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Government Clarifies PPP Loan Forgiveness for the Self-Employed

Dear Client:How much is clarity worth?A lot, a whole lot.And how much is making things easier worth? Of course, it’s a lot, a whole lot, too.We now have both the new (a) clarity and (b) easy road to Paycheck Protection Program (PPP) loan forgiveness for the self-employed with no employees. Get ready to smile.New Easy Road to 100 Percent ForgivenessSay thanks to the Paycheck Protection Program Flexibility Act of 2020. This new law creates a 24-week period for you to spend your PPP loan proceeds.If you obtained your loan proceeds before June 5, you can elect to use the eight-week period to spend your PPP loan proceeds.Here’s the big difference:If the 24-week covered period applies, your loan forgiveness for your deemed payroll is capped at 2.5 months of your 2019 Schedule C net profit, not to exceed $20,833.If you elect the eight-week covered period, your loan forgiveness for your deemed payroll is capped at eight weeks, not to exceed $15,385.Why Is This Importa…

COVID-19 Strategy:Hire Family Members To Create Tax Benifits

Dear Client:The COVID-19 pandemic may create tax benefit opportunities for you and your family members.For example, you could hire your under-age-18 children, pay them, say, $10,000 each, and they could pay zero federal income taxes. And you or your corporation, the employer, would deduct the $10,000 you paid to each of the children.The child wins. You win. There’s more.Schedule C BusinessLet’s say you operate your business as a sole proprietorship, a single-member LLC that’s treated as a sole proprietorship for tax purposes, a husband-wife partnership, or an LLC that’s treated as a husband-wife partnership for tax purposes. Good!That means you can hire your under-age-18 child, and the child’s wages will be completely exempt from Social Security and Medicare taxes (FICA tax) and FUTA taxes.To be clear, the FICA tax exemption applies to the employee’s share of FICA tax that’s withheld from the employee’s paychecks and to the employer’s share of FICA tax that your business must pay over…

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The accounting process involves recording, interpreting, classifying, analyzing, reporting and summarizing financial data. Bookkeeping is the process of recording financial transactions. Recording financial transactions is the first part of and the foundation of the accounting process. Bookkeepers handle the recording part of the accounting process. Accountants handle all parts of the accounting process.