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The SBA updated its list of Frequently Asked Questions (FAQs) for the Paycheck Protection Program Loans to clarify the issue of certification in good faith. FAQ 46 states, “Any borrower that, together with its affiliates,20 received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.” Although it is still good practice to document the necessity of PPP funds, there is now clarity that this particular documentation will not be subject to scrutiny by the SBA for loans under $2M.

The safe harbor provision was added after the SBA and Treasury determined that borrowers with loans below the $2 million threshold are less likely to have access to adequate sources of liquidity. Borrowers with loans greater than $2 million who therefore do not satisfy the safe harbor provision may still have an adequate basis for making the good-faith certification based on their individual circumstances. If the SBA determines during its review* that the borrower lacked an adequate basis for the required certification, the SBA will seek repayment of the loan balance and inform the lender that the borrower is not eligible for forgiveness. If the loan is repaid after notification from the SBA, the SBA will not take further action.

The most recent update also added FAQ 47 that extends the repayment date from May 14 to May 18. The SBA is providing borrowers an opportunity to consider FAQ 46 before deciding whether to repay the loan.

For more information about the PPP loan forgiveness, download the slides and recording from our May 12 webinar, Maximizing PPP Loan Forgiveness. For the latest news, information, and resources related to the crisis bookmark our COVID-19 Response page.

For specific questions about PPP loan forgiveness, contact your CPA or tax person.

QuickBooks Pro Advisor has a lot to offer.  If you need an example of an engagement letter you can log into your Pro Advisor  center and click the resource tab.  Once you are on that tab, under the Growing Your Practice Section there are a set of six sample engagement letters that you can download.

2016 Payroll rates and bases are the same as 2015:

• Social Security wage limit            $118,500
• Medicare wages are unlimited at 1.45%
• If your wages are over $200,000.00 withhold additional .9% medicare tax
• FUTA rate is 6% on $7,000 Wage Base
• Business mileage rates down in 2016 to $.54 compared to $.57.5 in 2015
  • relocation and medical miles are $.19
  • Charitable rate miles $.14
• 401K limits for 2016 is $18,000 and if over age 50 you can take an additional $6,000

Maryland Tax Amnesty begins September 1, 2015 and ends on October 30, 2015.  Taxpayers who submit and application may pay their tax obligation in full or include  10% of the amount owed with the application to set up a payment plan.  Taxpayers that choose the payment plan must have their tax obligations paid in full by December 31, 2016.  During the amnesty period a taxpayer may not be charged with criminal tax offense as long as the tax is paid during this period.  Those that participated in the 2001 and 2009 amnesty are not eligible for the 2015 amnesty program.  This opportunity is given to tax delinquents to do the right thing and pay their taxes. To get more information or have more questions call 1-800-MDTAXES.

In business, a profit is the money a business earns after accounting for all the expenses. We all know a profit is a good thing and a negative profit (Loss) is bad. In our minds when we see a profit on our financials we believe that amount should be reflected in the checking account. Then realty hits and you realize there is no money in the checking account.

Always remember that profit is not cash and does not reflect what you have in the bank. The income statement reflects the movement of income and expenses for the business within a given period. The net difference is either your profit or loss which is reflected at the bottom of the income statement.

Now let’s take loan payments and how they affect your profit or loss. When you have an outstanding loan the principal is reflected on the balance sheet. The only deduction that a business owner can take from that loan is the interest paid that year. You need to use your cash from the checking account to pay for the loan, but receive a small benefit from the deduction of the interest only portion to the business.