How Do You Calculate Number Of Employees For PPP?

What is an owner employee for PPP forgiveness?

“S Corporations: The employee cash compensation of an S-corporation owner-employee, defined as an owner who is also an employee, is eligible for loan forgiveness up to the amount of 2.5/12 of their 2019 employee cash compensation, with cash compensation defined as it is for all other employees..

Who is eligible for the 24 week PPP program?

If you were assigned a PPP loan number on or before June 5, 2020, you now have the option of taking 24 weeks to spend the funds instead of eight weeks. Borrowers whose loan numbers were assigned after June 5 will automatically have a forgiveness period that is the shorter of: 24 weeks, or.

Do owner employees count for PPP?

For reasons known only to the Small Business Administration (SBA), it continues to attempt to treat “owners-employees” in the same manner as sole proprietors and partners for purposes of loan forgiveness under the paycheck protection program (PPP).

How do you calculate FTE headcount?

The calculation of full-time equivalent (FTE) is an employee’s scheduled hours divided by the employer’s hours for a full-time workweek. When an employer has a 40-hour workweek, employees who are scheduled to work 40 hours per week are 1.0 FTEs. Employees scheduled to work 20 hours per week are 0.5 FTEs.

Can owners be paid from PPP loan?

When it comes to the PPP, your payroll will be limited to the wages that you are taxed on. … This will not be owner draws, distributions, or loans to shareholders, because none of those types of transactions are subject to payroll or self-employment tax.

What is the payroll period for PPP?

For payroll calculations, the Covered Period is eight weeks beginning on the first day of PPP loan disbursement or Alternative Payroll Covered Period, if applicable. The Alternative Payroll Covered Period begins on the first date of the pay period following loan disbursement.

What is FTE headcount?

Headcount refers to the number of employees working in a company. … FTE stands for full-time equivalent and refers to the number of hours considered full-time. For example, if a company considers 40 hours full-time, and there are two employees working 20 hours per week, those two employees would be 1.0 FTE.

What is a FTE for PPP?

The FTE calculation converts a company’s total employee count (including both full- and part-time employees) into the “equivalent” number of full-time employees working 40 hours a week. The original loan forgiveness application clarified the base hours of 40 hours per week to calculate an FTE.

Who qualifies for PPP forgiveness?

For Borrowers Paycheck Protection Program (PPP) borrowers may be eligible for loan forgiveness if the funds were used for eligible payroll costs, payments on business mortgage interest payments, rent, or utilities during either the 8- or 24-week period after disbursement.

Who is not eligible for a PPP loan?

Passive businesses owned by developers and landlords that do not actively use or occupy the assets acquired or improved with the loan proceeds (except as Eligible Passive Companies under 13 CFR § 120.111) are not eligible.

How do I calculate FTE for PPP?

Average FTE: This calculates the average full-time equivalency (FTE) during the Covered Period or the Alternative Payroll Covered Period. For each employee, enter the average number of hours paid per week, divide by 40, and round the total to the nearest tenth. The maximum for each employee is capped at 1.0.

Who is an owner for PPP?

The 8/24 Rule states that any individual with a 5% or more “ownership stake” is an “owner”. “Ownership stake” indicates that any ownership interest is considered under the 5% test, whether or not it is a voting interest.

Can I apply for PPP if I have no employees?

To apply for PPP loan forgiveness, self-employed individuals can use the simplified Form 3508EZ. As long as you don’t have employees on payroll, this form applies to you. … When you apply, you’ll need to submit a Schedule C from your 2019 tax return showing the income and expenses from your sole proprietorship.

What is a full time equivalent employee for PPP?

The Small Business Administration (SBA) defines a Full-Time Equivalent employee [FTE] as “an employee who works 40 hours or more, on average, each week.” The hours of employees who work less than 40 hours are calculated as proportions of a single FTE employee and aggregated.

How do I calculate PPP payroll?

For a Sole Proprietorship without employees, leave out the employees, and just calculate your yearly net profit, divide by 12, and multiply by 2.5 for PPP payroll eligibility. The process is similar for all legal entity types.

Can an LLC with no employees apply for PPP?

Only sole proprietors, sole members of LLCs, and independent contractors may at this time apply as self-employed individuals for PPP Loans. … Note: SBA stated that it will issue additional guidance for those self-employed individuals in operation on February 15, 2020, but not in operation in 2019, to apply for PPP Loans.

Is it too late to apply for PPP?

It is too late under the original PPP program, but a new PPP program is being rolled out soon under new legislation. … Without the PPP Extension Act, the deadline to apply for a PPP loan expired on June 30, 2020. The PPP Extension Act changed the deadline to August 8, 2020.

What documents are needed for PPP forgiveness?

For the payroll portion of your PPP loan, you will need to provide documents from your payroll provider and proof of paying employment taxes with IRS and state forms. Eligible payroll costs include salaries and wages, health benefits, and paid leave (i.e. vacation, parental, family, medical, or sick leave).

What is the chosen reference period for PPP?

The borrower must first select a reference period: (i) February 15, 2019 through June 30, 2019 (or) (ii) January 1, 2020 through February 29, 2020 (or) (iii) in the case of a seasonal employer, either of the two preceding methods or a consecutive 12-week period between May 1, 2019 and September 15, 2019.

Who is considered an owner employee for PPP?

“Owner-Employee” Defined The IFR states: “Owner-employees with less than a 5 percent ownership stake in a C- or S-Corporation are not subject to the owner-employee compensation rule . . .