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I've got a few updates just for YOU!
Hey all,

I know many of you have been patiently waiting for a TON of information.  I've got a few updates just for YOU!

There are a few topics that are specific to this group.  I'm talking to the barbers/salon owners, contract workers, truck drivers, real estate agents, and ANYONE who reports their income on a Schedule C on their income tax return.

1) Unemployment - For the first time in the history of our country, there will be unemployment benefits for the self-employed.  Remember that this is not your typical unemployment.  This is not a state-by-state unemployment package.  This is created by the federal government (Pandemic Unemployment Assistance Program) and the states are waiting for the federal government (The Department of Labor) to distribute the specific instructions on how to administer the plan.

Here is how I would expect the plan to work:  
a) You'll need to apply online.  Keep an eye on this website for more updates.
b) You'll need to prove what you make.  I would guess the simplest thing to prove what you make would be your most recently filed tax return, and more specifically your Schedule C that reflects your NET business income.
c) Your benefit would (LIKELY) be ((Net Income on your Schedule C x 50% ) divided by 52 Weeks) +$600 per week.  If you made $52,000 on a Schedule C, I would expect your benefit to be $1,100 per week.  It would appear as though the program is slated to last four months.
d) Again, there are a TON of answers we are waiting on but this is based on the information that has currently been provided to us and is SUBJECT TO CHANGE as the law gets put into action.

2) Loans - There are a few options here.

a) You can apply for an Economic Injury Disaster Loan (EIDL). This program has a component that allows for a business owner to request a $10,000 advance on the loan.  The advance is only given to those with employees.  A small business with 3 employees would receive an advance/grant of $3,000.  If you do not have employees, then this is just a loan. The loan is now streamlined and much easier to apply for.   You can apply here.

b) You can apply for Payroll Protection Loan (PPP).  This one is a little more confusing based on what we know TODAY.  This loan has been calculated as 2.5 x your average monthly payroll.  But, many of you want know, "What if I do not have payroll?"  My answer is an assumption based on how the law is written and the SBA guidance we have been given so far here.  I would estimate your "Average Monthly Payroll" to be 1/12 of what you reported as net income on your federal income tax return (Schedule C).  If you reported $24,000 on your 2019 Schedule C, your eligible payroll protection loan would be $5,000.  If you do not have payroll, then the maximum that would be "forgivable" would be $1,250 (25% of the total) assuming you spent that money on rent, utilities or interest on a mortgage (for your business, not your house).   

Be prepared for changes to this program as it does not go "live" until tomorrow.  

Here are some items you will likely need (drivers license, voided check, 2018/2019 tax return, 2018/2019 Forms 1099, monthly Profit and Loss Statements- IF POSSIBLE)

c) You can apply for BOTH.  BUT, you cannot use the money for the same costs.  You can use the EIDL to reimburse you for money you spent before the loan, and you can use the PPP for costs incurred AFTER you receive the loan.  

3) Other Items

a) Federal, State and City Filing and Payment Tax Deadline has moved to 7/15/20.  I do not intend to have six days a week availability for tax appointments from 4/15/20 - 7/15/20.  I would encourage you to send in your documents as soon as possible.  It is unlikely we will be back to normal in person appointments for some time.  We will continue preparing tax returns as needed but will do so under normal non-tax season hours and will handle all meetings via video conferencing.

b) Tax Credits - There are a variety of new tax credits created by the CARES Act.  Many of them will have some impact on our clients.  We will learn more about these in coming months and will not be applicable until we prepare your 2020 tax return.

c) Stimulus Checks- These payments should start rolling out this coming week.  All LEGITIMATE updates about these checks can be found here.

We will be covering some of these topics as well as a general update to the payroll protection loans for business owners next week during our webinar with the Business Journal on Wednesday, April 15, at 11:30 a.m. Please sign up HERE.

Thank you for your continued patience throughout this process. We are doing everything we can to continue to share accurate and valuable information as it becomes available.

Now more than ever, thank you for your continued support.
Tim


 
 
 

Tim Petrey, CPA, CGMA
Managing Partner
HD Davis CPAs,LLC
330.759.8522 ext. 103









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