I assume Jack’s sole proprietorship employs no one and that he earned $156,000 for the year. If this is case, he can only look at $100,000 of his earnings. And basically that means a PPP loan of $20,833. (I calculated this as $100,000 / 12 months * 2.5 months.)

In this case, he can get forgiveness for the payroll costs that stem from owners compensation replacement. That amount equals $15,385. (I calculated this as $100,000 / 52 weeks* 8 weeks).

BTW, if he has other employees–which I think he doesn’t based on the way his numbers resemble mine–their payroll costs get handled the same way. E.g., if Jack had two employees making $50,000 each, the numbers shown above–loan amounts and payroll costs triggering forgiveness–double everything.

Final comment: Not everyone thinks this, but I read the guidance to say that if Jack is self-employed (which appears to mean he’s an employee-less sole proprietor), he only gets forgiveness for payroll costs. Not for any rent, interest or utilities.

Steve, wouldn’t Jack’s inquiry be able to be forgiven by using owner compensation replacement – the same response you posted for someone else?—-

i. Payroll costs including salary, wages, and tips, up to $100,000 of annualized pay per employee (for eight
weeks, a maximum of $15,385 per individual)…

ii. owner compensation replacement, calculated based on 2019 net profit as described in Paragraph 1.b. above, with forgiveness of such amounts limited to eight weeks’ worth (8/52) of 2019 net profit,

—- So can’t he use that other $56,000 of net profit to cover forgiveness of the PPP exceeding the $15385?

Thank you. I think I will pay myself the higher amount and just plan to pay back a few hundred $$. I honestly don’t believe they will round up. It freaks me out to have that be a possibility!

It was my mistake – I had used 2018 line 31 before my cpa finished my 2019 return. and I had been instructed by another online financial person to include my payments for health ins which were personal payments, so when I applied I had the wrong number. I am just going to save the difference and show the bank whre the calculation came from.

Yes. BTW, if you didn’t include partner compensation in the original PPP loan amount, guidance provided yesterday says you can ask bank for an increase in the PPP loan for this “missed opportunity.”

More detail: https://home.treasury.gov/system/files/136/Interim-Final-Rule-on-Loan-Increases.pdf

I think you need to pay 8/52nd each week to “sole proprietor”… aka the member in the single member LLC. That’s the most you can pay. And as noted in blog post, the SBA says 73.8% is “enough.”

It’s possible that additional guidance might give you some forgiveness for how you spend the other 25%-ish… keep your fingers crossed. But other than hiring another employee and paying them wages, I don’t think you’ll get more than 8/52nd for payroll.

Thanks for all the info on this. Two questions:

1. For single-member LLC with only “payroll expenses” to fund during 8 week period should entire loan amount be divided by 8 and paid to single member on a weekly basis rather than using the 1/52 of the loan amount in the hopes that rules will change in favor of 100% loan forgiveness? If no, I’d obviously only be spending 73.8% of the loan amount.

2. For single member LLC with monthly rent and utilities (reported on 2019 schedule c) should payroll expenditures still be based on the 8/52 calculation even though the portion of the loan spent on payroll is 73.8% and the amount spent on rent and utility is over 25%. Or, should I adjust the number to try and get as close as possible to 75% and 25%?

Thanks, in advance, for your input.

Carl

Do you thing employee who made $120,000 In 2019 and had 25 % pension employer pension $30,000 already paid out. So for ppp payroll forgiveness
can you use 30k divided into 8 weeks or is the new max $100,000 x 25= 25k divided into 8 week period

As you can see a few dollars can put you over 75% requirement

I think it’s probably 75% of the $35K… but ask the bank. How the EIDLs work depend on timing.

BTW, I need to do a blog post on this, but we are getting more and more reports of the banks and the SBA shorting small businesses on the “payroll costs” number… so, fingers crossed, you may have more payroll costs that you think.

Question if I got $35,000 ppp Loan and $2000 Eidl grant . What I can’t figure out is if the ppp loan forgiveness calculations for payroll
Is it $35,000 x 75%
Or $33,ooo x 75%

This will determine if I make 75 % threshold for loan forgiveness.