NEW Covid Relief Breakdown LIVE with Q&A

To the most exciting podcast webinar on the planet. Today we are breaking down the COVID Relief act bill Appropriations bundle of 5,000 plus pages. My name is Mark Kohler. I'm here with Matt Sorenson, my amazing co host. We're here on Facebook, entrepreneur.com Facebook Mark Kohler, YouTube. We're trying to be everywhere but nowhere. It's kind of, it's mysterious place to be. So, Matt, this is gonna be good.

Yeah, it's gonna be awesome. If you didn't know President Trump signed this bill, there was a lot of drama before Christmas on whether he was gonna sign it or not. So we've been tracking it and trying to digest this, and we're ready to serve it up to you today. That's some important tips, I think for any of you entrepreneurs, business owners out there. There's some really critical items in this that we think will help. And I think as Mark and I have talked about this, there's really something for everyone. And I think that's why Trump had to sign this is because this bill was so big, everybody got something. Now there was something for everyone else to be pissed off about and not like there was also something in it for them. So at the end of the day, they're like, yeah, sign.

And totally. And everybody out there that's just given this one more minute to find out what we're talking about here. We're gonna make this fun, we're gonna joke around, we're gonna keep it understandable, but you cannot rely on your professional to know everything about this bill. Matt and I have literally been knee deep in this for a week and a half. And we were starting to study it, hoping in some ways that it wouldn't get changed because we don't want to reread something new. So we're still figuring this thing out. So you got to be the captain of your own ship. So take some notes. Make sure you have discussions with your provider, whoever they are, after a 2020, the nightmare of 2020. I'd met with so many people at the end of the year, I said, how'd it go? Did you get your ppp? Did you get this? I don't know. I just let my accountant do it. Really? Did you do this? Did you do that? Well, no, I didn't bring that up. Well, not every accountant gonna. Is it created equally? So, yeah. I highly recommend stay with us for this 30, 45 minutes, hour. We're gonna wow you. We want Q and A. If you're there right now, please type your Question down below in the, in the screen of whatever medium you're watching us. This is live, it's legit. Yeah, so.

So let's hit some things that are in the bill. Stimulus checks. Okay. I'm just gonna hit tops. I don't even get into it. Stimulus checks. Okay. Ppp, New rules for existing people that got ppp, Paycheck protection program for you small business owners and a second round where you can get a second PPP loan. Okay. The employee Retention Tax credit. This is a tax credit. If you've been. Your business has some connection to Covid, where it's been affected, shut down or some other reason, we'll get into it. You can get an employee retention tax credit that's been increased that you can also take with ppp. There's paid sick leave, paid emergency family leave that businesses offer and can get tax credits back from the government on. We've got some updates on dining expenses that are 100% write off. Now, moving forward, what else is.

There's unemployment.

There's unemployment for gig workers and self employed, plus a $300 federal benefit.

Oh, and, and let's just. And by the way, we're gonna dive deep into some of these quickly. Then we're gonna field questions. I've only got Matt Sorensen here for about 30 more minutes, and then I'm gonna fly solo, which is. Okay. Been doing it. You know, Matt and I covering for each other on our webinars and podcast. And so we're gonna dive deep. But let me just say a couple initial comments. First, this is part of a bill that they pass every year in December. It's called the Appropriations Bill. And every department in the government comes in and says, here's what I need to make our department work. Billions of dollars. This is a huge bill every year. And if you've seen the drama over the years, if you're an adult, you know, over age 25, 30, you've seen where they threaten the government's going to shut down every year if someone doesn't pass this bill. So Congress had this brainiac idea. They said, well, let's throw in all this Covid relief crap in the appropriations bill this year and let's just do it all at once. They're in a hurry, they want to get it done and they want Trump to sign this thing. So they threw in the kitchen sink, and I think there was some leverage there that if Trump did sign this, the government was going to shut down and all this garbage. But what we all ended up with on is this 5,000 plus bill that no one in their right mind is going to read the whole thing. I'm not. I'm only going to read the COVID portions. But Congress also shot themselves in the foot because everybody's looking in here going, what? We're giving a million dollars to what country? And we're doing, we're giving money to, for someone for tennis shoes here and we paid $100 for a toilet wear. And so this appropriations bill opened up a can of worms. The news has been going berserk because no one ever reads this bill. But now that Covid is buried in it and every department's asking money for Covid relief, it's a monster. So that's why we're all talking about it and it's why it's creating a little bit of a firestorm. But I'm going to let Matt start with ppp. But let me say one last thing. We have a weekly newsletter. We've got two podcasts we do a week, the Main Street Business podcast and the directed IRA podcast. We've been doing them for years. Close over 10 years. We have over 500 podcasts in the hopper. Five star reviews. We do this newsletter and blog. You can just type Mark Kohler or Matt Sorenson, Google, and you're going to see tons of great content to help you succeed as a small business owner. So please look down below. We're going to put some of those links so that you can follow us. And we'll be back here Facebook live, YouTube live next week answering more of your questions for at least the next month. We're going to be breaking this down.

Yeah.

Okay, Matt, why don't we start ppp, Tell us what we've got there.

All right, ppp. Now, I got an article on entrepreneur on this. So just note that you can get more detail there. But let me break it into two parts. You already have a PPP loan. There's some cool things if you want another PPP loan. These are called second draw loans where there's an option to get another PPP loan. Let me hit what existing PPP loan owners get. There was this rule that the IRS came out with that said, hey, if you get your PPP loan forgiven, which we all want, right? If you got a PPP loan, everybody, the deal is, I wanted this forgiven.

I want forgiveness. I'm shy for forgiveness for my whole life. I was like, sign me up.

Yeah, well, the IRS said there's going to be a toll for that. We're not going to let you expense the money, okay. That you used your PPP funds on if you come get the loan forgiven. It was basically a backwards way that, that the IRS could tax your PPP loan. Congress hated it, got in the bill. So now it is clear the new bill has said you will still be able to deduct the money you used your PPP loan on. You will not be taxed on your PPP loan. So that's update one for existing PPP loan people getting forgiveness. Don't worry about getting taxed on the PPP loan if you get it forgiven.

Okay, number two and I'm looking at some of the comments Mark Norris says, yak, yak, yak, blah blah, blah. Mark, I'm glad you're watching but you know what? Some people do kind of want to know what, how we got here and what's going on. So I hope you stick around because we're going to give you some meat too. But some people are like how did we get the stupid bill and why is it so long? So I was, that's all I was trying to do, not annoy you. Alright, the second thing for all of you that got a PPP is you get the tax deduction that goes with it. Big news. Everybody's stoked about that. You also, if your loan is under 150,000, you're going to get the EZ application. Now SBA had a couple versions of applications over the last four months that they've been trying to get out to everybody. A lot of people were taking the wait and see position. Let's see what the SBA finally comes out with. And everybody's begging Congress to do something else. So SBA has approximately 10 days or as soon as possible to to kick out one freaking easy app for anybody that had a loan under 150 grand. It's supposed to be one page with no calculations. I mean I was dreaming for this in high school. I begged my math teacher for a test like that.

Right? Yeah. None of this show your work on how you get to this number that you want forgiven. It's pretty much they can ask what's the loan amount and did you qualify for forgiveness and how much do you want forgiven? So if you use the money right, you're going to be able to get it forgiven. And it is a one page app that will get the other detail on that. Like Mark said, it's 150,000 or less loans is if you got an Eidl advance. You do not need to subtract that out on the Forgiven amount. That was a prior rule. You had to subtract out your Eidl loan. And some of you that have already gotten PPP forgiveness, where you got an Eidl grant of, let's say, 1,000 bucks per employee, you had to subtract that out. You're not going to have to do that anymore on any of the PPP forgiveness apps.

Okay, now I'm going to quickly answer some of these questions that are flying in.

Matt, too.

Rob says, I didn't get the first loan. Can I do the second one? Better yet, tell them the new rule on this, Matt.

Yeah. Now, when we get to the second draw loans, this is something. If you've never got a PPP loan, you got to really focus in on the second draw. Loans require a loss of revenue. You have to show you've lost revenue, and we'll get to that in a second. But if you never got a PPP loan at all, you can qualify under the original rule, which was that your business faces economic uncertainty. See, when PPP came out in April, nobody knew whether their business was going to be affected or not. We were all freaked out. So everyone, every small business pretty much went out and got it because who knows, there was economic uncertainty. Everybody pretty much qualified. Now that it's sorted out, Congress said we're not going to let everybody get it because we know there's some evidence now. Now you have to show a loss of revenue of 25% or greater to qualify for the second draw loan. But again, to the question just asked, if you never got a first one, you can still qualify under the original rule of economic uncertainty to get your first PPP loan.

Here let me tell you the technical term for the rules for the first loan. Easy schmeasy. I think it's pretty straightforward. I might be affected by Covid. You can get the loan. So, Rob, you're in business. Glenn asks, can a single member LLC get part of the second, get a second PPP loan?

Absolutely. Yeah.

Llc, corporations, S Corps, single member llc, multi member llc, non profit.

Yep.

Everybody. So now I'm going to get a little. And by the way, Tom asked, can I get a new Eidl grant? We have no. There is no Matt. Right. I don't think there's.

Yeah, it's going to be pretty targeted. There was some new money funded for Eidl grants, but it's going to be to economically depressed areas or specific businesses. So I don't know how that. You're going to have to wait till SBA gives the Guidelines, they're going to be able to determine who's going to qualify. I think it's going to be pretty narrow though. I'd have. I'd have little hope there.

Okay, now, Donnie, I'm going to use Donnie's question to bring us around and just wrap up some points on the ppp. So first rounders, you got tax deductions, easy way to get forgiven. There'll be an application coming out soon. Any of you is interested in the second round. If you got the first round, you can still get the second round. You're going to go through the same process as before. You're going to go to the bank, you're going to fill out an application, and if you had a first round, unless you had a nightmare experience, I'd suggest you go back to the same bank. You're going to be in their system. So get there, apply for the second one. Can you apply for the second without having forgiveness on the first? Yes. Get in there and apply. You're going to have both these loans rolling out there.

Yeah. Now, you do have to use all of your first PPP loan proceeds, though not necessarily had the forgiven yet, but there's a requirement for the second draw loan. You must have used your first PPP loan proceeds entirely.

Yeah. And Donnie asked, well, what application am I going to use? You're going to use the new application for the second draw of PPP. But as Matt said, this 25% reduction in sales rule won't apply to you in that application because you never got money in the first round. Now, due to time, let me say one thing here. Matt pointed, said, we both glossed over it quickly. Let me say this. Do you qualify for the second round? Here's how you figure this out. This is the big kahuna right here. You take any quarter in 2020. Now, your tax return is not done for 2020. You're going to go to your QuickBooks, you're going to go to your bank statement and you're going to look at your gross sales, not your profit, not after expenses. What were your gross sales in any one given quarter? Now, some of you may say, well, first quarter didn't hit me hard. Second quarter, eh? But third quarter Covid kicked my can and I had a ton. I had a massive reduction in sales in July, August and September. Okay, so you take that July, August and September gross sales and compare it to July, August, September. In 2019, if it's less than 25%, meaning you took it in the shorts. 25% in sales reduction. You qualify, fill out the damn application, you're into the second round and you're in. Now, Glenn or no, it was Rob who never got money in the first round. He doesn't even have to do that. He just says, I didn't get money in the first round. I've got uncertainty. You're in, Rob, but everybody else that got money in the first round has to do that calculation on your application. And then the bank's going to say, come on in, let's get you some money.

Yeah. Now you're going to get similar to what we had last time, two and a half months of payroll. So if you had 100,000 average monthly payroll in 2019, you're going to get a second draw PPP loan of two and a half months of payroll, 250 grand bucks. Now, food service industries, though, get three and a half months of payroll there. So if you're a food service business, like restaurant, for example, you had 100,000 average monthly payroll in 2019, you'll get a 350,000 second draw PPP loan. This is one of the gifts, there's a few of them to the restaurant industry, which has been one of the most hit that have been subject to multiple shutdowns. So they're getting kind of some greater benefits here, a larger PPP loan being one of them.

Okay, Chris says, thanks, guys. And he's in from Irvine. He says, guys, dumb question. I don't think it's done, but I think I missed the 25% revenue reduction requirement by maybe $4,000. Guessing out of luck. Our loan size is about 145,000. Now, when you say our loan size is about 145,000, it sounds like, Chris, you might be referring to your first loan. Remember, you're starting over. Your fourth quarter is not even over. You got four more days. So, Kris, this, you got to look at 2020 in retrospect and go, what was my sales each quarter compared to the same quarter in 2019? And if it is true that you're off by $4,000 and you don't have a 25% reduction in sales, you will be out of the PPP second draw, even if it's $1. I mean, that's the rule.

Yeah. Now keep in mind, any of you that got a first PPP loan, this revenue test does not apply. Do not worry. This has nothing to do with your first PPP loan. This is, this is only if you want to come back to get a second PPP loan. So there's Going to be a lot of businesses that got the first. You qualified, you're good. You're going to get it forgiven if you used it for payroll costs and other qualifying expenses. But you may not qualify for the second because you don't have a 25% loss of revenue compared to 2019 yet in 2020. Okay, yeah.

Before you go down another. Before you go down. Now, everybody. PPP is just a piece of this. We've got ppp, employee retention tax credit, emergency paid sick leave and emergency family leave. We got a bunch more to talk about. PPP is only a piece of this. And then I got a creme de la creme climax, you know of the show on a tax strategy that all of you can benefit. That's in the COVID bill. Now let me just rapid fire some of these questions. All businesses, every industry can apply for the ppp. I don't care if you're apparel, restaurant it, engineering, law, accounting. No one cares what industry you're in. We're worried about your sales number two. You just have to have.

They did restrict financial services industries though, by the way. And other. Yeah, certain other illegal businesses like. But you know, I think that's like the medical marijuana businesses or the recreational marijuana business that are legal in certain states but not federally. Yeah, they did a couple restrictions, but

we're getting some audio problems with Matt Corey. Can you try to figure that out? I'm not hearing Matt. Let me throw this out to everybody. Every type of entity is allowed for. You can qualify. Again, Sole Proprietors LLC is S Corp. C Corpse. All of you, every industry generally except financial services and those that are deemed illegal by the federal government are not included. But here's, Here's the biggest takeaway. You have to have employees. If you don't have employees, the only. You can only you can still get the PPP for what your profit you took out or what your payroll would have been if you're an S corp. But the PPP is called the Payroll Protection Program. So there was a question here from Tom. I'm a landlord. Can I take the ppp? No, that's not an operational business. It does not have employees. You did not have an earned income from it. It's passive income. I'm so sorry. But again, landlords are getting the shaft in this. I don't see anything for landlords in this.

Well, there's. Tenants can get rental assistance. There's a lot. There's billions in rental assistance going out. And actually one thing in the new bill is if you're a small. Sorry. If you're a landlord, you can actually apply on behalf of your tenants to get the rental assistance paid directly to you. You have to get their approval of your tenants. But so that there's something there at least. I mean, I've even had tenants I've had to do that for in some of my rentals where I've had to coordinate to get paid from rental assistance because they are on unemployment.

Yeah, okay. And I apologize, Tom. When it comes to the ppp, the ertc, the paid sick leave and all that, they're kind of employee based. What the government's trying to do is say take care of your employees, pay them, stay open, hire people. We're going to help you landlords, they're saying there's this rental assistance feature. We're going to talk about that on another show. Okay, now there's two lanes on the highway here, people, and you can actually drive in both lanes. In the last Covid relief, it was either PPP or a tax credit for every employee you have. Now listen everybody, you couldn't do both. So some people would say, ooh, I'll take the tax credit of $5,000 an employee because I'm going to get more with that than the ppp and I don't have to worry about all this forgiveness crap and an application. I'm just going to take the ERTC Employed Retention Tax Credit. Retain your employees, get a tax credit. Well, it's back and it's up to two quarters. First two quarters of 2021 and you can get 7,000 a quarter per employee for a total of 14,000, providing they have at least $20,000 in payroll. During those two, it's up to 10,000 in payroll, $7,000 credit, 70% of whatever you pay them in each quarter. So it's pretty sweet. That's called the ertc. Matt, can I do both?

Yeah. So you used to not be able to 2020. It was one or the other. You can get PPP or ERTC now under the new bill you can. If you did ppp, you can also do ertc. So let's say you did PPP already and you don't qualify for new second draw ppp. Or even if you do crap, you can also do ERTC first two quarters in 2021.

Now by the way, there's some comments on the chat that landlords could get the Eidl. Yes, but the Eidl grant was up to $10,000 and they're not talking about the 504 and all the other SBA loan options for landlords. And so Tom, I get it, the Eidl was there for landlords, but it was nowhere near the lifeline that PPP is for those with employees. Airbnb people. If you've got people, you pay on payroll, not subcontractors. You're doing W2s for your Airbnb business, great, sign up for PPP. But if you're just paying subs or paying people under the table, ain't happening. Who was Jorge's question up above? Can you scroll back up? Because everybody's saying they liked Jorge's question and I'm like, what was his question? Okay, Jorge says, could you talk about the option of using last 12 months payroll versus 2019 payroll for the loan amount calculation of the second draw? What if my payroll last 12 months is higher than 2019? Matt, why don't you talk about the payroll calculation for the PPP, the months and stuff?

Yeah, yeah, you can do 2019 or a period in 2020. So you can, if you have a higher payroll in a prior 12 month cycle that's in the bill, that you can pick and choose between the two. We're always talking about 2019 as the easy way to do it. That's how it was in the first round. But if you have higher payroll in the last 12 months, you'll be able to do it. Now, the thing on that, why I don't bring that one up as much, is it's unlikely you'd have that. You'd also qualify for the second draw because your business, in order to qualify for the second draw loan, your revenue had to go down, which presumably your payroll did. So I don't know, maybe for some people, their 2020 or prior 12 month payroll is going to be better, but you can use either one.

And Matt, you're talking about, and Vagaretto asked this, you're basically choosing a quarter, you're choosing three months a year to

determine the average payroll cycle.

Okay, all right.

To qualify for the loan. So what's the year? The 12 month period that I can take to divide by 12 to get my average monthly payroll to Then times by 2 and a half to get my loan amount.

Can I use any 12 months?

Yes.

Well, no, I mean it's either 19 or 20.

No, you can do a prior 12 month period. But, but you, when you say any 12 months, it's got to be like a consecutive 12 months. You know what I mean?

Yeah, right, right, right. But I mean like you could do October of 19 to October of 2020.

Right.

Okay. All right. So everybody out there and Matt and I have researched different parts of the bill and written different articles. So I'm kind of quizzing Matt here because he's Matt's nail it on some of these. So you choose your 12 months. Any consecutive 12 months in the years of 19 and 20 divided by 12, there's your monthly payroll. Now, now, how do you calculate the PPP amount, Matt? At that point, it's two and a half times that monthly average.

Right?

That's your PPP, unless you're a restaurant or food service. Then it's three and a half times. Is that right?

Correct.

Okay. Yeah.

3.5 for restaurants or some other food service industries.

Okay. Now, Jethro says, well, can I start a business with free money? No. This PPP is based on prior payroll. Now, if you were making profit as a sole proprietor, you're considered the one employee and you can get some PPP money for you. Is that one employee of your sole proprietor? Hypothetically, you're just using that. And now you get this, some sort of benefit. But it's not to help you start a new business. And you can't just.

Now, the prior rule was the prior will you is what you did have to have a business in already established by February 15th of 2020 to get the original PPP loan or somewhere around there. But now that has actually been stretched out a little bit longer. So even if you started a business in the pandemic, but you can, you can get a new loan under the new law, but it's not going to be for a new business. So if you don't have anything right now, it ain't going to work.

Now, a couple other points. I'm going to just finish this with Vegetto and then Matt's going to leave us here in a couple minutes. Let me say this. You can't choose just two months. You have to take 12 months of consecutive payroll or if you're a sole proprietor, 12 months of profit for yourself, divide it by 12, and that's your average monthly payroll. Then you multiply that by 2.5. You can't choose your crappiest two months or your best two months. You got to take 12 months consecutive divided by 12, and that's the beginning of it. Now let me say this to everybody out here too. We have a nationwide legitimate law firm. Yeah, we only have about seven or eight attorneys, but we're doing phone calls all day long for clients around the country. We set up entities, we dial in your Payroll strategy. We help you with your S Corp, writing off your kids, setting up your Roth ira, and we can consult you through your, your PPP questions. If you want to book just a half an hour or an hour with any of our tax attorneys, you can do so give us a call. Corey, will you put it down in the chat? Put down our main phone number down there. So we were doing hundreds of consultations in the spring when PPP came out. We are doing the same thing again. So if any of you would like a consultation, because I can't answer a lot of these questions in detail that many of you are asking, but I'm going to keep rolling here and please give us a call, do a consult in the next two to three weeks. You got plenty of time to figure this out. Okay, Matt, do you want to say anything in parting right before you run out the door? We got the PPP and the tax credit that you could take both, but any final words?

Yeah. So remember, you can have both. Look at ertc. Now, ertc, you only qualify for that if your business was shut down, either temporarily or, you know, permanently. From COVID and a lot of states, we've had shutdown orders, you know, unless you're an essential business, a lot of people had to shut down. So many of you can qualify under that shutdown or you had a reduction in revenue of a quarter of 20% or more from a prior year. So there's this. It's not 25% like the new second draw PPP, it's 20% for ERTC. But I think the way most people will qualify is to say my business got shut down, you know, during the pandemic because I wasn't an essential business. My state or city had a shelter in place or stay at home order.

Okay, now, folks, don't go anywhere just because Matt's leaving. I got you. And we're going to be back here next week. We also have our newsletter, our podcast you can always do a consult with, interview our tax lawyers. We are writing articles for Entrepreneur magazine on a weekly basis trying to help get this information out. Don't go anywhere. We're going to say goodbye to Matt. He's got a run. He's on our critical deadline. Matt, we love you. We'll see you next week on next week's show.

Thanks, everyone.

Okay, now, everybody, let me hit an important point here. When you do the PPP, let's say you get 100 grand for your PPP loan. You have to use 60% for payroll to get the thing Forgiven. Then you can use the other 40% on rent and other items. Okay, what you don't use for PPP you can use to qualify for the employee Retention tax credit. You can do both. Now, everybody, let me repeat that. You apply for the PPP second round, you get 100 grand, 50 grand, whatever. You don't use all of it for payroll. Or maybe you do and you still have some additional payroll, because remember, the PPP is only two and a half months worth of payroll. And you got two quarters, you got six months of operations, but only two and a half months of ppp. So now you're going to say, well, how can I get help with that remaining payroll amount? You can get the employee Retention Tax credit. You don't apply at the bank, you don't apply with the SBA. It's on your 941 payroll report. So for all of you that have employees, there's going to be a spot where, where you can say what payroll is eligible for the Employee Retention Tax credit. And it's 70% of qualified wages of your employees, and it's wages you didn't use PPP for. So the point here is, and I was using a baseball analogy on our podcast, is first base you're hitting. You're hitting a first base single, you're going to get ppp, but on the leftover money that you're still using for payroll and you tapped out on your ppp, you. You're turning the corner. You're going to second base and you're going to use the employee Retention tax credit. Okay, now before I get into emergency paid sick leave and emergency family medical leave, I want to tell you about the dining deduction and answer a few questions here. So let me hit some Q and A and I'm going to. And then before any of you leave, you got to hear about the dining. It is insane. Okay, so let me just kind of scan some of these. Self employed massage therapist with no employees and an llc. I was unable to get unemployment benefits. Will I qualify for the loan? Yes, Jessica, you should be able to get the PPP again because you did not get PPP money the first time is what I'm assuming. So you didn't get unemployment, you didn't get PPP the first time. So you've got more of a lax rule to qualify for the second round of ppp. So, Jessica, I would get a consult with someone and look into it. You should get it. Ray says, what are the rules for the S Corporation owner? If you're Ray, you're the only employee of your S Corp. You can apply for your payroll for the year. Any 12 month period divided by 12, multiply it by 2.5, you're getting PPP money. So, Ray, all you have to do again is if you got Money on the first round, for the second round, you have to show that 25% reduction in sales. S Corp owners can get this if they're. Even if they're the only employee. Or maybe you have your spouse on payroll or your kids on payroll. I don't know. Okay, Kirs says what are the attorneys available within the next two to three weeks? Absolutely. We've got attorneys that can take appointments within the next 10 days. We are busy, busy, busy this time of year. But get on a calendar. Even if it's a month out, you can always cancel if you need to. We've got a waiting list of people that want to get in and we're tax lawyers for this Main Street America. That's why we're the Main Street Business Owner podcast. We love it. We're booked out to the 13th right now, so we're out about 14 days. Okay, thanks. I appreciate that, Whitney. Okay, what is the PPP provided payroll included in that? Payroll? Oh, my gosh. Vergado, you're getting into some details. I love it. It is actually included some of the, I believe the healthcare and there's some other. It's the same calculation as before, so. But I'm not going to go there. I'm trying to keep it a little more broad. But Vergado will be back here answering more and more detailed questions. Can you go down? Corey? Let's go actually the other way. Let me see what we got here. John from Dallas, Texas, here. I applied for the full PPP forgiveness back in September for my S Corp. How can I increase my basis so I can deduct all business losses in 2020? Oh, my gosh. I have a. You know what? I wonder if the PPP loan to begin with would increase your basis because now it's more of a grant than a loan. You're going to pay back Vergado? That's a good accounting question. Stay in touch with us. Maybe email me that question or get a consult with one of my tax attorneys or my CPAs or. We've got about 15 CPAs on our staff as well. Bugatto, I appreciate your patience there. On the baseball analogy, we hit a single, a double, we're going to hit a triple and a home run here. So hang tight, everybody. Just a few more Questions and we'll get into dining. Applying for forgiveness. Contact your landlord to learn the correct form to use. Correct. Now, the SBA is supposed to come out with the new forgiveness application. So no one go apply for forgiveness right now. Wait for the new application to come out. It's supposed to be one page, no calculations. If your loan was on 150,000, it's supposed to be expedited and you get a tax deduction for all the money you used it for. And that's assuming you use 60% for payroll and met that criteria. Do I have any information on the main street lending facilities? I do not. Sorry about that. Can a new LLC get the PPP loan as well? Yes, Mallouk. It just depends on your Malik. It depends on your payroll level for the last 12 months, whatever you use. Okay. Is it God 2 win says or good 2 win says. Is it possible to pay to have you guys answer emails about tax questions? I want to know. Is there anything I need to know before next year starts? As a real estate professional. Oh, my gosh. Good to win. I've got a podcast on my year end 16 strategies. I've got an article out on my website, markjkohler.com on the year end tax strategies. Please go read it. We can answer emails rather than a phone consultation. It just depends. Good to win. Talk to Whitney. See if she can hook you up at the CPA and they can build their time to answer questions. All right, now let's get over to one of the next best write offs. Everybody pay attention. This could be the best part of the show today. Under the new tax relief bill for this Covid relief, the government said we got to help restaurants, we got to help the food and entertainment business industry. We're going to give business owners. So it's a benefit for us as well. 100% deduction to go back to eating out. So if you go eat out at a restaurant, it have a business meal, 100% write off. If you do takeout and bring it back to the office for a staff meeting, 100% write off for the next two years. It's 100% dining deduction. People, this is huge. This has been around for 30 years. This is like the best next, next thing to slice bread. And I get it, sliced bread. Food deduction. Sorry. Okay, but here, this is cool. So any of you that are small business owners, I've got four ways I like to write off dining. Number one, you go out to dinner and talk business with a partner, a vendor, a client, a customer. Your business partner, you can take 100% write off for whatever the dining was. That's the bar tab, the tip, everything. 100% write off. Number two, if you're traveling for business, that's outside of a normal commute. I'm just going somewhere for business. I don't have a conversation with anyone, but I'm traveling for business. 100% write off for all my dining. Third, I have meetings in the office and I bring in food from a restaurant. 100% write off. Now, this is where things get dicey, and there's a lot of questions still. What if you go to a bakery and get donuts, you get bagels. Does that qualify as a restaurant? Maybe they serve sandwiches there, maybe they don't. Is a bakery a restaurant? You're going to bring it into the office. Is that 50% or 100%? What happens if I go down to a convenience store and I get a hot dog and a drink and I'm with my business partner, we're talking business. We take a quick run down to the convenience store. It's our only time to meet during the day. We talk business. I get a hot dog so it's prepared for me. It wasn't. And it's not a restaurant, but they prepared food. Where's the line? I don't know yet. So we're going to see, but you're going to love it. And when does it start? It starts in two days, January 1st, Josephine, for the years 2021 and 2022. 100% dining, write off when you're talking business. Now, let me give you one other fun example. Some of you may know about Topgolf. Topgolf is a place you go hit some golf balls and talks business. Maybe you're going to go to a baseball game or a football game someday they're going to open the stadiums again. You go to the stadium or you go to Topgolf. No write off for the golfing experience or the tickets to the game or the theater. That's entertainment. No write off for that right now. But the food that I buy while I'm at the entertainment experience, doing a valid business meeting or conversation, 100% write off. So I could write off 100% of the hot dog at the football, baseball game, the nice dinner outside the theater, whatever it is. But I can't write off the entertainment experience. I could write off travel to get where I'm going, 100%. And I can write off the dining 100% in 2021 and 2022. So people, that's a huge thing. What about a country member country club membership fee? No, but Rob, what you're doing with your country club membership, a lot of country clubs are delineating how much of that is for food and how much is for the use of the club or the golfing. Make sure you talk to your country club and go, I want to ride off for the dining portion and I'm going to talk business. When I come, it's only for customers and clients and da, da, da. Make sure you get the dining. Good to win says Ken. You know, I need to quit squinting. Let me see if these glasses will help from that distance. Nope, they're more for close. Good to Win says, can that be done as real estate professional write off as well? For sure. Good to win. All of you out there that are realtors and brokers and plumbers and electricians and dentists and doctors and lawyers and accountants and realtors and massage therapists, and you're in the restaurant and a food truck vendor, you're a small business.

This is it.

This is your world. This is Main Street Business podcast and my newsletter and Matt Sorensen and my books. We're here for you. I love you. For 20 years, I've been trying to spread the good word about the American dream. You guys are here in the right spot. Please subscribe to my newsletter and when I go live on YouTube or Facebook, come check it out. I want to rock your world with great ways to save you taxes and make you money. So you guys are asking great questions and some of you're like, is this a dumb question? No. A lot of people are shocked to find it's this easy. I don't care if you're a sole proprietor. I don't care if you're an llc. I don't care if you're an S corp. You. You're a freaking business. And you go out and talk business over a meal, you're writing it off 100%. Boom. There you go.

All right.

Musicians. Sure. Hector, do you make money as a musician? That's a small business. I've got a drumming client that sells drums and does drumming lessons and does drumming riffs and sells them on music, bakery and da, da, da. That's a musician, that's a business. A hair salon. You're doing catering, you're doing Uber. Uber drivers. You're a business.

All right.

Anyway, Judy says, can you talk about writing off your car? Judy, go to markjkohler.com, go to my blog, type auto. I've got the sweetest article on 8 ways you could choose to write off your auto experience. Are you going to do actual. You're going to do mileage? I've got videos on it, people. Get over to YouTube and just type Kohler. I got a YouTube channel with over 100 videos on crap you can write off. You're going to love it. All right, I'm going to get the next two items out on the table that are in the COVID relief bill that you need to know about. Okay, let's summarize. Everybody take a breath. I know, I get excited.

PPP

tax credit, employee retention tax credit. You got employees, you get a tax credit. Ppp, you can do both. You can't double down on the same dollar, but you can do both. Now we've got employee. Sorry, Emergency paid sick leave for employees. It's a tongue twister. Epsl, Emergency paid sick leave for employees. If there's six criteria. If any of your employees hit the first three, essentially, if they get sick, you keep them on payroll. The government reimburses you 100%. It's emergency paid sick leave. Now, you can't use the same dollars. You got PPP to give them that payroll. But after you tap out on ppp, an employee walks in and goes, I'm sick. Or maybe they call you I'm sick. Then you say, okay, cool. I'm going to keep you on payroll and the government's going to subsidize it 100%. The other three versions are someone's staying home to take care of a family member that's sick. You reduce their payroll by a third, so the government will cover two thirds of their payroll. So you say, hey, employee, I'm going to reduce your payroll by a third. But you stay home and take care of your family, the government's going to cover your payroll. For me, that's called emergency paid sick leave. Google it. I got articles on it is out there and you can do it. In addition to ppp, in addition to the tax credit, you can now hit a triple, baby. You're turning the corner again. You're now on third base. Matt Sorenson joked around and said, mark, you've been trying to get to third base your whole life. Took an act of Congress to get you there. That's probably fair statement. I'm a nerdy accountant. I'm Michael Anthony hall of Sixteen Candles. I'm a nerd, just a little older. Okay, anyway, now how do we hit a home run? Now you have what's called emergency family medical leave. Which is up to an additional 10 weeks at 2/3 pay. So let's say you use your PPP in January, February, March. Cool. You get into third quarter, you ran out of PPP money, but you still have employees. Now you get the employee retention tax credit. Now someone shows up and goes, I'm sick. Emergency paid sick leave, two weeks. Oh, I'm taking care of someone, homesick. Emergency paid sick leave, two thirds of pay, two weeks. Well, my other family member got sick. Oh, I got to stay home because my kid can't go to school because I'm stuck at home taking care of my kid because daycare is not open. Emergency family medical leave, 10 weeks at 2/3 pay. The government will give you the money to keep your employee on payroll at two thirds of their regular wage. Now, there's some rules here. We've got articles on it and all that sort of information. I'm going to say this, you can hire an employee and two days later they can claim emergency paid sick leave. But to have an employee go on emergency family medical leave, they had to have been on payroll for at least a month. Now I've had clients where their spouse was on payroll and stayed home to take care of the kids. Stay at home, dad, stay at home, mom. They got emergency family medical leave at 2/3 of their payroll. There's your home run baby. First base, PPP, second base, Employee Retention Tax Credit, third base, emergency paid sick leave, home run emergency family medical leave. You can do all four, but, but you can't use the same dollar for all four. So you're going to use your PPP money first. As soon as you tap that out, you go get your tax credit. Then you've got emergency paid sick leave for two weeks and then emergency family medical leave for additional 10 weeks. In summary, what the government's trying to do, and I'm sorry, Tom, and some of you that out there that don't have employees, they're trying to help keep people employed. And if you're a business and you have employees, those four benefits are for you and for you as a sole proprietor, you're the only employee. You can get a couple of those, but you can't get them all. And so there's rules for sole proprietors. We'll talk more about that on the show and in our articles in the weeks to come. If you need a consultation, call the number below, talk to one of our tax lawyers, get an appointment a couple weeks out. Yeah, it might cost you three or four hundred bucks. We want to wow you. I Don't even know if I had one or two refund requests this entire year. Everybody, we get on the phone with us, we want to make sure you walk away happier with more benefits than it cost you to hire us for just an hour. And then you may say, by the way, I need to get my trust done. By the way, I need to get my minutes done on my S Corp. By the way, I need a new llc. By the way, I need this. We're there for you. We are not fighters. We're lovers. Win, win. Win. Irs lose. Okay, let's do some questions and we'll wrap it up here in the next five or ten minutes. Donya says, what is the monetary cap on salary under the new round of PPP? Okay, Donya, you do the math. You take 12 months of payroll. Any consecutive 12 months from 2019 and 2020. You take 12 months, you can go from June 2019 to June of 2020. You say, what was my total payroll in that 12 month period? You divide it by 12, you multiply it by 2.5, that's your PPP. If you're in the restaurant business, multiply it by 3.5, that's your Ppp. Cory need to see that, if you could. Okay. Nicholas says, does the business food write off also apply if the transaction is done in another country? Absolutely. Nicholas and I just took my family to Puerto Rico for Christmas. I. I know Puerto Rico is a U.S. territory. They're not out of the country. I get it. But you felt like you're kind of out of the country, you're down in the Caribbean. Anyway, we were in Puerto Rico. I did my family board meeting. All of my family members are on my board of directors. We took a write off to get there and hold our board meeting over Christmas. Dining 50% because it was last week. Next week, 100%. Okay, Malik. PPP Loan for LLC established in November 2020 with no employees. Malik, it depends on your profit over the last few months. You got to look at your 12 month profit period. You're not going to get much of a PPP loan because it's based on your profit and your brand new business. I wouldn't expect much. Judy, are these for 2020 or just 2021? Judy, I think you're talking about the dining write off is for 2021 and 2022. If you're talking about PPP, you're blending 2019 and 2020 to get you an application for PPP. Now, I don't know, Judy, if that helps. Get a consult. Nick. Says, what if I own multiple businesses? Love it. You can get the PPP and multiple businesses. You got it. Now, again, to qualify for PPP, you got to have a 25% reduction in sales, not profit in sales compared to the same quarter the year before. So, Nick, do the numbers. You can get multiple. Hector says, can you write down the phone number again, please? Corey, can you type that in this section? Hector, thank you so much. Love you, man. Donnie says, is 100 grand still the salary cap per employee?

Yes, it is.

It is. It is still the cap. David, how does the law say. What does the law say about businesses that were started after May of 2020? You're good. If you started a business in May of 2020, you can take your average payroll since May of 2020. Since May of 2020, do your average payroll and multiply it by 2.5. You should be in the business now. Let me say something else, too, people here. These laws evolve. A week from now, you may go, what the heck? Mark Kohler's wrong. Do you know the SBA came out with less than. No less than 20 updates during the year? So we held a podcast in March when this first hit came out, and within two weeks, we were making changes to our conversation based on new updates from the Department of Labor, the irs, the Department of Treasury, sba. So please, if you're finding this podcast webinar helpful, stay tuned. We're not going anywhere and we'll be there for you. Hector says, thank you, Corey, and you're making me sick. Corey, you're killing me. Okay, bless you. My producer, Corey. A huge shout out, by the way. Corey, my producer is working like a madman here to keep this thing live and cranking on three different platforms, doing Q and A's. You guys are awesome. Give Cory a shout out when you get a minute. I'm just beating him up here. Tom says he met with Jason last week. He was great. Highly recommend. Thank you. Jason is one of our CPAs, not one of the tax lawyers. A little more affordable per hour. You can ask for Jason, folks. He's great. Tom, thanks for that shout out. Marisha says, hi, Mark, what's the number to pay for consulting? Thank you, Cory. Put it in the chat. Scroll up. It's 888-801-0010. And by the way, this is not an infomercial. I love you guys. You can just keep doing it. Tico says my gym is labeled as a club. Tons of business owners there that I talk business with. Can I write that off? Okay, Tico my gym is labeled as a club. Tons of business owners there that talk business with. Can I write that off? Okay, Tico, you're onto something here, but let me make sure this is everybody out there. I go to the gym, too. I may not look like it, but I go to the gym. You're right. I may talk to a business owner there that becomes a client. I still can't write off my gym membership. The IRS is all over that. The only people that are writing off gym memberships are my clients that are business owner personal trainers where they literally have revenue from being at the gym. Now, the gym is a write off. But Tico, just because you're networking there, I can't write off the freaking gym. Now let's say you're at the gym and you buy someone a protein shake and you get a protein shake and you talk business. Am I going to write off your protein shake? Damn right I'm going to write that off. That's 100% dining because you're talking business and you had food. But I can't write off your gym membership. So see the difference there? Hopefully that helps you folks out. Alicia in Ohio, what happens to the tax reports if you open an llc, have profit, and close an llc? How does it work, Alicia? If you open an llc, Everybody listen, this is a good question from Alicia in Ohio. Let's say you started a business in 2020, start making money, you open a lemonade stand, right? Alicia, it could be any business, right? You start selling widgets, you. You start selling the lemonade, you open up an llc. Does an LLC give you more tax write offs? No, an LLC is not for tax strategies. It's for protection. And then Alicia says, oh, I killed the llc, but I still have my business. You're still going to file a schedule C, as in Charlie, on your 1040 and claim your business income and business expenses. People S corporations are saving you taxes, and LLCs are for protection. Now, you may have an LLC taxed as an S corp. That's a whole other animal. But Alicia, don't worry about the llc. Think I had a business. I had revenue, I had expenses. The end. Marisha, thanks so much for those kind words. Chris says, I think I'm getting the S corp distributions confused. If I have 100 grand in net income and throughout the year I already paid 40,000 in salaries to all owners is if that generally the proper allocation? Kris, I just had a meeting with a client today and I was praying they were not an S corp with partners. That's A mess in my book Tax and legal playbook. I don't even have one on the shelf. Do I have one anywhere? Oh, Cory's gonna grab one in the back. Kris, you do not want an S corp with partners. You want an LLC and every partner an S corp. I've got videos on that. Go to YouTube. Thank you, Corey. Here's my tax and legal playbook. I have a chapter just on partnerships. Easy. Read the first six or seven chapters. All of you would love it. You can get it on Amazon. I like to give one. You know what? I'm going to give one away today. Corey, you choose a random winner that's asked some questions. I'm going to sign it right now. 12, 30, 20. The year of craziness. The year of craziness. I'm going to put this here. Corey will give it to one of you that participated today in the webinar. If he chats you up, send him your address and he'll send you this book randomly. Choose someone, Corey, please. Christian, you're asking some unique questions. Christian says, who can I connect contact in your team to confirm that I qualify as a real estate professional? First of all, I have a whole chapter of it on my book. Next, in YouTube, type Kohler, real Estate Professional. I got a couple videos there. We'll just call the main number and say I need a consult with one of your CPAs and we'll talk about your real estate professional deductions. Norman says, awesome. Edward says, I want the book. Elizabeth says, me, I. Corey, you got a hard choice there. You choose someone random, buddy. Corey likes chocolate. And you could write Corey's name on a $10 bill and mail it to him. He would love it. I'm just joking. Tell us the name of the book again. Tax and Legal Playbook, second edition. That's that green bar across the top. It's on Amazon. I've sold thousands of them. Five star rating. I've got other books on Amazon. Let me say this. We did it. You chose Donna Banks. Donna Banks is the winner. Donna, you're the winner. Oh, no. Donya. Donya. Donya Banks is the winner. So Donya, Cory's gonna message you. Give him your contact info so we can get your mailing address. Okay, everybody, let me say this. Thanks for being here. I love small business. I love Main Street America. I was a small business owner as a kid from day one with my little lemonade stand. And I'm out there as an attorney, CPA with a wonderful law firm and a accounting firm with great People on my team trying to help small business owners around the country. Please don't go anywhere. I know some of you, I didn't get to your question. Please come back. I'll be here next Thursday at 4 o', clock, same time on YouTube and Facebook. Entrepreneur and Kohler Facebook and my channel on YouTube. Answering questions with Matt Sorenson, my partner. Or just be me. We got a great podcast. Mainstreetbusiness.com you can sign up for my newsletter there as well. Everybody, have a great weekend. Enjoy your first. Drive safe. Don't drink and drive. Have fun. Have a great weekend. And you know what? Make 2021 rock. You can do it. Write up a great strategic plan. I'm going to be talking about strategic planning for 2021 soon. All my podcasts are about helping you succeed. They're free. I love what I do. And thank you everybody for your kind words. So nice. So many nice words. Thank you. Someone just ordered the book right there while we were here. And eight steps to start and grow your business. 60 videos in there. Larry, you're gonna love it. Should I give one of these away?

Yes.

No. Yes. I'm gonna do it. This is 99 bucks on Amazon. I normally am. Not this cheesy. 99 bucks on Amazon. Corey, close your eyes and choose a name. 99 bucks on Amazon. I'm gonna sign it right now and Corey will mail it to you. Chris s. Chris S on YouTube and he was asking all sorts of questions. Chris, live the dream, baby. I put Chris on here, so you better be able to get a hold of him and deliver this. To get your book. Email jackarkjkohler.com Chris and Donya. All right, everybody, I'll see you next week. I'm not going anywhere. Have a great holiday. Chris, email jackjkohler.com, donya. Email jackarkjcohler.com for your free book. All right, everybody, I'm out.