We received our funds on May 5th which means the eight week spending deadline is on June 30th, but our Payroll runs on July 3rd. Will that be OK, or do we need to run an early payroll for the 30th to meet the deadline?
For payroll expenditures only, the SBA has issued new guidance. Borrowers may choose to use the 8 week period following the date they received their funds OR they may choose to use an "Alternative Covered Payroll Period" calculation as follows: Borrowers with a biweekly (or more frequent) payroll schedule may elect to calculate eligible payroll costs using the eight-week (56-day) period that begins on the first day of their first pay period following their PPP Loan Disbursement Date (the "Alternative Payroll Covered Period"). For example, if the Borrower received its PPP loan proceeds on Monday, April 20, and the first day of its first pay period following its PPP loan disbursement is Sunday, April 26, the first day of the Alternative Payroll Covered Period is April 26 and the last day of the Alternative Payroll Covered Period is Saturday, June 20. Borrowers are generally eligible for forgiveness for the payroll costs paid and payroll costs incurred during the eight-week (56-day) Covered Period (or Alternative Payroll Covered Period) ("payroll costs"). Payroll costs are considered paid on the day that paychecks are distributed or the Borrower originates an ACH credit transaction. Payroll costs are considered incurred on the day that the employee's pay is earned. Payroll costs incurred but not paid during the Borrower's last pay period of the Covered Period (or Alternative Payroll Covered Period) are eligible for forgiveness if paid on or before the next regular payroll date. Otherwise, payroll costs must be paid during the Covered Period (or Alternative Payroll Covered Period). Count payroll costs that were both paid and incurred only once.
If you paid a month's worth of salary on 4/30 and you received the money on 4/27: will this payroll count as forgiven?
Yes. Payroll costs are allowed if paid or incurred during the covered period.
Can everything in the employee's paycheck be used for the PPP or should anything not be included in the total?
Payroll costs consist of compensation to employees (whose principal place of residence is the United States) in the form of salary, wages, commissions, or similar compensation; cash tips or the equivalent (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips); payment for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums, and retirement; payment of state and local taxes assessed on compensation of employees. For each individual employee, the total amount of cash compensation eligible for forgiveness may not exceed an annual salary of $100,000, as prorated for the covered period, capped at $15,385 per individual for 8 weeks or $46,154 for 24 weeks. Also excluded is Qualified sick or family leave for which a credit is allowed under §7002 or §7004 of the FFCRA, payments to independent contractors and compensation of an employee whose principal place of residence is outside the US. The employer's share of FICA taxes should be excluded.
If we pay for Professional development for staff during this period, is that considered payroll related expense?
There is no specific guidance from the SBA on this. We suggest you consult with your accountant to determine whether the specific expenditures you are considering would count as a non-cash benefit that would count as payroll for PPP purposes.
Does FMLA pay count towards payroll for purpose of PPP?
You cannot simultaneously claim payments made to an employee for Qualified sick or family leave for which a credit is allowed under §7002 or §7004 of the FFCRA and as payroll expenditures under PPP.
Does payroll paid to employees on FMLA due to COVID /schools closed need to be excluded from PPP? It seems like double counting if you can get PPP forgiveness AND a tax credit against payroll taxes to $200/day.
You are correct – you cannot simultaneously claim payments made to an employee for qualified sick/family leave for which for which a credit is allowed under §7002 or §7004 of the FFCRA and as payroll expenditures under PPP.
I am the sole employee of a non-profit. We do not have a group health care plan. I obtain my healthcare through my wife's plan at work, which is funded by a monthly deduction from her paycheck. My non-profit reimburses us on a monthly basis for the amount of this deduction as part of my employment agreement with the non-profit. Is this an expense to which the PPP funds that the nonprofit has received can be applied?
Is Worker's Comp insurance part of Employee benefits forgiven?
No – this is an employer expense, not a part of compensation to employees.
Will Admin fees to third parties who manage HRA Plan as well as HRA expenses (we pay the $1500 Care First Deductible for staff on the plan) count as payroll expenses? Do Health Insurance Premiums or third-party Admin fees for our 401k plan-do those count as payroll expenses? What about the amount paid to the 401k for Profit Share in March 2020 before we knew the pandemic was coming? Can we pay for AFLAC and Legal Shield Policies that staff usually pay as deductions from their pay for Cancer or disability or life insurance policies and count that to payroll expenses?
Generally, any compensation that represents a benefit to your employee can be counted – which would include paying deductibles for staff, or paying for supplemental insurance policies. At this time, third party fees that the employer typically pays like administrative costs for payroll processing cannot be counted, nor can expenses for things like liability insurance that protect the company not the employee. There is no specific guidance as to whether previously incurred and paid expenses like a 401k profit share payment could be included. To be safe, we would recommend not counting it for now. If there is additional guidance from SBA on this, we will let borrowers know.
We have employees that are paid bi weekly and monthly. Are payrolls based on when the cost were incurred or paid?
Expenses paid during or incurred in the covered period can be counted. Unpaid expenses from prior to the covered period (but after February 15, 2020) that are paid during the covered period are also eligible.
If you paid LESS before the PPP arrived and now you want to catch up, can you? i.e the payroll may not be consistent when looking back since January?
If you effectively owe your employees back pay, paying those costs with your PPP loan is permissible going back to February 16th. Please note that FTE must still be consistent in order for you to receive full forgiveness.
What if you pay monthly on the 30th and the PPP 8 weeks ends say on June 28th, should you run payroll on June 28th as an exception to make sure it counts under the PPP 8 weeks?
You can run on your regular pay cycle and note an alternative covered period, ending on the 30th, in your application. The Alternative Covered Period is designed to address this very situation. Please note that the alternative period applies only to your payroll costs. The non-payroll eligible costs must be spent during the regular covered period in order to be considered for forgiveness.
If you pay a payroll on May 15th for the date range of work done from April 15th to April 30th. will this payroll count as forgiven?
Yes because it was incurred after February 15 and paid during your covered period
I am the sole employee of a non-profit. We will use over 60%, but not 100%, of the PPP funds received to cover my salary in its pre-pandemic amount for the 8 week period, but since we don't pay rent or have a mortgage, we will not be using the balance on other covered expenses. I know that I can't carry the balance beyond the 8 weeks. Can I give myself a "raise" above the salary I was receiving pre-pandemic in order to use up the balance on the funds received?
You can elect to use the 24-week covered period option now available to ensure that you spend 100% of the funds received on eligible expenses.
When I applied for the PPP Loan, I gave our payroll information for the past year, which included part-time workers as well as teachers of music, art and dance. We have kept all our full time staff on payroll, but have not paid hourly wages. I specified in my application that we had 13 full time staff, and hadn't laid off any of them. Will the fact that we are not paying hourly workers now affect the requirement for head count?
If you based your application on your full payroll, including part time staff, you will be required to return to that FTE count to obtain full forgiveness. And you must demonstrate that you are paying wages at least 75% of the prior level to avoid a reduction in forgiveness.