 09 Jun 2020 14:10:53 +0000 https://www.smecpa.com/?p=1381 The Senate unanimously passed H.R.7010, the Paycheck Protection Program Flexibility Act of 2020, and the President immediately signed it into law.   This new Act allows more flexibility for borrowers taking advantage of PPP funds.  It basically extends the time period for businesses to use the funds and changes the ratio for payroll to other fixed…

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The Senate unanimously passed H.R.7010, the Paycheck Protection Program Flexibility Act of 2020, and the President immediately signed it into law.  

This new Act allows more flexibility for borrowers taking advantage of PPP funds.  It basically extends the time period for businesses to use the funds and changes the ratio for payroll to other fixed costs.

The following is an overview of the main points:

  • Borrowers of PPP funds can choose to extend the loan period to 24 weeks, or they can keep the original eight-week period. This change was made in order to help borrowers reach full, or almost full, forgiveness.
  • Borrowers can use the 24-week period to restore their workforce levels and wages to the levels in place prior to the pandemic declaration, which is required for full forgiveness.  This must be done by the deadline of December 31st, instead of the original deadline of June 30th.
  • The legislation includes new exceptions allowing borrowers to achieve full loan forgiveness even if they don’t fully restore their workforce.
    • There was already an allowance so that borrowers could exclude from their calculations employees who turned down good faith offers to be rehired at the same hours and wages as before the pandemic.
    • The new bill allows borrowers to make an adjustment because they could not find qualified employees or were unable to restore business operations to February 15, 2020 levels due to COVID-19 related operating restrictions.
  • The payroll expenditure requirement drops to 60% from 75%.  This change requires borrowers to spend at least 60% of the funds on payroll.  If not, none of the loan will be forgiven. Currently, a borrower is required to reduce the amount eligible for forgiveness if less than 75% of eligible funds are used for payroll costs, but forgiveness isn’t eliminated if that threshold isn’t met.
  • Borrowers now have five years to repay any unforgiven amount of the loan instead of the original two-year repayment time period. The interest rate remains at 1%.
  • Borrowers can now defer the employer’s portion of Social Security payroll taxes for two years. Half of the payroll taxes will be due in 2021, with the rest due in 2022.

Given the extended coverage period and the reduced payroll ratio, most PPP borrowers should be able to achieve full loan forgiveness without continued planning strategies.

If you find that you need further assistance or have any questions about the new guidance, please contact us.  We will continue to closely monitor these and any further developments.

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PPP Forgiveness Application https://www.smecpa.com/ppp-forgiveness-application/ https://www.smecpa.com/ppp-forgiveness-application/#respond Wed, 20 May 2020 12:02:26 +0000 https://www.smecpa.com/?p=1374 On May 15th the U.S. Small Business Administration (SBA) released the link to the “Paycheck Protection Program Loan Forgiveness Application,” which contains information on PPP Loan forgiveness along with instructions for completing the application form. The SBA said its form and instructions are designed to reduce compliance burdens and simplify the process for borrowers.  The form…

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On May 15th the U.S. Small Business Administration (SBA) released the link to the “Paycheck Protection Program Loan Forgiveness Application,” which contains information on PPP Loan forgiveness along with instructions for completing the application form.

The SBA said its form and instructions are designed to reduce compliance burdens and simplify the process for borrowers.  The form and instructions provide details on how to apply for forgiveness of PPP loans, consistent with the (CARES) Act, P.L. 116-136.

The application and instructions are the first detailed guidance from the SBA and U.S. Treasury regarding details of computing PPP loan forgiveness. While this guidance does not answer some questions borrowers may still have about the program, it does provide some additional clarity on a few key items:

  • Flexibility in the “incurred” and “paid” language in the CARES Act to include eligible payroll and non-payroll expenses both paid OR incurred during the eight-week period after receiving the PPP loan. The form instructions state that non-payroll expenses incurred during the 8-week covered period must be paid by the next billing cycle in order to be included as eligible expenses;
  • Interpretation for the calculation of full-time equivalents is relatively borrower-friendly, with 40 hours being used as the base to determine FTEs;
  • An explicit statement that covered rent obligations includes leases on both real and personal property;
  • Options for borrowers who use a biweekly or more frequent payroll schedule to allow for the calculation of payroll costs using an “alternative payroll covered” period that aligns with the borrower’s regular payroll cycle;
  • An indirect bar on using bonuses to owner-employees to fill shortfalls in eligible payroll costs for loan forgiveness and an inference that bonuses are acceptable if paid to rank-and-file employees due to a lack of any such language as it relates to other employees (further guidance is expected on this issue);
  • Implementation of statutory exemptions from loan forgiveness reduction based on a rehire date by June 30, 2020;
  • An additional new exemption from the loan forgiveness reduction for borrowers who made a good-faith, written offer to rehire employees, which the worker(s) declined; and,
  • Step-by-step instructions on how to perform the calculations required by the CARES Act to conform with eligibility requirements for loan forgiveness.

The SBA plans to release regulations and guidance in the coming days to assist borrowers as they complete their loan forgiveness applications. When final guidance is released, our team will make available a new estimator for forgiveness. The new guidance updates several of the assumptions made in the previous model released. More specifically, this recent guidance made significant changes to the FTE calculations, Covered Period start date, and the 25% reduction calculation. These changes will likely improve eligibility of forgivable amounts.

If you need assistance SME CPAs is here to help you clarify how this current guidance applies to your situation.

706.722.5337 Augusta 803.648.6047 Aiken

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5 things you should do once you receive your PPP loan. https://www.smecpa.com/5-things-you-should-do-once-you-receive-your-ppp-loan/ https://www.smecpa.com/5-things-you-should-do-once-you-receive-your-ppp-loan/#respond Thu, 14 May 2020 16:12:25 +0000 https://www.smecpa.com/?p=1370 1. Only Use Money From The Loan on Forgivable Expenses You must track what you spend this money on in order to be able to apply for forgiveness. Recipients must not lose sight of the legal restrictions on the use of these fund. The SBA issued a Rule that requires PPP applicants to certify funds…

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1. Only Use Money From The Loan on Forgivable Expenses

You must track what you spend this money on in order to be able to apply for forgiveness. Recipients must not lose sight of the legal restrictions on the use of these fund. The SBA issued a Rule that requires PPP applicants to certify funds are being used for the following:

  • Payroll for 8 weeks after receiving the loan
  • Rent or mortgage interest for 8 weeks
  • Approved Utilities

This requirement comes with a warning: knowingly using the funds for unauthorized purposes may lead to charges of fraud.  In fact, there are a few potential federal crimes that could apply for misusing funds or even making false statements about the intended use of the funds.  

2. Work Closely With your Tax Professional to Maximize Your Forgivable Amount.

Loan recipients should work closely with their tax professionals to ensure that they maximize the forgivable amount of the loan. This requires proper documentation of the allocation of the funds.

3. Which Brings Us to Document Everything.

Keep records on every penny you spend from the PPP loan. Have documentation to show the number of employees you have and how you have not laid anyone off since February 15th. If you did lay or furlough employees after receiving the loan, you have from April 26th until June 30th to hire them back, in order to get full forgiveness. Make sure you understand every expense that you can allocate to the PPP, and that at least 75% of the PPP loan is used for payroll.

4. Look for Additional Savings Under the CARES Act.

Everything happened so quickly and there was a mad dash for borrowers to get their foot in the door and secure their funds. But since the dust has settled a little borrows need to take the time to consider other tax breaks under the CARES Act or even better revisit the second point, and consult your tax professional. Here are a few potential tax breaks.

  • The CARES Act specifically increased the ability to deduct net operating losses – referred to as NOLs. This idea allows taxpayers to file amended returns and get cash refunds now.
  • The CARES Act loosened the rules that limit business interest deduction. Allowing some taxpayers to deduct additional business interest expenses.
  • The CARES Act accelerates the ability for corporations to use alternative minimum tax (AMT) credits. Under the new provisions, companies are able to claim AMT credits for as early as the 2018 tax year.  

5. Don’t forget to file an application with the bank after the 8-week Period to Request Forgiveness of Your Loan.

Finally, PPP borrowers will need to file an application with their bank after the 8-week period.  If you have followed all of these steps, this process should be an easy process.  Banks are required to make the forgiveness determination within a 60-day period after the application is submitted. 

Keep in mind that a representative of the business will be required to submit a certification providing, among other things, that the amount for which forgiveness is requested was used for appropriate purposes. 

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Georgia Retraining Tax Credit https://www.smecpa.com/georgia-retraining-tax-credit/ https://www.smecpa.com/georgia-retraining-tax-credit/#respond Wed, 06 May 2020 15:01:09 +0000 https://www.smecpa.com/?p=1355 Retraining tax credits enable Georgia businesses to offset their investment in employees. Whether retraining workers to use new equipment or new technology or upgrading the company’s competitiveness with ISO 9000 training, companies can afford more training, more often, thanks to Georgia’s tax credit program. If your business has purchased or upgraded software, equipment or any…

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Retraining tax credits enable Georgia businesses to offset their investment in employees. Whether retraining workers to use new equipment or new technology or upgrading the company’s competitiveness with ISO 9000 training, companies can afford more training, more often, thanks to Georgia’s tax credit program. If your business has purchased or upgraded software, equipment or any technology, you may already qualify for a retraining tax credit that immediately reduces or eliminates your state income tax burden.

Retraining tax credits can be used to offset up to 50 percent of a company’s Georgia corporate income tax liability. If the earned credit exceeds that limit, then the unused credit can be carried forward for up to 10 years and applied to future years’ tax liability. Any business that files a Georgia income tax return is eligible for the retraining tax credit.

Businesses can receive a tax credit of 50 percent of their direct training expenses, with up to $500 credit per full-time employee, per training program. The annual maximum of the credit amounts to $1,250 per employee. Eligible expenses include:

  • costs of instructors and teaching materials
  • employee wages during retraining
  • reasonable travel expenses

Based on approved Retraining Tax Credits this year, over 90% were awarded to companies related to upgraded software or new software, including to help them manage:

  • Customer conversations (e.g., CRM)
  • Business processes (e.g., ERP)
  • Patient health information (e.g., EHR or EMR)
  • Marketing activities
  • Inventory, documents or storage
  • Project details and workflows
  • Billing or payments

As always, we are here to help. If you think your business may qualify or would like to discuss this opportunity further, please contact your CPA.

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