If so, use this for the interest payments that are reported on Form 1098 by your bank at the end of the year. Anyone who has W-2 employees and offers them benefits like health or disability insurance, childcare, or group-term life insurance can report those costs here. This field is for payments made to workers who perform services for you, but aren’t your employees. If you work as a DJ and hire a friend to help set up your equipment, that’s contract labor.
FAQ: Paycheck Protection Loans and Economic Injury Disaster Loans
If you received your loan prior to December 27, 2020, the Covered Period can’t go past December 31, 2020. Enter the same business name used on your PPP application, which should be identical to the name you use on your tax returns. Learn how to build, read, and use financial statements for your business so you can make more informed decisions. Our intuitive software automates the busywork with powerful tools and features designed to help you simplify your financial management and make informed business decisions. Not sure where to start or which accounting service fits your needs? Our team is what does adjusted balance mean ready to learn about your business and guide you to the right solution.
PPP loan forgiveness
He has written extensively about small business loans, entrepreneurship, and marketing. Hopefully, these changes will help more underserved small business owners get the financing they need to endure this list these monthly expenses in your budget pandemic. Upload your tax forms and Keeper will prep your return for you.
“Forgiveness is capped at 2.5 months’ worth (2.5/12) of an owner-employee or self employed individual’s 2019 or 2020 compensation (up to a maximum $20,833 per individual in total across all businesses). The individual’s total compensation may not exceed $100,000 on an annualized basis, as prorated for the period during which the payments are made or the obligation to make the payments is incurred. However, these expenses must have been claimed (or reducing family business drama must be claimed) on the 2019 Form 1040 Schedule C for them to be a permissible use during the eight-week period following the first disbursement of the loan. Initially, PPP loans were solely for businesses with employees—which meant sole proprietors weren’t eligible for any funding. Congress made some changes, but these special rules based loan amounts on sole proprietors’ total profits (as shown on their 2019 tax return). For small profit businesses and those already struggling, this meant little-to-no cash.
For detailed instructions, refer to your chosen forgiveness form for clear guidance. Enter the sum of any personal protection equipment or property improvements to remain COVID compliant from March 1, 2020 onwards. Enter the sum of any purchase order or order of goods made prior to receiving a PPP loan essential to operations.
Page 4: PPP Schedule A Worksheet
Typically it’s used by people selling physical products, but any refunds can be put here. If you paid a contractor more than $600 you are required to send them a 1099-NEC. These boxes ask you to report whether that applies to you. This is optional, but it’s used to list your “doing business as” name.
- Not sure where to start or which accounting service fits your needs?
- If you can’t find it, your lender will be able to provide it for you.
- In this guide, we explain each section and walk you through exactly how to fill out this form to get your loan forgiven.
- Make the required representations and certifications and sign.
- Partnerships (or in general, if any other individuals were compensated as an owner), include a separate table that lists how the compensation was paid out (names and amounts).
We’ve provided this information for educational purposes, and it does not constitute tax, legal, or accounting advice. If you would like a tax expert to clarify it for you, feel free to sign up for Keeper. Use this box to report sales tax, franchise taxes, property taxes on business assets, and payroll taxes (if you have employees). You can also report any business licenses you were required to pay for to operate in your state. We provide documents in 17 different languages to help you understand eligibility requirements, fill out applications, and answer frequently asked questions.
