Mark J Kohler Live Q&A!

Are we live? Welcome, everybody. Right. Huh? Welcome. I'm just getting my pen down here. I wanted a little sharper, but. Welcome to this broadcast. My name is Mark Kohler, CPA and attorney, small business owner, real estate investor. I love the American Dream and I love helping my clients save taxes, build wealth. And I am here with you, just doing Q and A. I want to give a shout out to my wonderful partner, entrepreneurmagazine.com entrepreneur.com, however you want to say it. And I'm also live on my own Facebook and YouTube and just out there and hoping to help many of you that are looking for clear, concise, understandable answers to tax and legal questions and the stimulus package and marketing. And just my firm, we got five attorneys and about 10 CPAs for helping clients around the country. With all of our staff and support and paralegals and accountants, we're about 80 people strong. We have our partner directed Ira, helping clients self direct and with all those employees were there as a team. And I learned so much from my wonderful team members in the office and group texts, group emails, staff meetings. So I just happen to be the one that likes to get in front of the camera. So I'm here, senior partner in a law firm and accounting firm and trust company, helping you out today. So I'm just here with Q and A. We're going to talk stimulus package, PPP money, whatever you guys want. And we're just going to see where it goes, and hopefully we can get my pen working here. I'm going to let Janae play with this. It is way too thick. Can you get that down where it's a little better for me? Thank you so much. All right, well, I'm going to just jump into some questions, and I want to know where you people are from. If I don't know, I'm just going to assume you're from Duluth, Minnesota. We have a huge following out there. And so I got Chris from Duluth, Mark, for the PPP loan. Does the same FTEs need to be hired or can you hire anyone? Yes, you can hire anyone, Kris. Now, everybody. So, you know, if you get the PPP loan. Thank you, Janae. That looks great. If you get the PPP loan. I need to be louder. All right. Okay, louder. I hope that's all right for many of you out there. Okay, PPP loan. Let's say you get 20 grand in your PPP loan. You've got two tests to get that baby forgiven. Well, could even be more than that, but let's just say two in general, 75% of it needs to be on payroll costs. That definition is different for S corporations than it is for sole proprietors. You independent contractors 1099s listen to the podcast yesterday. It's on my YouTube channel. A lot more detail in on that. 75% has to be payroll costs. 25% can be rent, utilities and interest. Or you could keep spending payroll costs on the whole 100%. That may get it forgiven. That's test number one. Test number one, you may think you're home free, but you got to do test number two. And you have to look at, during this eight week period, how many full time equivalent employees did you have? Anybody working over 30 hours a week average during those eight weeks? Sorry, we'll put it right here. 30 hours a week plus average. That's considered a full time employee. Any part time employees would be less than 30 hours a week average. And two of them equal one full time employee. So two part time employees equal one FTE full time equivalent employee. Now why do I care about that? Why does the statute care about that? Because they want you to use this PPP money and have the same number of employees you did before this entire mess or full time employee equivalent during that eight week period that you had before this whole mess got created. I know, it's nuts. So you have two measurement periods. You can go back. Okay, so let's say this is your eight weeks. This is a new way of looking at it. My brain just went here. You have eight weeks. Sorry Kris, your question's a big one. Everybody's got to know this. You got your eight week period from the day you get your PPP money. And it's not just spending 75% on payroll, it's having the same number of employees. Now if it's just you, you have one employee before, you have one employee now. Done. But you have to look at how many employees you had during this period and you have to measure it against your choice. Two different periods. One is January through February approximately in our articles and more detail there, sorry, 2020. January to February, what were your full time equivalent employees? And then you can go back to the same period last year, which is approximately March to June in 2019. And what were your full time employees equivalent there? So you have to look at these two numbers. If you had, let's say 10 full time equivalent employees before the pandemic, you've got to have 10 full time equivalent employees during that eight week period. If you only had six employees, then whatever you want to have Forgiven is cut by 60%. Yeah, not good. If you go, well, last year I only had five employees. Okay, cool. Well during the eight week period you had six employees. Well good, you're fine. You had the same number or more. So you hit the test 100% or more. And so you get to forgive everything under whatever you got in test one. So what Kris is asking, do I have to hire the same employees that were working with me before the pandemic where I can hire anybody as long as I hit my FTE number, full time equivalent number? Kris, you can hire anybody you want. Just hit the frickin number. Now there's exemptions to this. We talked about it in our prior podcast that was recorded on yesterday on Wednesday and it's on YouTube. Get over there to my channel markjkohler.com and watch the video on update to getting your PPP forgiveness because we go through it for an hour. All right, Chelsea says from Duluth, Minnesota. Apparently Chelsea says, what can Eidl loan proceeds be used for? Are there limitations on Eidl spending? Now the Eidl is the economic injury disaster loan through the sba. You get your PPP by going through a bank. You get your Eidl by going through the sba. The Eidl has a part A and B. Part A is up to $10,000 of grant money that you get to keep unless you also got the ppp, which we could talk about. And part B is a long term loan, up to $2 million, 3.75 interest, 30 years and everybody gets approved for different amounts. I just got an email yesterday from the SBA that I got approved for a certain dollar amount for part B and I get to choose if I want to use it or not. Now Chelsea's question is a unique one. She says, well, what can I use this money for? Can I use it for anything I want? You can. You could put it in the bank and reserve it for the harder times that might come this year. There's some pretty grim predictions out there on the news right now. Unless you've got a strong stomach, be careful watching the news at night or you're going to be up all night scared to death. And, and so be careful where you're getting your news information. Not that they're wrong, not that they're right, not that Fox is bad and CNN's good or vice versa. I'm just saying some people that get some camera time, the only way they do it is by saying the sky's falling. So I'm just nervous And I. You may take this money, Chelsea, and just put it in the bank. You might buy equipment, you might save it for a rainy day. You might use it in your business or however the heck you want. But if you want this PPP money forgiven completely, you have to use it in certain ways. And if you get the EIDL 10,000, it reduces your PPP forgiveness. So you're going to. If you get both PPP and EIDL, you're going to be. Whatever Eidl you got is going to end up being a 1% loan over two years because it reduced your PPP again. I've got more reading material and videos on that you could pay out. She says, can I pay off credit cards and stuff like that? Yeah. Use it for whatever you need to to make your business successful and get back on top. Alma from Duluth, Minnesota, says, I checked on IRS.gov and it says I got sent a stimulus payment. But you do not. But you do not recognize the account number is there. But I do not recommend recognize the account number. I think is what she meant to say or he. Is there anything I can do about this? Oh my gosh, Alma. So if you went to IRS.gov and the IRS says you got your money and they sent it to a specific account number that you have no idea what the frick it is, I would get on the phone with the irs. You may be on hold for two or three hours. Guys, I get on hold with the IRS all the time. That's what lawyers and accountants do for their clients. And we try to multitask while we're on hold with the irs. So you're not paying for us just to sit there like that. So, Alma, make sure you've got a few things to do. Get the phone with the irs, put them on speakerphone, and you're going to listen to the same music that was there 15 years ago. They have not changed the music on the IRS phone system. I wish they would, but anyway, get on hold and then just listen until they pick up and tell them your problem. You may have to resort to mail. And one other thing, Alma. You'll be able to reconcile this on your 2020 tax return. And state, I never got it. So I hate to tell you this may not get resolved quickly, but don't give up. Just fight it out with the IRS and communicate and call and write letters and that's all you can do. Don't hire someone like me to do it. It's not worth it for twelve hundred bucks or two grand. Just do it yourself. Just fight it out and call up and cry. Don't be a jerk. When you get on the phone with the irs, they love it when you're nice because they don't like to be there either sometimes. And if you take it out on the IRS agent, you're not going to get as much love. So be really nice. I got a funny story once I called up, I don't know if you guys heard me say this before I got my team in here. I always try to talk nice to the irs and I put on my Southern charm. Yes, ma'. Am. Yes, sir. Yes, ma'. Am. Yes, sir. You betcha. I'll get that right over to you. Thank you so much. And a lot of times I do, I say, thanks for working at the irs. It's a thankless job and they appreciate that. So I'm on there and I'm going, yes, sir. Absolutely. Yes, sir. I'll get that to you. We'll get it right out. Yes, sir. Yes, sir. And I'm just being totally respectful. At the end of the call, they say, this is a yes, ma', am, not a yes, sir. And I was like, oh my gosh, I'm so sorry. You just had a deep voice. Okay, gotta go, bye. And then I called the client and said, yeah, you're screwed. I don't know what happened, but they don't like you, so wasn't my fault. Anyway. Okay, Eddie says from Maryland. Eddie from Maryland. Thank you, buddy. He said, I received my EIDL grant of $1,000. Woo hoo. All right. Living large. All right, 1,000. I know, Eddie, that if you're one employee, that's all you're going to get. Do you know how they will determine how much the Eidl loan will be? No, that's a great question. I think it's going to be based on your gross sales that you put down on the Eidl application, which is really fast. People, you can fill this out in 15 minutes. Now, if some of you are watching this and like Mark, I never filled out my Idle app, Go do it. Go do it. If you get the money and don't want to give it back, but go play. The website was shut down for at least two weeks. It is open right now. Just go to the SBA.gov and you'll find your way to the Coronavirus COVID 19 help, blah blah blah. And get over to the Idle app. You can do it in 15 minutes. You get $1,000 per employee, part B. They send you an email And Eddie, I've seen it up to two weeks later they say hey by the way, we've approved a loan for you for 20 grand, 150 grand, I've seen as high as 500 grand and I think it's going to be based on your gross sales, net profit that you put on the application. So that's all I can say. Eddie. Carl, I own a small daycare, 10 employees. Carl, boy you are a man. If I had to run a daycare with a bunch of screaming kids, I don't know if I could do it. You're a trooper, Carl. I own a small daycare, 10 employees in Delaware. Can't decide whether to take the PPP I'm being offered or file for unemployment. As a self employed person I don't know when I can open or what children will return. Well Carl, the first thing I do is take the ppp, go apply for it, put the money in the bank. Number two, go apply for unemployment, find out what you can get and start getting the check. If you use the PPP money you're going to have to put yourself on payroll and you're going to have to stop unemployment. If business is good you may choose to go that route. If all of a sudden shelter in place is gone and no kids come back are not enough worth it to open. Leave the PPP money alone, keep the unemployment. Once the employment benefit really gets, it's going to really. The federal benefit runs out August 1st. So by August 1st you may say screw it, I'm not going to stay on unemployment, I'm going to get back to work because it's 600 a week until August 1st. On top of state unemployment that might be 1,000 a week. And Carl says, you know what, I'm going to take the thousand a week but get the ppp, put the money in the bank. If you decide to stay on unemployment, don't touch the ppp. And when your eight weeks is up go back to the bank and say here's your money, thank you very much, I didn't need it. Now you will pay 1% interest on the time you didn't use the money for eight weeks, that's it. But you didn't spend it so you can just give it back and you don't need to apply for loan forgiveness. So Carl, I'm a betting guy and if I can put down two bets sometimes I'll even be dumb in Vegas because I think I just want to feel like a winner. So I'll put one chip down on Red and one chip down on black and play the roulette wheel and whatever you call the guy or gal at the. What do they call them right there at the table? I don't know. It's not the pit boss. It's a little worker there. They always look at me like, really? You're going to put a chip down on red and black? I just want to feel like I win so I have a. I'm going to win either way. So, Carl, what I would do is apply for PPP and apply for unemployment. But you can't do both at the same time. You can apply for both and then just see how it goes. If you keep with unemployment, don't touch the ppp. If you touch the ppp, stop unemployment. If you try to do both, it is fraudulent, it is bad. You will get in trouble. All right. Okay, last written question, then we're going to our live callers. You guys feel it? Okay, these are the early birders to send in some questions before the broadcast. Robin says, can we pay overtime with PPP money? Yes. And does it count as payroll for the forgiveness? Yes. Now, Robin and everybody out there, you've got to be careful giving people raises. But overtime, love it. Giving yourself a raise, I'd be a little concerned. Make sure you hit your employee account, Robin. Make sure you know how much you need to spend on payroll to get the whole thing forgiven. So, Robin, this is a great question, but there's a lot of factors you need to take into account. Now, if some of you are new to this and you're like, who's this Mark Kohler guy? I'm glad I'm getting some answers here. I hope you are. On our website, we've got Multiple articles on Entrepreneur.com, we've got multiple articles and webinars. We're holding another webinar with entrepreneurs at Tuesday. We're going to be doing it Tuesday, I think, live. Yeah. No, no, no, it's Wednesday. It's Wednesday live at 3pm Eastern. That's right, 3pm Eastern. Live on Entrepreneur, Matt Sorenson, my partner, I will be doing a webinar answering questions about forgiveness. By then, all the money will probably be gone and allocated across the country. The money's still available as of today. From what I'm understanding, all the research shows me that. So, uh, don't stop monitoring and learning and knowing what to do during this eight week period. It's a lot easier to apply for the money than to get it forgiven. Now my tax attorneys are doing consults Every day we're going, I'm asking them to work late into the evening and on weekends doing half hour and one hour consults. Please call my team, get a consult. If you're trying to get 10 grand forgiven, I think it's okay to spend 300 bucks to get to make sure it gets forgiven. And if a tax attorney at 300 bucks an hour is a steal, you try to find that in Chicago, Louisiana, New York, any major city. And they know what they're doing with the stimulus package. You're going to pay out the no's. We've been around for 20 years. I'm not trying to be salesy here. I'm just saying we are a resource for this. And you might be able to read all the articles and watch all the webinars and videos out there and still have questions on your specific situation. I'm going to try to do better my best to answer what I can here and continue to follow the experts at Entrepreneur and on our site and we will help you. Okay, are we ready for our live questions? All right, want to say thanks to Logan. Rosalie here. They're in the house making it happen. And we got Janae over here on the cameras. We looking good. You should zoom out in a little bit, you know, make it, I don't know, you don't like going in and out? Okay, we, we can zoom in and out here, Janae. So it's up to you if you think it'd look good. All right, we're we going with Rosie, Rosalie. Ladies first. Carlos in Orlando.

All right, Stephanie commented on your betting you won't win if it hits free.

Oh, that's right. If you hit the zero ought, it's. I think it's zero or zero. Zero. If you hit green, then you don't win on red or black. I have had that happen to me. Not when I was betting on both red and black, but I have got the yeah, the zero sucks. I thanks, Stephanie. Appreciate that.

All right, can we get PPP now and then use the employee retention credit in the third or fourth quarter of 2020?

No. Okay. There's another strategy out there, people. He asked, can I use the PPP money now? I said no. And no one heard the question. He said, can I use the PPP money now and then later this year use the employee retention tax credit later in the year? And the answer is no. Now, here's what we're seeing some clients do. You can get your PPP money and refuse it by May 14th. You can say, I don't want it because I'm going to go use the employee retention tax credit. The employee retention tax credit is $5,000 per employee, not you or your family members. Employee retention tax credit of $5,000 per employee. And you can do that throughout the rest of the year. There's no eight weeks, no rush. You've got all of 2020. And if you get the Eidl, you can get the Eidl on top of that and have that first ten grand completely forgiven. No headaches, no application. But if you do the ppp, you have to minus idle from it. And you're going to pay that at 1% over two years. You can maybe get more money under the PPP, but if you use the PPP, you cannot do the tax credit. If you use the tax credit, you can't use the ppp. Now, I won't tell the franchise company, National Food Restaurant that some of you would, many of you would be aware of, has a local. One of my clients has a local franchise for this company. He got the ppp, couple hundred grand. The franchisor at the national level said, we are not allowing you to take it under our franchise agreement because we don't want the bad pr, even though you may need it at your local level. Which is true. He did. This was kind of sad, but they said, even though you may need it, we don't want the bad press that one of our franchisees took that money. It wasn't McDonald's. But think of it like that. McDonald's told them, don't take the money at your local level because we don't want the heat. And so, bummer. So he can give the money back by May 14th and as if he never got it, then he can go over and take the earned the employee retention tax credit and oh my gosh, that's $5,000 per employee that you pay up to 10 grand. You might have 30 employees between now and the end of the year. Oh, my heck. That's almost 150 grand, right? 30 times five. Yeah. So that's not bad. So you could be doing some decent numbers with this, depending on your type of business. All right, Logan. John from Dallas. John from Dallas. Thanks, John.

S Corp. With my spouse on payroll as well. Can you explain what S Corp needs to do to make sure health care is a PPP eligible expense?

Okay, so we have husband and wife in an S Corp. They're both taking a W2 and they went and got the PPP. Now, this is why I would ask John to do a Consult with one of my other attorneys because I don't know how much his total PPP was. Did they have other employees? I don't know how much the PP was for and when's the eight week start and what all of his other expenses are. So there's a lot of variables here, I don't know. And that's why a consult for many of you would be helpful. I'll put my phone number down in there, make sure you guys do that for us and I'll do it here at the end. But let's just say hypothetically, with two employees it could be as high as $40,000. But I doubt that. I have not seen that in a husband wife combo for a number of reasons. But let's say he gets a PPP for 30 grand. Let's do that. Okay, so 30 grand is. He's got to spend 75%. Let's do the math together. $30,000 times 0.75. Okay, 2250. So he's got $22,500. So this is John in Dallas and this is a good example for everybody. He's got to spend at least $22,500 on payroll costs. Now, because he said he's an S corp, he's got a different set of rules than those of you out there that are just 1099 sole proprietors. So be careful, don't listen maybe because you're going to have a different rule. But what John can do is he can take total payroll that he paid his husband or wife, he and she, and plus any health insurance premiums incurred during the eight weeks. So that's going to be two months of health insurance premiums plus any 401k contributions that they would normally make for two months worth. And then he can take that. Now you cannot add FICA on top of that. Now the maximum amount John can Pay himself is 8333 per month. And again, I would not normally, but we might see that as high for his spouse as well. Again, I don't know all the numbers. I'm not saying he can do that. It depends on a number of factors. But if they paid themselves each 8333 twice during. There's so many variables here. The maximum you can pay an employee is $100,000. That's including yourself on an annualized basis, plus you've got health insurance premiums and 401ks numbers. I don't know what John's situation is, but the real math on the application is not going to be okay, you guys, you know what, I'm sorry this is so complicated. I'm going to back up and tell you how this really works. I'm not that I'm trying to hide the ball from you, but I'm trying to make it simple. And sometimes you just can't make it simple and give an accurate answer. So we've got to go and let's assume John got $30,000 in a PPP. Alright? The only way he would get that is if he was paying himself 100 grand last year and his wife 50 grand. That's how it would work. And I don't know what health insurance was, but let's just say that's 30 grand. So what you would do is take 100 grand divided by 12 times 2.5, that's around $20,000. Then we would pay his wife 50 grand divided by 12 times 2. 5 is going to be around $10,000. That's going to get us the 30. Now you have to say, oh, he's got to hit 22,5 payroll. Well, you don't get to pay yourself based on the same factor. This is where people say the government is evil. Because what you have to do is say what's his salary? Now when you go to forgiveness, it's 100 grand divided by 52 weeks. See, the math is at two and a half months, but the forgiveness is based on eight weeks. It's different math. So 100 grand divided by 52 is $1,923 for John times eight weeks times eight, that's 15,003, 84. Then his wife would be 50,000 divided by 52 weeks equals 961 times eight weeks would be $7,692. Plus the $15,384 gives us a total of $23,076. Now here's what's good. Did he meet his $22,000 threshold? Yes, he's already at 23. Plus he gets to add on to that health insurance premiums. So let's say his health insurance premiums are $1,000 a month. So we could add $2,000 to that. That brings us to 25,000. 076. Let's just round it down to 25,000. Now he wants to get the whole 30,000 forgiven. So he's got to cough up another 500 grand of rent, utilities and interest on long term debt. If he can cough up five grand, he's got the whole 30,000 forgiven. Don't hate the Messenger. Just hate the game. I'm just trying to teach it to you here. And I'm so proud of you for wading through this. This is why we've got articles and other webinars and podcasts so that this will sink in. And if you're like, screw it, I don't want to know all this. I just want to have someone tell me what to do. Call my office and get a consult. Or call your accountant and get a consult, and they better know what they're doing. Our number is 435-586-9366. If some of you already did a consult, add this text. Yesterday, someone said, mark, I already did a consult with Christie, one of our attorneys, Parker. She's great. Who should I call about forgiveness? I said, call Christy Parker because she did your consult on the front. She'll do the consult on the back and make sure we get as much forgiven. So if any of you have done that already, it's money well spent to talk to your advisor, whoever they are, and call us if you want. Rosalie and Logan will set you up on an appointment. You can call and talk to Logan. He's a good looking guy. Over here. Sorry, ladies, he's married. Rosalie, beautiful over here. Wonderful. Married as well. Why are you two. You know, Janae's available, Jenny's out there. Oh, you got a new bow, though, so maybe not. Okay, all right. I'm just saying, you can talk to these guys and they'll help you get an appointment. Janae just does my video. She's awesome. Okay, Beth in Chicago,

not planning on using it for payroll, but rent. Will I still get 25%?

No, she said, Beth. Sorry, I keep saying no. I'm being rude. I'm not. Beth said she got a PPP for $2,400. That's good. It's better than nothing. She goes, I plan on using it all for rent. Is it going to be forgiven at all or 25% of it? No. In order to get the ceiling of how much was forgiven, 75% has to at least be on payroll. Now, Beth, I'm going to give you a tip here. $2,400. It sounds like you're the only employee or it wouldn't be that low, which is fine. So $2,400, that's you. That's cool. Pay yourself $2,400. Do the FICA on it, which is going to be 15.3%. So let's do the math because you're going to have to withhold and match on yourself. 0.153. Now, I'm assuming you're an S corp, too, Beth, if you're a sole proprietor. I don't know, Beth. You got to call my team. But. Okay, let's say that it's just her. Okay? $2,400 on a W2S corp times 0.75. She's got to at least do $800 in payroll to get the whole thing forgiven. Well, we want to do some on rent. What I would do, Beth, is pay yourself 1,800. Do your FICA, which would be $275. That's your real cost. But when you pay yourself, turn around and use it for rent, but claim it as payroll, then the other $600 can go to rent as well. So you still pay rent with the money, but you claim a paycheck of $1,800 and you pay FICA of 275. Now, here's why you want to do that. The whole thing is forgiven, and it only cost you $275. So you really got free money. And this is how some accountants are doing it. Is your free money from the IRS is actually $2,125 free money. Use the whole thing for rent, but you've got to take it as a paycheck. 75% of it, then do the rest in rent. Now, if Beth doesn't do that, if she just does the whole thing in rent, zero. Forgiven. So she can spend $275 to have the whole thing forgiven. Or just pay it all in rent and get nothing forgiven again. Make sure you talk to your advisor, Beth, on the exact protocol. I don't know all your facts. I don't know if you're an S corp. I don't know if you're a sole proprietor. Married, single. How much did you make last year? There's a lot of factors here, but we could maybe get the whole thing forgiven. For 275 bucks. That's the goal. All right. Keith and Rhode Island. I love it. You guys are telling me where you're at now? No one's from Duluth. I thought we had a big following in Duluth. Guess not. All right. Okay.

I just got my PPP money and I transferred it from my general banking account to my payroll account. I'm an escort. Is that an issue?

Keith just said from Rhode island that he got his PPP money. We don't know how much. But what he did is instead of putting it in his main bank account, he went and Put it in his payroll bank account. He apparently has two different bank accounts. One that he does payroll with and one he pays for all of his other expenses with. And he said, is that a problem? No, it's not a problem. And it's not really something you have to do either. For Keith, it made a lot of sense for him to just put this money over here and use it all for payroll during the eight weeks. Then when he goes to apply for forgiveness, he's going to take in his payroll reports to the bank, say, look it, I spent all my money on payroll. I want the whole thing forgiven. They're going to go, looks good, Keith. See you later. You don't have to pay it back tax free. Enjoy. Now that's if Keith uses all that money in his payroll bank account. But what Keith is really asking about is where should I hold this money when I do all this? Frankly, the answer is it doesn't matter technically where you put the money. What matters is that you can show how you spend it. And the better organized you can be and have all that documentation, the better. And that's what Keith's trying to do. So Keith, I commend you. I think that's fine. It's not going to hurt you. It might help you. I do not care. What I care is where you spend the money and being able to document it and you should be fine. Ashley in St. Louis, Missouri, if we

have an employee currently being paid under the FMLA and are taking the tax credit, their pay does not count towards the PPP stable. Do they still count as an employee for the FTE headcount?

Wow. Ashley in St. Louis has stumped me today. Now I'm going to tell her my guess, but Ashley said, we have our company. This is good. Many of you didn't know. Ashley asked a very smart question. She goes, here's our S corp we have. Ashley's on payroll. She spells it a very unique way. I got that right. Okay, so Ashley in St. Louis, some of you may know an Ashley that has this spelling in St. Louis. She may be the only one. This could be your person, you know. Anyway, so Ashley's out in St. Louis and she says, hey, we've got. That's in her example. She goes, I have three employees. And before this whole freaking mess, I had three employees. Now I got my PPP money and I'm going to use it for my three employees. Hold up. One of them, number three, went and took family medical leave. Now what's cool about that is the employee gets up to two thirds of their paycheck and the government will reimburse Ashley for that. The employee gets to go home for up to 12 weeks, take care of their family or themselves, and they get 2/3 of their pay and the government reimburses Ashley. So it's not out of Ashley's check either. What it's doing is telling employers, hey, let them go home. We'll cover the bill. 2/3 of their pay and they get 2/3 of their pay to go home and take care of family. That's what the government wanted to do. Okay, that's good. Oh, well, when she goes to spend the ppp, the money that she used over here, because she's getting reimbursed for FMLA cannot count towards her 75%. Ooh, some of you that asked questions earlier like, oh, I didn't know that. That's right. Anybody on FMLA, that money does not count for the 75%. What was test number two? Test number two is she has to have the same number of employees before that she had before the pandemic that she had during the eight weeks. That's the first testing period. She can also go back to last year, but let's just assume it's three for both periods. So she had three employees before the pandemic. Now, well, now we have to remember she counts as one of the employees, so there'd be four. Let's do it. Right. So she has four employees before the deal. She has three third party employees and herself. So the head count is four. Her question is, does number three employee count for the head count on the ppp, but they're off on fmla. So we know the dollars don't count, but will the head count hurt me? Because I'm going to pay these people more time, maybe even overtime to make up for this person being gone. But am I going to be penalized? Now? If she's penalized, look what happens. She had four employees before the PPP. Uh oh. Now she only has three employees. That means she's down 75% employee headcount. So let's say she spent all the PPP money on payroll. The whole thing's supposed to be forgiven under test number one, but under test number two, she only had a 75% headcount. So her PPP is reduced by 70 by 25%. Ouch. My guess, Ashley, is that if you have an employee off on FMLA and getting reimbursed under fmla, it's not going to count for the ppp and the headcount's not going to work either. What I would do is go out and hire another employee and look at it. Doesn't hurt you. You got the money to do it and you get it forgiven. And your number three employee is at home and the government's paying them to be home. So if you do it right with the right math, everybody wins. I would go out and hire that other employee and use the money to hire them. And you can say, well, I don't need them because these two people are going to pick up all the work. Doesn't matter. The government will pay you to go hire them, have them paint the walls, clean the floor, help do something around the office or the business, and you'll be okay. So just a thought. All right, whose turn is it? Logan, who do we have?

Newborn from LA.

Newhor in LA says, Can I hire

new employees to reach the 75% on my PPP money? Also, is there any limit to how many new hires I can have? My landlord gave me a break during this time.

Okay. Nuhore thought they could be special and asked three questions. So because they're easy ones, I'm going to answer them fast. Thanks. Newwhor Nuhor says, can I go out and hire someone else to hit my headcount rule? The answer is yes. I just answered that for Ashley. So new horror, you can go hire someone else and that's okay. You'll make your number. Number two question was, oh, is there any limit on the number of employees I hire? No. The more you hire, the better. That's what the government wants you to do. So you're, you're hurt if you don't hire as many employees as you had before. That's where you get hurt. So go out and hire as many employees as you want. It actually works for you. Then the third question was, oh, his landlord. Okay, now remember here, let's play like this is where now we have new whore here. Not Ashley, is it? N U H O R E. Okay, so no Ashley, it's Nuhor. And he's got to spend 75% of his PPP money on payroll, remember? Then the other 25%, if he wants it forgiven, has to be rent or other payroll or utilities. Well, he talked to his landlord and knew whore got a break. The landlord said you don't have to pay rent for those two months. I'm going to help you out. If you say, well, I'm going to prepay my rent for the next couple months because I want it forgiven. Matt Sorenson, my Amazing partner pointed out in the statute, it says in order to have this rent forgiven, it has to be paid and incurred during the eight weeks. So, nuhor, what I would do is call your landlord and say, you know what? Put it in writing. I will pay my rent for May and June, but if you're willing to help me out in July and August, I'd really appreciate it. But I would rather pay my rent in May and June because I got the PPP program. So don't forgive my rent in May and June. Let's put it in writing that you might forgive July and August, and I'd be grateful. And frankly, that's kind of what the government wants. They want your landlord to get rent in May and June. They want the PPP program to help pay rent. In fact, 25% of the money you get, they want you to pay in rent. So I would go ask your landlord to forgive a couple other different months, and I think you'll be better off. All right, Sheila in Renton, Washington, ground zero. What do you got?

Does that employee amount include or exclude employees from a temp agency? Temporary agency?

Yeah. Okay, so Sheila, good question. Says, I normally lease employees is what she says. And so this is tricky. Sheila, it depends on what you did on your PPP application and how the leasing company is. Oh, man, this is hard. Okay, you may be a W2 on your S corp, the owner, and then you go out and lease all your employees. In many instances, you're going to 1099 the leasing company, and then they w to the employees. That's option A when you go out and work with a leasing company. Some leasing companies say, hey, we're going to run your payroll and everything for you, but we're going to get your employees lined up, but we're still going to issue them a W2 as if it came from you. You're just going to pay us a service fee to handle all the headaches. So when Sheila went to go get her ppp, this is where it could be dangerous. If you went to the bank and said, yep, I have employees. I have 20 employees over here. They would have normally asked you for your 941s, meaning you were under B. You were really paying the employees off of your company, but the leasing company was handling the benefits and the payments like an ADP maybe on. So, Sheila, if you went to the bank and got a PPP based on actual 941 W2 employees, and the leasing company could verify that for you, for the bank, you're going to be fine. The leasing equation works. But if you went to the bank and you said, yeah, I have a bunch of employees, and the bank said, okay, great, tell us the number. And they didn't. And. But come to the reality was it's just a 1099, and the bank didn't catch that. And you got a big old fat PPP and in reality, you don't have employees. You're 1099 in a company to hire employees for you. You may not get any of that forgiven. Sheila, I would really talk to one of your professionals that you work with and talk to the bank and make sure that you got the right PPP and the right number and use the right factors. And you may want to talk to one of our tax attorneys to help you, guide you through this to make sure you're not screwed over in the end. Be careful. Be careful. You're playing with fire with the leasing issue. I just hope you've got the right number based on the right factors and you actually have W2 payroll going through your company, because a 1099 does not count for forgiveness. Chloe in Denver. I love that you guys are watching. Thanks so much. I love doing this. I love helping small business owners. I was a kid selling lemonade when I was in junior high, and I had a cleaning business when I was in high school. I had a cleaning business in college. That's all I knew, was to clean. That's what my dad had me do in his offices. And then when I got out of law school and my master's program in taxation, I started four or five businesses because I was just crazy. And then I realized, you know what my best business is? My accounting firm and law firm. I need to just focus on that. Took me a few years to figure that out. And so I still have rental properties. I still start little businesses with my kids, but my primary business is helping you, my business owners around the country. And I've got great law partners, accounting partners, staff, great people here helping today. I couldn't do it without all of them. And thank you for being here. Sorry. Little touchy feely. Is that okay? Love you guys. So appreciate it. You want some lemonade? I'm selling some outside. Okay. All right, go ahead.

What should you do if you apply in two places?

Oh, oh, oh, Chloe. Oh, no, Chloe. Okay, Chloe from Denver. She said she went out and applied for two PPPs because she didn't trust her first bank. I get it. That's okay. And then she goes, I got approved at both. All right, cool. I Would normally say, fine, only sign loan docs on one of them and they'll put money in your bank. The other one say, see ya, thanks, I don't need it. I already signed loan docs over here. And she said like it wasn't her fault. They both put money in my bank. Well, that's because you went and signed loan documents on both of them. Chloe, You have got to give back the money on one of them. It is fraud. You would go to jail. It is not good. Not good. So spend the money on one of the PPPs, but you have until May 14th. You've got six days to put that money back. So you want to get a hold of that bank right away. One of them, the one you don't want to work with and say, I don't need the money, sorry, I changed my mind. And you give them every red cent back and say, I disclaim it, I don't want it. And the IRS and the SBA and the federal. The Treasury Department is allowing business owners to say, I don't want it up until May 14 with no cost, no ramifications. Chloe, you have to do that. And if any of you are watching and you took two ppp, not good. Give one back, focus on the other, let's get it forgiven, that's okay. And if some of you applied to multiple banks, that's cool. And someone said, hey, we got you approved over here to say thanks, I don't need it, that's fine. But you cannot take two PPP monies. So Chloe, get out of that quick. Love you. Krista in Idaho. Eagle, Idaho, that's over by Sun Valley, over by Boise, we're on the east side. Over by Jackson Hole in West Yellowstone. I'm not going to diss on the west side. I'm just saying there's two different sides to Idaho. If you didn't know that, now you feel so much smarter. Many of you. Okay, go ahead. Krista, what do you got? Oh, Krista, Krista, Krista, Chloe and Krista. Man, you're working me here. Krista says, hey, can I write an additional paycheck during the eight weeks so that I can use up all the money on payroll? No, it's what you pay and incurred during that time. So if you wrote an extra paycheck, that means you're paying someone for time that they're going to. They spent before the eight weeks or if you write a check at the end of the eight weeks, then you're paying someone for work they're going to do after the eight weeks. And the government said it's eight weeks of hours worked, employees earned, payroll. Now, if some of your payroll is a little whacked and you got to catch up a little week of payroll on the front of the eight weeks or at the end of the eight weeks, that's cool. But you can't pay someone for work they did before the eight weeks or after the eight weeks. It's got to be in that period. And if you go, well, damn, I'm not going to make it, then the government says, go hire someone else. Don't give everybody raises. Go hire someone else. That's why they have a number test and a money test. This is the payroll protection program, people. Not the small business protection program, not the rent protection program. They want you to go hire people. There is almost 30 million people unemployment right now. Now, some of you may argue you made unemployment so good, no one wants to get off unemployment. I don't know. I'm not going to play politician, but here's the thing. There's people out of work right now. Go hire someone. That's what you should do. Last question from Tammy and Maryland Corp.

And I have 24 W3 employees, and I give myself a raise to help pay other business expenses, not cover my.

Okay, so Tammy, playing with fire. Love it. We got a little base out in Maryland. Love you guys. My dad served in the military out in Maryland at the military base there. And my mom taught kindergarten and first grade for three years while my dad was in the military in Maryland. And I got to go back recently and look at the house they lived in. It was kind of interesting. And I had some good seafood, by the way, FYI. Okay, now, Maryland, Tammy and Maryland has this little s Corp. With 24 employees. Wow. Okay. And she got a PPP. All right. I suspect it was a little hefty. Probably 100 to 200 grand PPP with 24 employees. That's probably where it hit. And then she says, oh, by the way, accountants, we call employees E s. That's shorthand for employees. All right, so she's got this, let's say 200 grand PPP. And she says, can I give myself a raise because I need to hit 75%? I'm going to say everybody out there, yes, you can give yourself a raise as long as it's reasonable. And it cannot exceed $100,000 divided by 52 weeks times eight. So let's do the math. $100,000 for Tammy. That's her salary. Maximum salary for the year. Divided by 52 weeks times that's $1,923 per week. That's the max she can pay herself times eight, that's 15,384. Now, if you say, well, during the eight weeks, I'm going to do four payrolls, because that's kind of how most people do it. And we don't know where the eight weeks falls based on when you got the money. So generally, you're going to have two, four, six, eight weeks, and you're going to have one, two, three, four payrolls before you hit your cutoffs on the eight weeks. So the maximum in these four pay periods I'd want to do, Tammy, is 15,384 divided by four pay periods. So you would get a check for 3,846 times four pay periods. That's the max you can pay yourself, Tammy. And if you go, well, darn it, I'm not going to hit my 75%, then go out and hire more employees or pay your employees for overtime or make sure you hit your health insurance premiums. You might want to pay that for two months or you might be doing some 401k contributions for your employees. So you got to find ways to chew this money up and get it all forgiven. That's why you want to consult. And I'm going to say in summary here how much I love you guys. Oh, we got to announce our book winner, and I'm going to give away a book. Which book should I give away? Janae, you get to decide. What book am I going to give away? Financial freedom. Janae chose that. One of you. If you will share this video on YouTube or Facebook with any of your friends in the morning, Rosalie is going to look at all the shares, and then she's going to choose a name of someone that sent her a box of chocolates. Some random person that sent her a box of chocolates. Is that dark chocolate milk milk chocolate? No, she wouldn't do that. She's going to randomly choose a winner, but the chocolates won't hurt your chances next week. And then she will mail you this book. And I'm going to sign it now, and I'm going to say, you are a winner, because we're all winners in the theater of life, aren't we? Well, you're a winner, Mark Kohler. So she's going to mail this book out. Last week's winner was Katie. It looks Thai, and I don't know how to say it, so forgive me. Rosalie is Korean that's not a Korean name. Is that Thai, you think? Okay, she's not going to go Korean. She doesn't know. All right. So Natalie, congratulations. And I was going to say this. If any of you need a consult, please give us a call. 435586 boy9366 and if you want to get to my website, please sign up for the newsletter. I was up. I'm not kidding. I want to say this. I was up until 4 in the morning today. I was complaining to these guys earlier. I was up till four in the morning writing articles, working through my YouTube videos, writing a weekly message and trying to make a good quality newsletter. I do it once a week. I usually try to get in bed by 1am the week I do it, but it was terrible. So long week. So get over to WW marcjkohler.com and sign up for the newsletter. I have a free ebook. And I'll say this because more and more states are getting rid of their shelter in place. This weekend is the last weekend for my quarantine special. I normally only do it on Cyber Monday every year, but because everybody's hurting, they need some education at home. I give away almost $1,000 worth of all my videos and some books on Kindle and audio and all that. It's normally 999 plus. I mean, it's like $1,000 plus. I do it for 99 bucks. So it's this weekend. It's the last time to sign up. So if you want to get over there and get it, you automatically get access to videos, some of which I've been shooting this week. And I do. It's a lifetime membership. You get access to all the videos. I update them every year. I've been doing it for eight years now and it's almost 30 to 40 hours of content on all sorts of great topics. So please check it out. As long as I'm alive, I'm going to keep shooting those videos and you get access from now until then for 99 bucks. It's a good deal because there's normally 3, 4, 500 for just certain videos and up to $1,000 for all the pieces and parts. So anyway, I want to say thank you for being here. Next week we're going to be starting our annual estate planning special. I'll be here next Thursday. We'll be doing Q and A or talking about a specific topic until the stimulus packages is over with. I don't think we're going to be talking about much else But I'm here for you. So thanks, everybody. Keep living the dream and don't give up.