Round Two of Stimulus Act: What are my Options with PPP?

All right, so here's the deal, everybody. In my opinion, and I'm talking about small business owners are too focused on just the PPP. There are 10 options in the stimulus act. And if you've been following Matt and I over the last two weeks, doing multiple podcasts and YouTube videos and webinars, we've been trying to emphasize these 10. But even Matt Sorenson and I in the last three days have kind of had an awakening of how powerful the employee retention tax credit is, which is $5,000 for each employee that you pay at least $10,000 for between now and the end of the year. That can include you, a spouse, a child. And you can still get the Eidl based on your employee count for last year, where with the ppp. And that Eidl reduces your ppp. Go ahead, Matt.

Yeah. On the employee retention tax credit, to remember, this is not just a tax credit you're going to get next year when you file your return. You know, this is happening now while you're doing payroll, whether it's monthly or quarterly. And so it's something you can see immediately back in real stimulus. And it's also refundable. So I've heard a lot of people like tax credit. I need money today. Oh, no, this is coming now.

Don't worry.

It's not a next year thing when you do your return.

Yeah, no, I think. Great. Excellent point. And we want to get into some of these details now. We've got just a short time with you here. We'll probably go over an hour, but we're going to try to keep it to an hour. Our partner at Entrepreneur, we're live on their Facebook as well, and they pretty tough on us. They're like, do not go over an hour on our Facebook channel. I mean, we just freaking hijacked Entrepreneur Facebook, which is freaking awesome. We love them. They've been so accommodating for us as we've been trying to stay up to speed on all this legislation. So we're going to probably keep it tight to an hour. And we've also got our. Our iTunes feed that we try to keep to an hour each week. All right, so my big picture is there's this fork in the road and we're going to come to that. We got to talk unemployment first. Is that something viable for you as a business owner? And then split the road and go down this PPP route or the tax credit route, and then there's these 10 options amongst all that of what might be best for you. So We've been doing consultations at our law firm. Our tax attorneys are so tired and worn out, we're keeping them nights and weekends to try and give personal plans to people within an hour's time on each appointment. And it's been quite effective. We'll give you our contact information if you want to try to do that. But we've also had a lot of clients get steered incorrectly by their banker, their own CPA or their own attorney that aren't eat, drink and sleep and breathe in this every minute. I was just on a conference call, Matt, with 21 accountants and CPAs just 30 minutes ago. And when we got off that call, I still learned something new. This is constantly, ever changing and moving. So that's my big picture is I think we need to talk about all the pieces of the stimulus package and not just hyper focus on ppp. Matt, what's your summary of this before we dive into a little visual and maybe some questions?

Yeah, I think the one thing to take into account is PPP is big. If you have big payroll, a lot of small business owners are like, well, it's me, I'm a solopreneur, I'm self employed. PPP is not that you've got so many other options besides PPP and particularly those that making less than 50 grand we made. PPP might even be plan B for you, which we're going to talk about. But if you have payroll more than 10 employees in particular, or five, you know, let's say you definitely need to be going down ppp, that's your best route. But what we're seeing is the real small business owners are solopreneurs. You've got a lot of other options to consider. And so, so we want to talk about those. And they range from individual things you can do like stimulus and filing for unemployment. Thinking about what if you have a spouse, what should your spouse be doing in the business possibly are we putting them on any of these benefits? So think creatively here and we're going to go through some strategies. Maybe you pick up three or four out of the 10, maybe you're lucky and you're getting five or six. But it's not just the one little thing that, you know, the secret bullet of PPP.

Yep. I love it. Wow. Okay, now we've got a very active chat line and we've already got a caller. So let me do a little before we dive right into questions. I'm going to give just a Matt and I go back and forth. I want to do a Little summary here for those that are able to see the whiteboard. Those are for the benefit of our YouTubers and Facebook followers. Let me just throw this out, and some of you may have seen me take this approach in the last 48 hours on another webinar. But again, every time I talk about this, I say it a little differently. And my education and knowledge on every piece of this bill continues to grow. So here's what we tell our clients. All right, of the 10 the stimulus check, the SBA loan forbearance. For those of you that already have an SBA loan in place, it'll be forbeared or paid for by the SBA for six months. And then number three, accessing retirement accounts, which we're normally talking about how to get money into your retirement account. Now we're talking about how to get it out creatively in this dire situation. Those first three topics are really universal stimulus check, SBA loan forbearance, and retirement accounts. Whether you have a corporate job that you've lost or you're on furlough or you have a small business or not, those first three, anybody can really take a bite out of crime on those three. Okay, now the other seven, in my opinion, and I'm going to let Matt comment on these pieces, the first one is we got to talk about unemployment. We get so many people that call up and say, should I just claim unemployment? So we need to talk about that for a moment. But once you decide if you're going to keep running the business or claim unemployment, that's your first stop on the path. If you say, nope, I'm moving forward, I'm going to make money in the next three months, then we're going to go down this PPP rabbit hole or we're going to go down the employee retention tax credit hole. And they both have different benefits. At the end of the day, PPP is reduced by Eidl and under the tax credit, it's increased by Eidl. You can do both and they don't cancel each other out. Then we can add into this unemployment benefits for your spouse or child or someone in the family that might be on unemployment. And then we've got the emergency paid sick leave and the Family Medical Leave act, both of which we have webinars on our sites and an entrepreneur on those topics. And then we can even add to the ERTC side. That's the tax credit side. We can still do unemployment, emergency paid sick leave, family medical leave, and this payroll tax deferral and defer Making our deposits for up to two years. So those are the 10 topics. And if we had to map it out, Matt and I kind of come up with this little map that I think helps people decide right at the top, do I take unemployment or not? Then do I go down PPP or tax credit? And then what are the bells and whistles I can add under each of those columns? So, Matt, why don't you summarize for us, if I may be so bold. Why don't you just give us a little quick summary of the ppp, how people apply, maybe some issues with banks and the numbers. Now go fast with this and I'll do the same for the tax credit. Then we're just going to take questions the rest of the time. How about that?

Okay. All right, well, let's say unemployment. Let me hit that before we talk about ppv. And you make.

Yeah, yeah, yeah, sorry, Unemployment. Yeah, yeah, you're right. You're right, sir. Go unemployment.

Let's hit that first. Okay, but even before you're doing ppp, we want to make sure you're making at least. Let's say you're solopreneur. You don't have any other employees, your Schedule C or you got your own S Corp and your W2 or your net profit on your Schedule C. That's what you sole proprietors are using. You got Schedule c for your 2019 return. You got to go to line 31 for your net profit. It's not all your 1099 to get. It's your income minus all your expenses. Line 31 in your schedule C. Okay, let's say that's less than 40 or 50,000. PPP is probably not the best option. Unemployment right now you can get up to 39 weeks of unemployment. The federal government's adding 600 bucks a week onto your state benefit. In a lot of instances, it's coming out to almost a thousand bucks a week of an unemployment benefit waged as long as you had enough income over the years and a pay history. And so that's better than any PPP loan you're going to get by far on the lower end of the bracket. Also easier to get less paperwork and headache. Okay, so that's just, just keep that in mind for unemployment. Now, ppp, Mark, you want me to hit ppp? Let me, let me dive into that and I'll outline that. Are you going to illustrate on the board for me as I go, Mark? Okay, I presume you can hear me, so I'm going to just keep going on ppp. Okay, so.

All right now, Matt, I appreciate your patience here.

Okay, let me hit ppp. PPP is paycheck protection. Oh, there you are.

Oh, yeah, I came back. I just took our live caller. I've got her question. It's Lisa out of Washington, and she's got a good question about the PPP and dealing with her bank. So, Matt, since you explained unemployment, you kind of went through our concerns there, right? Wipeout and all that, right? Okay, May I talk about the PPP then? Do I have carte blanche?

Yes. Let's move forward. Let's start. PPP or 3P. I hate calling the damn thing PPP. PPP. PPP. Sometimes I do four, sometimes I do two. I don't know.

Yeah, so 3P. We're going to call it 3P. We are going to own that trademark. By the way, everybody, we've said this a couple times in the last few days when we've done a webinar or podcast. Please be patient with us. And understanding this, we try to provide a little levity and try to keep it light. We know many of you are going through one of the hardest times in your life, either financially or with the passing of a loved one. But this is a tough topic and we want to keep it a little light just so it's a little easier to digest. So just remember that I really care. Matt doesn't, but I do. And so I apologize if he offends you in any way for shape or form. All right? Okay.

More of my time to the gentleman from Idaho.

Yeah. Yeah. Because I live out in the middle of nowhere. Hey, I'm in the Kohler compound up in Idaho. I'm totally safe. So, you guys, I'll get.

There's not even 10 people in the city, so he's socially distancing all the time.

Yeah. So there's no social distance problem. That's why I moved here, was for social distancing. Okay, ppp. Now, everybody, round two. This is very important. I'm going to just hit this really quick. You have two routes to go. You're going to go down the. I'm a corporation and I have payroll and 941 and W2s for myself, my employees, blah, blah, blah. You're going to add that up. We've been through the equation a number of times on our prior podcast and in our articles. You're going to divide it by 12, multiply it by 2.5, there's your PPP, the next big concern. And, people, I got to say this right now do not think after this webinar you are finished with us. You've got eight weeks to spend it. And Matt, there's another law firm that just came out of Southern California. You saw that article that Liddell forward over to us from Randy, right. There's a lot several law firms around the country that are saying if you don't hit 75% you get nothing forgiven on top of that. Now that's a position that some people are taking. There's a lot unknowns on how to get it forgiven. So you've got to stay tuned people. If you did get a ppp. Now the new wave of round two is really meant for the sole proprietors. There's a lot of sole proprietors that didn't even get a chance to apply. Now what you have to do, and I'm going to say it right now, before you even go down to the bank or get into problems here, you've got to complete your 2019 Schedule C. And when you complete that Schedule C, there's going to be a net profit at the bottom line. Now, 95% of Schedule C business owners do not have other employees. But for those that do, you would add your payroll to that of outside people. But for you as a sole proprietor, maybe you drive Uber, sell crap on ebay, Etsy, whatever, and you have a small landscaping business, whatever. If you've got net, you're going to divide that by 12, multiply it by 2.5. Now that's your PPP as a sole proprietor. Now the problem here is most people try to keep their sole proprietorship income low because they don't want to pay self employment tax. And for years Matt and I have been teaching if you make more than 40 grand, you better be a freaking S Corp. Anyway, so the problem here is sole proprietors are taking that 40 grand, let's say hypothetically dividing it by 12, multiplying up by 2.5, you're getting an $8,000, 8,333 PPP. You're fighting for this. I think it could be a waste of time because over on the.

That could be of unemployment, let's say if you were.

So that's the problem with the PPP is a lot of people think they're going to get more money than they really are. Then we have the banking issue. Now before we go down the bank route and we got a great question from Lisa out in Washington at ground zero, let's go down the tax credit route. So up on the whiteboard, what I've Written for everybody is you've got employment, unemployment at the top. You decide to move forward and not claim unemployment. If you go down this PPP route, you want to do the math. How much am I going to get? Is it worth the fight and the stress and the worry or do I go on the other side of the path and go down this new tax credit route which no one's talking about. We are like breaking news waves and airwaves with this tax credit idea and a lot of people are saying, oh my gosh, I didn't get the ppp, I might be able to use this. So Matt, tell everybody what this tax credit plus EIDL is all about.

Okay, this is employee retention tax credit. And the nice thing about it is it's a credit that's also refundable and you've got to spend if you want the max credit, which is 5,000 per employee. This could be you, a spouse, other employees you may have in your business. This is kids, maximum 5,000 credit, kids. But you've got to have spouses, multiple spouses. Those in Utah also count as long as they get a separate.

Oh my gosh,

true. I'm trying.

As funny as that is.

Hey, somebody's going to ask. You know, somebody's going to ask. But also you have to spend 10 grand to get the 5,5000 credit. So there's a little bit of cost in that because you're have some FICA and some payroll tax to spend that if they're not already on payroll, but many of you already have them on payroll or yourself at least that's going to happen and it's coming out of pocket anyways. But you're getting this 5,000 tax credit again is happening monthly or quarterly, depending on how you're doing your payroll refundable. Also, we're still not certain how they're going to send you the money back, if it's going to be a check or what. But we know it's not waiting until next year. So that can be. That can be pretty nice ugly. That can be nice to get to pick up for those aren't going PPP route. And plus, as Mark said, you can bundle up idle on this side as well. You can get idle and still get ertc. Yep.

Okay, now everybody, with that said, on top of either plan, you might have a family member go on unemployment. You might also have emergency paid sick leave, fmla. And there's some other little strategies there. And this is where you want to break down those. This is where we take a Full hour with many, many clients going through each option and how we can exploit it, to be blunt, for their benefit. And I'll give your phone number here in a bit if you want to call us. All right now, let's just start fielding some questions. We want to know what is concerning you the most. We've got a good 40 minutes, 45 minutes of left here to just help you. So, Rosalie Logan, I'm coming your way in a second. I know there's a bunch of questions.

Do we have the questions still on the ppp?

Yes, I do. I do. Okay, so this is Lisa out in Washington, and her question is a lot of these. So, Rosalie and Logan, if someone else is asking this question, you can just kind of wipe it. Here's what she's asking. My bank is being a pain in the butt. That's the gist of her question. Thank you for letting me paraphrase Lisa. So Lisa said, I went to my big bank and they said, round two. Let's get your application in. And the application, she's just sending it in, but she's not getting the tlc. She's concerned. She's in a big cattle call, and her pipeline of her application might be behind 10,000 other people. She said, well, my friend has a connection over to another bank. Should I go over there now? I'll say two more words and then Matt can give his take on this. There's a lot to say about this. My big analogy that I've been kind of playing with here is play like you're at Costco. How many of you have been at Sam's Club or Costco? There's lines on 10 stations, and you're like, ooh, which line is going to go the fastest? And you may put your kid or a spouse or a friend say, go stand in that line over there. If they move faster, I'll run over and join your line. And you kind of play it by ear, Right? I think that is acceptable because let me say why it is a question on your PPP application. Have you already applied for ppp? Now you have to remember what they're asking. Have you already been submitted to the sba? You could go to Chase and go, I'd like to do the ppp. Well, they're going to do an internal approval first, and then they're going to submit you to the sba. I had Matt, this is so sad. I literally had a phone call an hour and a half ago of give a shout out to Ryan and his wife down in California. He Called me up, he said, mark, I submitted my PPP app three weeks ago. They told me I was approved and they had docs for me. He went over to the bank today and they said, please sign here. And it was the application to submit it to the sba. He had only been approved internally by the bank. I got chills even saying this. He was devastated. He and his wife thought they were going to sign loan docs. He hasn't even been considered by the sba. So he's like, he swore at him, called him some names left, and he's going to find a local or community bank where he's going to get better. Tlc, get his application in immediately. And so, Lisa, in summary, my take is. And I'm going to. Matt's going to comment too. And he's got a unique take on this, which I love, with the 60 billion thing. Matt, I want you to talk about, Lisa, you go find a banker that loves you and takes care of it. And people don't worry if you're not a customer there or not. If the bank goes, oh, we're only helping our customers, then go somewhere else. Not all banks are saying that. That's just that dumb, stupid bank. So, Matt, what do you say on all this?

Yeah, I love Mark's Costco approach. You know, keep your application where you're at at big bank. Don't worry about pulling it, but you've got to get as many, you know, irons in the fire, so to speak. Another analogy here going, because this money is limited. The first 349 billion was gone in like 10 days. There are more people in the pipeline now in the second wave of 310 billion. And so I bet it's gonna go. I bet by Tuesday it's gone, if not sooner. And so you got to act quick.

But, Matt, talk about the 60 billion. Yeah, I love your. Your theory on this.

Yeah, yeah, yeah. So here, one of the things that happened in the bill, there's 310 billion allocated in the bill. And this is in my article on entrepreneur. Of that 310 billion, they carved out 60 billion. And they said for small banks and credit unions, 60 billion of this is allocated specifically to them because they're better at funding the true small business owner. And they can still play in the 250 billion with everyone else. But they said, this is only the small banks and credit unions can fund out of this 60 billion. So what that means is this 250 billion might go first. The big banks that are all pumped right now with tons of applications in the pipeline and their big small business customers that are getting million dollar loans, those are going to go first. And that 250 billion is going to go fast. The other 60 billion for the smaller banks might be what's left around for another couple of days, longer possibly. And so you'd rather be at a community bank or small bank because they get a play in the 250 billion plus the 60 billion. They've got more availability to fund your loan than, frankly, the big banks based on the way they wrote the statute. So if you got a contact, you know, someone that's gone to the small community bank or credit union, that's where we've had the most personal success stories of our clients. We've helped with PPP in advising them as they've gone to their local bank or credit union. Those are the ones that have funded them the most. So I would get an application in the community bank, I think. And don't worry about having to go at one time. Once one gets funded, you let the other bank know immediately. Of course. I got funded by the SBA and approved by the sba. That's the key. As Mark said, it's not about them approving it. There's an SBA approval that happens in this process. That is where your money is allocated. And they're pulling out of the 310 billion right now. That's going to be left for round two. So you want SBA approval. If they say bank approval or they say approval, you got to clarify. The SBA specifically approve my loan. That's the language you're looking for and that's the approval you want because that's what will fund the loan. It was,

it was brilliant. So I'm sure you're, you're loving it and I love you, man. Okay, we've got a call here on the line and I'm coming to our live chat. Okay, just one more live caller on our stream for itunes, Stitcher and Spotify. Okay, this is Chad out in Maryland, and this is a really good question on what we were just talking about. Chad says his wife has a massage therapy business. S Corp. Pays herself a salary, good to go. Business dried up, obviously. Social distancing. She's not making any money right now. She went and claimed unemployment, getting the 600 bucks a week plus the Maryland state portion. Chad, I'm loving it so far. Then Chad said, we applied for the ppp. Uh oh, and Chad had the good question. He said, is the PPP going to jeopardize our unemployment on that point right there, Chad. Yes. If you get that ppp, you got to spend it and that means you got to hire yourself, which means you're off unemployment. And if your wife's getting 600 a week on fed, at least 300 a week on state, I'm going to assume that's 900 bucks a week free money, unemployment. And the minute she takes that PPP money, freaking unemployment's done. So we. I would immediately. Here's what I'd recommend. When you rehire her this year, you get the $5,000 tax credit, plus she might put you on payroll to help handle the books. Chad, she could pay you ten grand. Five grand of it comes back in a refundable credit. You put five grand in your ten grand in your bank account and you got five grand of it paid for by the government. So. And I asked him, I said, Chad, what's your PPP amount? He said, 7,300, Chad, not worth it. So here's what I'd recommend with that PPP that you have sitting at the bank right now when they call you up and say you're approved, you can say, take this job and shove it. Do not go in and sign loan docs. Let it fly. Don't do the ppp, get the hell out of there. And I would go down the employee retention tax credit. Absolutely freak. We could even throw you on maybe emergency paid sick leave and a bunch of other things that we could talk about. So, Chad, that's my take. I would not touch the ppp.

Perfect, perfect illustration. Perfect illustration of how PPP is not for everyone. Because if you take ppp, you can't do ertc, you can't do unemployment, you're stuck. But if I do ERTC and I can do that with unemployment, go on unemployment. Now, once you're able to go back to work, right, in 2020, you can take ERTC because now you're back working, you're off unemployment. Those could be doubled up. So I think you're better off going down. Absolutely. Just like Mark said, it's a nice option. And ERTC again is good for 2020 to the end of the year. Okay.

All right, I like it. Now my. I want to just. We're going to go to our live callers on our chat on Facebook or YouTube and they're not going to be able to hear you. So I'll repeat the question. This is Grant down in Provo. What do we got?

Logan,

how long do you anticipate that ERC credits will take to be advanced to the business owner after filing form.

Okay, good. Good question. Grant asked from Provo, Utah, how long do we expect the ERTC tax credits to take and show up in our bank account? Great question. Let me tell you how it works. This tax credit is taken advantage of on the payroll report you file at the end of the quarter. So right now we are in April, which means you're filing your payroll reports, your 941 for first quarter. So when you go to do your second quarter payroll report, which is April, May and June, and you're going to send that report in in July, everybody. So on that 941, what the IRS and Treasury Department is telling us is on that 941, there's going to be a little box there and it's going to say, are you taking advantage of the ERTC? And if you say, yeah, I'm doing the ERTC, then you're going to get a 50% credit up to $10,000 of payroll for each person on that report. That's your employee retention tax credit. If you don't use the whole credit up, whatever's left comes back to you in a check. Now, this is what we're hearing, Grant and everybody out there, we don't know exactly how efficient they're going to be at this. Is it going to be an automatic deposit? Is not. We don't know. But we do know that this credit takes place on your quarterly payroll report. Now, my shout out to my partner on the accounting firm, Liddell Air. Liddell did some research on this today even further in the code and the statute for the CARES Act. And they said you have to be able to show that your business was impacted by the coronavirus in some form or fashion in order to take this credit. Who hasn't been? Duh. Right? So, Grant, great question, Matt. Do you want to add to that in any way, shape or form?

No, I would, I concur. I would. I would. I would concur.

Okay. Okay. I'm gonna fill the question.

Matt here, very similar question as well. They asked like, we applied for the Eidl loan. The first day was available, but have not heard anything.

Oh, good.

On the status.

Okay.

Do we need to reapply or will that cause issues with the initial application?

Okay. This is Katrina. She did not tell us where she's from, so I'm going to choose someone somewhere very exotic. Duluth. She's from Duluth, Minnesota, I presume. So. Welcome, Katrina. I like where you people are from. Okay. Rexburg, Idaho. Yeah, that's A little too exotic. I mean, that's like a dream vacation for people. So, Matt, let's keep our feet on the ground here. All right, so Katrina says Eidl. Now she's bringing up Eidl. Okay, everybody, this is the Economic injury Disaster loan, which is a part of this package of 10 things. Matt, I'm gonna pose the question to you. Katrina says she applied for the Eidl weeks ago, has not heard a word. And as we know, the SBA website for the Eidl was shut down the last five days and now it's we're back in biz, so. Well, I haven't checked today, but it should be as soon as Trump signs.

Yeah. Are we back in biz maybe tomorrow?

Yeah, yeah, maybe. I'll go over and check it out here. Okay. So, Matt, what would you tell.

Yeah, so part of this new bill that's passed today, we talked about the 310 billion for PPP. There's also 60 billion in it for Eidl. Now, Eidl, we thought was going to give everybody 10 grand, $10,000 grants.

It could.

It got overrun. Too many requests for money. SB had to say, we can't pay all these people that are requesting money. The $10,000 grants, plus possibly up to a $2 million loan, but we'll give you 1,000 per employee that you put on your form. Now, that sucked for rental property owners and such, but for those of you that had an employee, you had up to 10, you can still get the 10 grand. What's happened, though? The 60 billion has now replaced or, sorry, is now going into Eidl. So presumably that's going to open back up and you'll be able to submit applications. We're not sure. There's been no guidance from SBA on how they're going to allocate this money out under Eidl if they're going to do it 1000 per employee or not. My guess is that the portal is not up yet on the website, but I think it's going to happen in the next day or two. If it doesn't happen tomorrow. Was it up, Mark?

No, it is not. So I went right now to the sba.gov and people, when you go there, this is about a 15 minute application and Katrina and everybody out there, I want to say this. We contacted the SBA about two weeks ago when people weren't hearing back, and they said, if you haven't heard back in three days, go reapply. It's no big deal. And you're going to apply under each business that has W2 employees. That's all you can do. I think it's a sole prop. You can apply, but you're only going to get one employee. That's you. So that's a tricky one. Again, sole props. But anyway, the idol is there, the website is not upright or the page. So you're going to go to SBA.gov, click, click, click, click, go after the idle. And right now it says lapse of appropriate due to the fact we don't have any money, we're not taking apps. But as soon as this opens up, Katrina and everybody out there, I would go apply. Now, here's the important point. If you're going down the PPP route, the EIDL is essentially a 1% loan. Thousand dollars for each employee.

That's it.

Because it's going to reduce your PPP forgiveness. So it's going to end up as a loan. Let's not kid ourselves over here. If you go on the tax credit side, then that Eidl is in addition to the tax credit. So if we go out to Chad in Maryland and he says, we've got two employees, Chad and his wife, because, Chad, I want you on the payroll. Chad and his wife will get $2,000 under EIDL, plus $5,000 each under the tax credit. So we're at $12,000, Chad, and you're talking only 7,300 bucks under PPP. Stay away from the PPP in your situation. Now, other clients were telling them, run towards the ppp, run to the light. But again, everybody's a little different, so you got to know your numbers. All right, I want to give a quick shout out to our team. We've got five people in this room behind the scenes that are just doing a great job today. Caden, Janae, Logan and Rosalie. Awesome. Appreciate it. Guys, Cory's around the corner right now, but when we charge a little bit for a consultation, please know there's a lot of team members behind our firm trying to help get this information out there. And there's a cost. We're in business too, people, so be patient with this. But I love you guys. Thanks so much. Okay, what do we got? Logan, who's this from where?

I don't know.

Where?

Duluth.

Another caller from Duluth, Minnesota. All right. Okay, Malcolm, can you please share the

trade off for an S corp taking the PPP loan where it would be around 10k and the ERC?

Can I compare the two?

Yeah, like, I think he wants to know the advantage.

Okay. So Malcolm has an S corp out in Duluth and he says he's got an S Corp PPP app sitting out there for about ten grand. And he says, can you help me compare it to the ertc? Well, people, Malcolm, this is hard. And this is. I'm going to go quickly here because this is really down the same vein that we just talked about, Chad. And Maryland is, I don't know, are you married? Do you have family members on your payroll? How much money are you making? How many employees do you have? See, I got to ask those questions because you're getting five grand for yourself. If you do the PPP at 10 grand, then PPP's more, which one's more? And then you bet. But again, there's a lot of factors here. Now there's an important point I'm going to throw out. Now, before we go to Sonya. Where's Sonya? Calling from Maryland. Another Maryland. You're kidding. They're not joking with me. Sonia from Maryland. Chad, you have a fellow viewer out in Maryland. Oh, I love Maryland too.

I got some questions here, too. Mark, on my. On the.

Oh, you got some, too?

I can read off.

Okay.

Yep.

Okay. Matt's got a couple, too. All right, so let me say this. Everybody listen, I got to have a drink of rock star. Okay. I feel better. Okay, here's what. Yeah, cheers. Okay, here's what we got to do. I got a little rock star in my eye. It doesn't burn. See, Rock star is amazing. You can even drink it in your eyeball and it doesn't burn. Okay, this is good. All right, now here. Here's the thing. When you get your PPP people, when you get your Triple P people,

you

have to spend 75% of it on payroll. So in theory here, we have to go back to Malcolm and go, okay, Malcolm's got. He's an S Corp PPP of 10 grand. He's got to spend 7,500 of that on payroll in eight weeks. Then he can spend the other 2,500 on other stuff. If he doesn't spend it on qualified expenses like rent, utilities, and interest, then that's not going to be forgiven. Plus, if you went after the Idol, it's going to reduce the forgiven amount. And there's some schools of thought out there that if he doesn't hit that 7,500, he's going to have bigger problems. So, Malcolm, the game is not over yet. And all of you out there, once you get that triple P, you got to be thinking about, how am I going to get this forgiven. So please stay in touch and. And get a consult with your advisor or our team to just help guide you through that. All right, Matt, give us a Facebook question if you got one.

All right, I got some Facebook questions coming in here. This is from Natalie saying, if I receive ppp, can I still get the tax credit? No, PPP and ertc, you cannot get both. Right. So you can play in one, but you can't play in both. And that's again, you can do unemployment now and maybe get your TC working later in the year, but you're not gonna be able to double up on ppp. Another question was from Angie, and I

want to just use an analogy. This was really hard. Well, a quick analogy. This was hard for Matt because some may have thought he was a basketball phenom in high school, and he was recruited by the WNBA and the NBA, and they said you can't do both. And so Matt played a couple years of the WNBA and an operation occurred in order to make that happen. But he's back and he's with us now. Okay, Matt, go ahead. Okay.

It's okay. Yeah. Terrible example. Terrible example.

I thought that was a great example.

Okay, this is Angie. Sorry. What can Eidl be used for if I have PPP and what time frame of expenses? Okay, now you. If you did get Eidl, let's say you got PPP and you want to also take idle. This is going to be per employee up to 10,000. Now, you can use that. But here's the couple. I mean, you can use that money. Have to be for a different purpose. But obviously you're going to spend it on this. That's going to come off what you get forgiven. So if you take Idle money and then you. That's already like, it's already. You've gotten free money twice. They don't let you count it twice. So you've got to take it off. You've already got. Let's say you took 5,000 on idle. That's 5,000. You're not going to get forgiven on PPP.

Yeah, I got another way of saying this. What's your first name again? Matt.

Angie.

Angie. Okay, hear everybody out there. This is important. I'm going to say it this way. If you get Eidl and ppp, just realize the Eidl is going to be alone. And I don't care what the hell you spend it on, because even if you work really hard to spend it on qualified expenses, they're still not going to forgive it. It's just they threw this wrench in the system after they opened the floodgates. So I'm just. Don't you agree if you get both, Eidl's just essentially going to be a loan? Right, Right.

Yeah, exactly. That's a long way to say it.

All right. Okay. Now, if you get Eidl and go down the tax credit route, let's say, let's just go back to Chad and his wife out in Maryland. If you do Eidl and tax credit again, what's beautiful. I don't care what you spend idle on. It's a grant. They've already said that. Right. I mean, at first they said you got to spend the Eidl on certain things. I think SBA just washed their hands on it. If you get the idle, freaking go spend it on your employees. Good luck. Right? Yep. But if you got the ppp, we

don't want to let you get it. So we're treating this as a loan. You're not getting double forgiveness on it, essentially for the same dollars.

Yeah. So back to Grant and Provo. That's kind of one of the perks of the credit route is if you could get the Eidl, the Eidl's grant, that's not even a loan done over with and the credit is refundable. You're going to get a check there, too, and you don't have to fight the bank situation now. Okay, we got Sonya out in Maryland.

I got another question quick for me. Okay.

Your employee makes $14 an hour, but you want to pay them 17 an hour with the PPP during these eight weeks. Is that allowed?

Yes, it is. Okay. Sonia said, well, son, you can't even hear the question. Sonia said, if I have employees at $14 an hour and she goes during the eight weeks of the PPP, I'm going to give everybody a raise. I'm going to pay them $17 an hour. So I hit my 75% threshold. I'm going to keep my same staff on, but I'm going to give everybody a raise because, gosh darn it, they came off unemployment or they came back to join the company. All right, whatever reason you want to call it, I say it's allowed. Go ahead. As long as employees. Let me say this. As long as no employee, including yourself, is paid more than $100,000 pro rata for the year, which would be about $8,333 per month. So as long as you don't overpay someone the month, you can give him any raise you want. Matt?

Yeah. Let me say this, that that's a good idea for PPP purposes, but it might be a bad idea when you. When they then tell them, oh, now you're back to this pay rate eight weeks later. So just think of the business ramifications for that and dealing with staff and employees. When it's free money from the government, you're willing to pay them more, but when it's not, you're going to be a little more tight around the belt. I don't know. Be careful. I'd probably just pay out on a bonus rather than changing the hourly rate. But we do have a question from Ali.

Okay, go ahead.

You ready for a new one? Okay, I don't know if this is Ali or. Yes, sir, I'm on my phone. It looks like we're talking to Ali here. Okay, so please explain PPP for independent contractor or an llc. No payroll or salary, just a draw to yourself.

Okay, well, now I'm.

What?

You go ahead, Matt. You take your first stab at it, and then I will. Sorry about the delay, everybody.

Okay, so that's.

All right.

So, Ali, what you're going to do is you have to take the net profit. So you got to get your 20, 19 Schedule C done. This is where all of your, you know, 1099s, if you're an independent contractor, this is where all your income supposed to be going. It's on a schedule C on your personal return where you pick up your income, you pick up your expenses, you get to line 31, which is your net profit. You're going to take that number, divide it by 12, and that's the number you're going to go with. Well, times two and a half. But you really probably want to do times two would be my advice. Times two and a half, that's the loan amount you can get for under PPP as independent contractor. So you can do it. It's out there. We want to usually see more than 40,000 of net profit on there before you're going to do it. But there might be some other strategies depending on whether you're actually working still in the business or whether it's a wipeout and you want to do unemployment in ERTC instead.

All right, now I'm going to take this to the next level. So what was his first name again?

Ali. Ali.

Okay.

Like Muhammad Ali.

Yeah, I was thinking of Aladdin. Ali. Ali. Okay. Anyway, okay, now here's Ali Al.

Yeah.

Okay. Actually, believe it or not, my wife was singing that last. That Aladdin song last night. And it's kind of funny he says that. Okay, here is, here is the strategy that I would recommend as well. Okay everybody listen. You are, let's say an independent contractor. You're getting the 1099 or multiple 1099s. The PPP is not based on the 1099, it's is based on your net profit. So you do your tax return for 2019, you walk into the bank in the next 48 hours and you find a banker that'll take you. You flop down your 2019 return on the table. They look at line 31, divide by 12 times 2.5, that's your PPP. Now remember, you're going to pay self employment tax on whatever the profit is there. And that sucks. See, many of you are going to go do your schedule C and you get on TurboTax or tax layer and you're trying to write off everything under the sun. But the lower you take it, the less PPP you get. So you're like suck. This is no fun. So here's an alternative strategy. So for many, many, many of our independent contractors, what we want you to do is go, how much you getting paid? What are your expenses? All right, 2019 is water under the bridge. But for this year, if ali you're an llc, why don't we make an S election, let's turn you into an S corp, put you on payroll. Oh, now you're on payroll. You're an employee. Any pass through draw you take is not subject to self employment tax. I've been teaching this with Matt for years. And we want to. If any clients making more than 40 grand net, we're going to push you to an S corp. We're going to save you money. Then you're now on payroll. You got a $5,000 tax credit. Oh, you're married. We're going to put your spouse on payroll before the end of the year because he or she's going to help out. Boom. Another five grand. You got kids? Five grand. Five grand. Five grand. That's way too many kids. Never mind. But the point is now, if you time it right. Now look at this, Matt. This is the new coronavirus strategy. I just came to me, I think there's going to be a wave of pregnancies. A wave of pregnancies because of the coronavirus. Logan over here is married. So is Rosalie one of them. They're probably going to have a kid in nine months now. So if we get the timing right, you can get the coronavirus baby tax credit. Your personal return. Plus, if you could take a picture for your small business and involve them in the payroll, I could get a tax credit for that new baby right before year end. So this is the baby boom Coronavirus tax perk. Boom. Yeah, you heard it first here.

Doesn't pregnancy take nine months? So I think those babies are gonna be coming in January, aren't they?

Well, hold it. Nine months? It could be a preemie. Let's see. Four months. Nine months.

Okay.

Gosh darn it. I don't know if the math is. Are you already pregnant? Rosalie, this could work. No, she's not. She's denying it. Okay, all right. Janae Segal over here.

Absolutely.

You're not touching that one. Okay, all right. Okay. All right, Matt. Anyway, so I guess what I'm saying is. Yeah, Ali, here's the point. Everybody, with all my joking around. Ali again, don't hyper focus on the ppp. You may be a perfect candidate to S Corp up this year. Anyway, go watch my video on YouTube. Check, type in Kohler S Corp, do a little homework. And you're like, holy crap, I'm so glad I bumped into these guys. Our paralegals are so busy right now setting up new entities s corps and solo 401ks, because you can put money on your 401k and count it towards the PPP forgiveness. There are so many cool things here, people. I know some of you are like, holy crap. This is why we eat, breathe and sleep this stuff. We love it. All right, Matt, to give us another question, I'm going to take a caller while you feel it, but I want to hear your question. What do you got?

Okay, let me go back. Let's see.

Crap. All right, you got one ready? Rosalie's got one ready. Han from where? What do we got?

Okay, go ahead.

Oh, it's Alan. Okay, Alan from New Jersey.

Okay, you shouldn't apply to multiple banks because it might be considered as fraud.

Okay, now, all right, Alan asks a fair question. Alan says you should not apply for the PPP at multiple banks because it could be fraud. All right, now, Alan has a fair point, and I do not want to be reckless here and say you run around to three banks tomorrow and put in three applications everywhere. But here's what I am getting at, Alan. We've got people that went to some of these big banks and they think they applied with the sba, but really they're in this queue at the bank itself to be approved, and then they walk across the street and go to a credit union the banker hand walks their application over to a fax machine and sends it in. And now they're at the SBA five days faster. I'm not kidding. Have you committed fraud? I don't think so. Are you going to take money in two places? You. Absolutely not. And if the Big bank called and said, oh, okay, it looks like you're approved at the sba, say, nah, I changed my mind, I don't want it. The fraud is in the taking of two monies and lying that you've applied somewhere else so that you can double down. That's what they're trying to prevent. Now it is true. I gave Ryan down in Southern California a little disclaimer of mine. And this is the scary part, people. If both applications at Big bank and Credit Union arrive at the SBA at the same moment, I, I could see the SBA saying, what the hell, I'm not going to approve either one. And now Mark Kohler strategy has backfired and I have to give you that forewarning. I am not guaranteeing that SBA is going to be okay with that. Now part of me wants to say, if the SBA computer system says, oh, Alan, over here in New Jersey, we just approved his ppp, another app came in, discard it. He's already approved. I think that's what's going to happen. Now. That's just my opinion. And then finally I'm going to say this. What happens, Alan, if you go bet your money on horse number four and you don't apply somewhere else and they're in a big bank trough, you apply and you don't even get the cut, the money's gone. Would have been worth it to throw down another app somewhere. I don't know people, this, we're in freaking the Twilight Zone. I never dealt with this before. Now I'll tell you it's fraud if you go take two loans, but to throw in two apps? I don't know. I don't have a problem with it. Matt, you thoughts?

Yeah. What I would do if you're concerned about it is get the straight answer when you go to the bank or credit union. And like a lot of times that bank, like the person down the hall is the one putting these into the SBA system. If you're at Big bank, there's like 10 people in between someone even if you go to lucky enough to get someone to talk to at SBA on who's going to put in your application. So if you're concerned and you do get into the community bank or the small credit union and they're like, yeah, it's the guy next door. Or it's, I'm, it's me, she's the bank officer putting it in for you. Like you can get a straight answer from them about where you are in the process, then put in your application, go back to Big bank and say, pull me out, I don't want to take the app. I found, I found another bank. But just because you started with Big bank doesn't mean you're stuck with Big bank right now. And let's be honest, the smallest of the small business owners are the ones that are getting hosed right now. The National Federation of Small Business Owners did a survey. Those who had over 20 employees and applied for PPP, 52% of those were applied. Those who had 10 or less employees and applied for PPP, 18% got accepted and actually got PPP funding. So, and that's even, you know, only 20 employees or more. So there's some small business owners who are particularly the smallest of whom are just not getting serviced by the big banks. All right, let me read a question here. This was from, let's see, Ali asked a follow up question on what proof do I have to show as a sole proprietor after the eight weeks is up to get the, the loan forgiven? Great question.

Yes, Matt, I got a good one on that. Okay, so we were just in that conference call with 21 accountant CPAs and we went over this issue. Here's our current opinion and this is what we think from SBA guidance. They're going to ask for to get forgiven in a sole proprietorship PPP scenario. And everybody, you have to remember, here's my disclaimer, we haven't seen the application for forgiveness at the corporate level or the sole proprietor level. The SBA right now is worried about just getting money out there. Then they're going to turn around and during the eight weeks figure out how they're going to get all this crap forgiven and verify it with the banks. Now the first thing I'd say is we've got to remember the bank wants this forgiven. They want their money. And if they get it forgiven, they get a check from the bank. I mean from the sba. If they don't get it forgiven, they got to hit you up for the next 18 months and hope you pay them. So the bank is going to try to make this easy, I think, but without fraud, that's what they're worried about. So Ali, here's what we believe. Let's say you do $40,000 in profit last year, you divide that by 12, that's $3,333 a month. Now if you multiply that by 2.5, you're already upside down because you can only forgive, in our opinion, the monthly average of what you got the PPP for. So you've got this other point five hanging out there. Now if you don't use it for rent or utilities, it's going to be a loan or you give it back. Now that's our opinion. And you say, well, I'll just pay myself more. I don't think it's going to fly because you'd have to prove it and you don't have financials for 2020 yet. I don't think it's going to happen, people. That's why Matt earlier said something very wise. If you're a sole proprietor, divide your profit last year by 12, multiply it by two, there's your PPP and it'll be 100% forgiven.

Yeah, done. Yep, just take that. And so for those of you that may have applied on two and a half months payroll, what you should be doing right now is only spending two months worth of payroll on that. Know that other half of a month you're going to be sending back at the end of the day and that's. They're just going to take that for as terms of proof. They're going to take that that you're paying yourself the same that you already did in 19. You're going to get the benefit of the doubt when you go back for forgiveness. We'll wait till we see the forms and guidance on it. But you know, those of you who have actual payroll, you're gonna have a payroll report, you're gonna have some payroll filings and payments made, maybe quarterly. You're gonna submit with your forgiveness application.

Yeah, that's the I, what I just gave is the example of the sole prop. If you're an S corp, you're gonna have W2 941 stuff. All right, now we got a caller that just came in and so I filled out their call and it was a client of mine, Andrew. I'm going to throw out his full Andrew Libert out in Washington. Love this guy, love his family. And he's been trying to get ahold of me for a week and a half and he texts me, he's like, dude, I'm backing off. I know you're swamped. And so he had to call in the radio show to freaking get me. And I love him and he's so funny. I just gave him crap. And Andrew, you're a stud. Say hi to your family. I love it. Okay, so he said here's my question and this is a good one. This is a twist on something we haven't covered yet. He said, mark, I got an S Corp, did the ppp. I based it on my wife and I for last year's payroll. All good and we're going to go spend this thing. His first question was can I go spend it entirely on payroll? Can I just spend it entirely on payroll and get the whole thing forgiven? Yes, if you don't exceed the $100,000 annual cap of compensation. Now I've got a twist for you here Andrew, you're going to love it. So let's say Andrew went just an example. Let's say Andrew based his payroll on $100,000 for himself and 50 grand for his spouse. That means his monthly average payroll for him would be 8333 but for his wife it would be 4100 and change. Right? Okay, let's just say 4100. So could he increase his spouse's pay during the eight week period up to 8337, 8333 per month? Yes, he could, but he could not increase his own because he cannot go over $100,000 average salary because he's highly compensated. So Andrew, the first answer is you could give your spouse a raise probably, but not you because you have to look at what you based your PPP on. But here, everybody, you're going to love this. This is huge. But could Andrew put money in his 401k and exceed that compensation theoretically by doing a 401k contribution? And the answer is yes during that eight week period. So not only could he give his wife a raise up to the equivalent high comp. Oh yeah, we could do a 401 contribution. Now the big question is we don't know the answer to this yet, Andrew either is, is that 401k contribution pro rata divided by 12 or can you just throw down and max it out? I'll be honest, I don't know. And that's why we're going to have more webinars and more consultations with clients on that. Matt, your take.

Yeah, yeah. And that doesn't, that works for the S Corp person. Those you got a W2 that strategy, the add in on the retirement which is genius one and we're going to be chasing that one in terms of guidance and where we think it's the thing it's going to work. Does not work for the sole props though. Just keep that in mind. Does not work for the sole props.

Okay, Now Andrew had a second part and then I'm going to go to our Facebook over here with Logan. Are you on YouTube or Facebook? Okay, he's on YouTube. Okay. So Andrew said, but Mark, I use the idol for rent. So I used it for what I was supposed to. Why can't I get the idle forgiven as well? It use it as a grant. If I use the PPP entirely for payroll. Doesn't matter. The rule says your PPP forgiveness is reduced by whatever idol you got. Don't care what you spend it on. So sorry, you're going to end up with a 1% loan on the Eidl amount. Okay, Logan, what do you got on YouTube?

So it's from SJSU Rental. Don't know where it's from. He says do retired landlords that have no employee nor 1099 Nords could be.

What can you do? Okay, I've got some bad news for many of you out there and SJSU was the one to ask the question and I am so sorry. SJSU is a landlord. He's got rentals. He's got passive income. He has no employees. He just has rental property. And some of those renters may not be paying the rent. And if you have short term rentals, Airbnb and vrbo, they're freaking bacon. And he basically said, what can I do? And I hate to say, and I literally just got a tinge of emotion in my heart. There's nothing you can do right now. There is nothing in the package of the stimulus bill that would help you. Your only, I guess your only freaking Hail Mary is to go get a loan under the sba, which is kind of called Eidl Long term loan. It's not the $10,000 grant or 1,000 per employee, up to 10 grand. This is actually an entry loan. Now I've seen some clients get this, but you got to fight your way to it. And it's through the website and you have. And someone said long out in. Oh, out in California or Washington. I apologize. Long can't remember where you are for the moment. Text me earlier today and said he had a client get that. And I'm going to tell you the word he used. This might be helpful to some of you. And I'm going to see if Long actually text me back. He did not. And he said that. Okay, Matt, you Go to the next question on your feed and then I'll give what Long said here. Oh, it's the streamline option. He said he went to. He went to the SBA website for the 504 7, a streamlined loan, and got around the Eidl grant page. And so this guy got close to 500 grand in a loan that's 3.75 interest, 30 year. Now, again, I don't know how some of these people are getting into that portal, but give it a shot. Sorry, sjsu. Okay.

Yeah. Angie asked a question about PPP and say if the money I get for ppp, I can. Some of the extra can be used for utilities. Can we pay 90% to payroll, though? She's asking, can I pay 90% for payroll?

Correct.

I can do that, yes. Remember, the 75% rule? We're saying is if you took 100 grand on your PPP and you want, you've got to at least have 75,000 of that go to payroll. If 90% of it, 90,000 of that you use for payroll, that's cool, too.

You're totally fine.

Don't worry. The other 10,000 of that you could use for utilities and rent and some other qualifying expenses. It's just that 75% of the loan you get on PPP at least must be used for payroll, but use 100% of it. Anything between 70 and 75. 90%.

You're cool, Angie. I love it. Remember, this is not called the rent protection program. It's called the payroll protection program. So the more money you use for payroll, you're golden. Use it. Yeah, not a problem. And we have some clients that have higher payroll now. Yeah. Because they've grown their business since last year, so they're gonna. They're gonna. They may use that entire fund for payroll. That's what we're trying to do in our firm. We're trying to get people to, you know, more people at work, which is a good thing in a service industry. That's what you want anyway. Okay, we've got Parag. Parag from where? From Phoenix.

Beautiful town.

Did I miss my March 15, 2020 deadline, or is there a form to fill out for that?

Okay, so they want to claim an s Corp for 2020, and they're an LLC. All right, well, gosh, we've got a hardcore down the middle, straight ball on some good tax advice. Nothing to do with the stimulus.

Parag.

Thank you. She's out in Phoenix. Or he's out in Phoenix. Sorry. Unique name there. Parag. Said I want to be an s Corp for 2020. But didn't they say it was a two member LLC? Ooh, I'm not liking that. Prague. Okay, so Prague said they're thinking of making an s election for 2020 and it's a two member LLC. Prague, I get some advice on that. Set up a half hour with one of our tax lawyers because here's the deal. If that's a two member llc, husband and wife love the S election. If it's a two member unrelated party, s election in an llc, not normally what we recommend. I'm going to go to the whiteboard here just for two seconds for those on itunes. I am so sorry. Oh, you had it all set up over there. I had to walk over there, didn't I? Ah man, I screwed up my IT guy here. Okay, I'll just use this little side corner here. Okay, so here's what we're going to do. I would like the LLC to be the parent company and then you would have follow up, put it right in the middle of the page. I want an LLC with two S Corps parag. And that's if you're not husband and wife. Maybe a father, son, mom, daughter, llc, S corp, but that's very rare. So I want an LLC as the parent and two subchapter s subsidiaries. Also, she asked did I miss my deadline for March 15th to make an S Corp election for all of 2020? No, you did not. Our paralegals have a special form we submit with your 2553. So you can do it anytime during the year. I'm going to tell everybody. Talk to Susan. And Susan can get your S election done for under 150 bucks. Do it right, Prague. Do not try to do it yourself. They get jacked up all the time. Now while I have this whiteboard up here, Kevin Kennedy.

Now right here in our Phoenix, Arizona office, Kevin Kennedy, one of our tax lawyers can help with that structure right there. Diagram it out in your specific situation.

Yep. Prague, go to our local Phoenix office and do it in person. But we do consults all around the country. We got many clients in Maryland, New Jersey.

My phone. Now we're doing phone now, but later, later you can come in.

Yeah, yeah, you can always come in. Now I want to get this out to everybody and we'll just do a couple more questions because we're over an hour now. We got an Illinois question and a couple others is here's our phone number, please. Even if we're out a week or more, make the appointment, get a consult. Because even if you got the ppp, you need a conversation on how to get it forgiven. And if you didn't get the ppp, we can still talk about the tax credit and everything go with that. Also, if your structure was jacked up for last year is what you're finding out, and your accountant doesn't know what the hell they were doing, this could be a great consult for that. So here's our phone number. 435-586-9366. Now we have the KKOS lawyers, tax legal team, tax lawyer team that can do a consultation with you and help get you structured and answer your question on the stimulus. If you want to have us prep your taxes. We have a full service accounting firm. Another 60 employees cross the hall in our accounting firm. And. And that's K&E CPAs. And you're going to talk to Mackenzie over there. If you want to get just asked to be transferred to McKinsey and she can get you an engagement letter and we can help with your taxes. The KQS lawyers, we have five schedulers. We got Logan and Rosalie here, right in the room. They'll make an appointment for you and they'd love to be of service. So call that number if you need some help. If not again, at least sign up for our newsletter. Hit the bell icon on YouTube and whenever we go live, you're going to hear about it. Okay, what do we got?

I own a bar. Illinois has shut down my business. What if I get the ppp?

Okay, this is a great problem. Sorry, this is not a good problem to have. But it's a great question. Dean is in Illinois and said the coronavirus has completely shut down my business. And then I applied for the ppp. Oh, no, I still have a shelter in place. I need to get my people back to work. Some of them are on unemployment and I can't ramp up as fast as I hoped. But I got eight weeks to spend this money. What do I do? That's a very, very valid concern, especially in parts of New York where Governor Como is saying we're not going to let certain people open up for another three weeks from today. So you get your ppp. The clock has already started, per se. Here's my recommendation, everybody. You get the money. That's when the eight weeks starts, I think. Matt, what do you think of this? I haven't asked you this. Let's say I get approved by the bank, I get approved by the sba. I will go in. This is Lisa, out in Washington. So Lisa, hopefully you're still listening. Lisa out in Washington says, oh, okay, I went to the bank, I got my application in, I got approved. If you're approved, I'd ask the bank, I'd like to sign loan documents, but I don't want you to fund the loan until the shelter in place is out. I think they're not going to take away your money. I don't know. What do you think, Matt?

There's already guidance on that. The SBA says they can only hold your money for 10 days once you sign docs. They got a fund within 10 days. I think they perceive this being an issue and some business owners wanting to delay and quite honestly that's quite some of the point of PPP is for some businesses that do have owners, employees at home, they'd rather have them stay on the payroll of the business than be in the unemployment line. So I know it's tricky because you want to get the value out of them when they're working for you. But you at least get 10 days. For some people. If you're on round two right now, you haven't got PPP money yet. You haven't even seen loan docs. You're out two weeks maybe until you get funded. And if you use that 10 day window, you know, maybe even a little bit more, so, so you might be able to buy yourself a little time. I did have a question though from Dana who asked, she says back on PPP says if you use 75% or more of your PPP loan towards payroll, then the entire loan is forgiven. No, if you only use, let's say you get the 100,000 PPP and you use 75,000 of it for payroll, that's just the minimum you have to use to get anything forgiven. So you'll get 75,000 forgiven. Okay, so that, that's. Now let's say so if whatever you use for payroll is going to get forgiven. If you're not, if you've got 100 grand and you spend 10,000 on payroll, it's going to get forgiven as long as you don't spend anything else. Okay, the question is when people submit forgiveness requests and they say, well, half the money I spent on payroll, half the money I spent on other stuff, they're going to say, no, we don't like that. 75% of whatever you submit for forgiveness must be payroll to get forgiven. But it can be more. It could be every penny you spend could be all on payroll. But then you get just that amount forgiven.

Yeah. Now I know some of you are scratching your head saying, can't you say this some other way so it makes sense? Because Matt says it one way and people get it.

I'm trying to say.

And I say it some way. I know, I know. I hear you. I'm not beating Matt up. This is tricky. And it's really kind of like tomato, tomato. You can say it different ways and it's going to click for someone in a different method. Let me give it one shot as well, everybody, whatever.

If you.

Let's stick with that. A hundred grand. Example, if you have a hundred grand, PPP, if you only use 50,000 of it for payroll, I'll give you two examples. Example one, $50,000 for payroll. And you say, how much can I get forgiven? You can only get $66,666 forgiven because that's the forgiveness amount. And what's 75% of it? 50 grand. So whatever you do in payroll divided by 0.75 and that gives you the maximum amount that could be forgiven. Now let's say you do 75,000 in payroll.

Oh.

Divide that by 0.75. That's $100,000. Oh, that's what my PP was. So I'm lucky. I can get the whole thing forgiven. And notice the words, I can get the whole thing forgiven. Now, you've got to use that remaining 25% for authorized expenses, rent, utilities and interest on debt. And if you go, I don't have that much rent. Well, like some people have said, go use the whole damn thing on payroll. That's okay. You can use the whole thing on payroll and get the whole thing forgiven. But if you don't use the whole thing for payroll, that's when this equation comes in and other expenses. And that's why you're going to want to consult with a tax lawyer or an accountant to help you guide through that in the next eight weeks. All right, we got a question from Danny on Facebook. What do you got, Rosalie?

I was laid off for my job in early March and started a consulting business, llc. Apply for unemployment but. And want some work with my business. Can I still receive unimportant payment or does the business income make me ineligible?

Oh, good question. Where's Danny from? He does not say. And Danny, that's good you didn't tell me where you're from. Because if the IRS was listening. Well, I should say if the state unemployment division or SUTA was listening to this, you'd be in big trouble. So here's what Danny's done. Danny got laid off in early March, and I'm so sorry. And he said, but you know what, I'm going to go out and start a consulting business. You know, you just got the gateway drug to small business ownership. Yeah. You're in the mix with all of us now, Danny. Okay, so Danny's out there as a consultant. Oh. But he's getting unemployment. And he said, does starting a consulting business make me ineligible for unemployment? Yes. Now, if you started your consulting business and no one's paid you yet and you're just out there networking, that's fine.

You're okay. Absolutely. Yeah. A lot of new business owners, you're gonna be okay with that. You might even make a little bit of money, but you have no net profit yet. You've got some front loaded expenses and starting at. So I think you get a, you'll get a little bit of leeway on that. But once you start making money on that, you know whether these are gonna be 1099's coming at the end of the year. It's harder for the IRS to chase in your state unemployment division, but you're playing with fire. I think you get away with it for a little bit in startup mode, particularly if you're not making a lot of money or having a lot of income yet.

Now, I would say a gray area that you might, I think would probably be. I could live with this because you're a subcontractor. And by the way, we're going to go 15 minutes and 30 seconds more. That'll give us an exact 90 minute podcast and we'll call that our show for today. And we're done. No more consulting this, no more podcasts or webinars this week. And people, we, we are going to try to breathe and help one on one in consultations with clients all weekend. So we got 15 more minutes. So stay with us. And we know we've got a huge following there online. And are people sticking with us? We good? We're loving it. Okay. All right, thanks, everybody. We love you. This is so hard. And we're just having a good time here with you talking about a very hard thing. Okay, so what the hell was I talking about?

Unemployment.

Oh, unemployment. Here's strategy. Danny. Yeah, sorry, I lost my train of thought. Okay. I need to drink a rock star. Okay, Danny, what about this? You go out there and start shaking the bushes as a small business owner, consultant. Sign some consultants, some contracts. Get out there and do some work, but tell them that you're going to carry the accounts receivable until August 1st. That's when the federal $600 week unemployment ends. Now, some of you may say, mark, that is really bad. You're telling someone to take advantage of the system. Well, that's what they pay me to do. So I'm your tax lawyer. That's what I do. I'm Tom Cruise in the firm. So I'm going to say go out, do the almost.

He gets like shot at and almost dies, doesn't he?

Now this is the firm. The firm's. I don't know. I read the book. I don't. I only seen the first.

A lot of lawyers died in that. Why are you asking questions? I'm going to.

I'm going to die. Everybody knows that. Me drinking this rock star and no mask. I'm going to either die of COVID 19 or a heart attack in the next eight weeks. So whatever. Okay? And I shouldn't say that because it probably happened, but whatever. Okay, here's the deal. Go out, but do not take any payment. Danny, push it all out as accounts receivable to the month of August. Build your network, build your website, build all these things and get ready to come out of the gate strong August 1st. And. But once you get paid any dime, you're off unemployment and you get in big trouble if you try to hide that. So don't cheat that part. Okay? Matt, do you want to take a question? I got Kim. Should we do that one? All right, Logan, where we got Kim on YouTube.

Yeah.

Based on your credit score.

Oh, good. Kim says. Where's Kim from? Duluth, Minnesota. Kim from Duluth, Minnesota says is the idol based on my credit score. Yeah. We are way popular in Duluth. We love you guys. Okay. I think everybody's so embarrassed to ask these questions. They're like coming up with Peter lamonjello. We've got Ted Nugent on line three. We got Poon. What kind of name is Poon anyway? Comanche Indian, by the way. Okay, so we've got. She says, is the Eidl based on your credit in any way, shape or form? No. You can have a bankruptcy. You could be a disaster on FICO score and you still get the Eidl or the ppp. Your credit score does not matter at all. But I will say this, for the Eidl, if you are on back child support or have any criminal judgments against you or this, that, and another, you're not going to be allowed to get it. I want to say IRS debt, but I'm not going to go there. The stimulus checks are being kifed. If you have IRS debt or student loan debt in arrears, you're not going to get your stimulus check.

But and here's the good thing on ppp, here's a good thing on ppp, keep in mind you do not have to sign a personal guarantee for it. You're signing as the business. Unless you're committing fraud with the money, they'll chase it down for that. That. But then also on Eidl, if you do get the loan under part B of Eidl, which is like a three, was a three and a quarter percent loan, up to 2 million bucks. The first 200,000. If you do a loan, you also don't sign a personal guarantee. So those are nice perks about it. Now the other thing I was going to say on ppp, which is important, that came up too in the feed. If you get your loan forgiven on ppp, which is what we're hoping for, there's no forgiveness of debt income, which is awesome because a lot of times you get debt forgiven by a bank or someone, they're going to send you a 1099 for forgiveness of debt income, you got to pick up and claim as income on your 1040, not under PPP. There's no forgiveness of that income. So that'll be nice. Don't worry about that Coming back to Hunt ya.

Okay, I like it. I want to throw this out too. We got 10 minutes left. I think we're gonna be talking about this, Matt and I, for the next 18 months because some of you are gonna get this loan, not get it all forgiven. And some of you are like, I don't care. It's 1%. I need to save my business. That's cool. Whatever you don't get forgiven is 1% better than a credit card. You may be paying off debt with it. That's fine, whatever the hell you want. But then at the end of this 18 months, it's gonna come due. Now, these banks have SBA guarantees of 100% of the loan with no personal guarantee from the borrower. I'm not suggesting this in any way, shape or form, but I think we're going to see some businesses claim BK and they're out. And the banks are going to have to go back to the SBA and ask to get these covered. We're going to have a savings and loan bailout from the 70s here on a lot of this debt. I think it's not going to be pretty. So that's Mark Kohler predicting the future. Let me Set down my crystal ball. I got my crystal ball here rocking.

I'm gonna go out on that.

I don't. We're not going out. We got 11 more minutes.

Damn it.

Okay, we got Ahmed on Facebook. Chicago from Chicago. We cannot get another Chicago one.

About the loan forgiveness. He asked me, how do I show what the loan is paid for?

Oh, good question, Ahmed. Ahmed asks in the PPP program during the eight weeks, how do I show what I use the money for? Very good question. And this is important for all of you that are getting the PPP loan. I'm going to give my take, Matt, you give yours.

Now.

Again, Matt and I have not seen the actual application to get these things forgiven. We suspect they're going to look different for S Corps with payroll versus sole proprietorships with a schedule C. But our understanding is going to. You're going to have to prove any rent payments by showing attaching probably a valid lease agreement and canceled checks. Any utility bills. I'd probably attach the bill and a canceled check. If you're paying online, print out what you paid. Maybe you print out a check register, something like that, so you can show where the money went. Now, by the way, the utilities includes Internet and cell phones. That was an interesting piece of guidance. Also with payroll. Now, here's an important recommendation. Matt, we just talked about this at K and E in that meeting. I don't think I want my business owners. So, Andrew out in Washington. I don't want you just cutting one big paycheck at the end of this eight weeks. I think you need to take your payroll. Now, Matt, this is what Liddell was saying. You take your payroll for the year divided by 52 weeks, not by months. So if you're. So let's do the math here. If Andrew. I'll just pick on Andrew for a minute. And I know he's listening because he rocks. Let's say you're at 100 grand in payroll and that was your cap. Divide it by 52 weeks and then times it by two. That's a payroll BI weekly of 3846. So I'd like to see many of our clients in issue an actual paycheck. Even if our payroll team gives you the numbers, you show a paycheck every two weeks of the approximate amount based on a annual payroll divided by 52. And then you can go to the bank and go, here's my cancel pay stubs. And I think that's what you're going to have to show. So Ahmed, good, great question. You're kidding me.

Now, let me say this. On terms of forgiveness, of comment, you.

Yeah.

Okay. And I got a question, too, after this one.

All right?

So on the forgiveness, keep in mind, when you submit the request for forgiveness, they're going to want documentation. All right? The bank has to create their record of this. Now, the nice thing is the bank's on your side. They do not want to carry this loan. They want you to get it forgiven.

Right.

They're going to clear it off their books and get paid. And they got 500 basis points, 5% for loaning you the money. So. Especially for the smaller loans. So it's nice, but they're going to need records. They get examined. They get people in their stuff. They want to make sure you're being legit about it. Now, they have 60 days. That is the timeline in the statute for when you submit your information for request. After eight weeks, they have 60 days in which to approve it or deny it. So there is a short time window on that. And that's. And that, remember? Oh, yeah. They're going to be slammed eight weeks from now. Oh, my gosh. So you want to keep your stuff clean. We also sometimes are recommending for clients who are maybe a sole proprietor whose records are a mess, is using a separate bank account to deposit your PPP money and writing checks out of that for every expense that you want to be qualifying to have forgiven, to keep it nice and clean and separate from everything else. All right, Natalie asked a question. Do you have a comment on that? No.

I got two more questions. We're going to try to do Natalie, kitchen search and tea. We got three questions and seven minutes. Go.

Okay. This is an easy one. Natalie said any possibility of them extending past eight weeks. Doubtful. Absolutely not.

What are you smoking? She's in Colorado. Grown herbs. Yeah. Not going to happen. And I think. I think Natalie has got a fair point, because are they going to recharge the system one more time? No, this is it. And they're going to have to open the country, and there's going to be people that are going to expose to Covid. We just can't shut down a country in perpetuity. And I know this is a huge debate, health risk versus economic prosperity, but it's not economic prosperity. It's now economic survival. And I think people are just like, we got to get back to work. This is bad. Okay. Kitchen search, Duluth.

Yep.

I have 12 employees. Hoping that this time around I'll be able to receive the triple P. Okay. But in the meantime, I really need to send three people onto unemployment. How does this affect my getting the triple P?

How does it affect what? Getting her PPP if he sends them off to unemployment. Okay, Kitchen Search says he's got 12 employees and he's hoping to get PPP this go around. And he said triple P. So little shout out there, he's got.

I like it.

We're gonna trademark that. Yeah, we love you. So he says, I'm hoping to get the money this go around, but I haven't got it yet. And these employees have gotta go claim unemployment. Is that gonna hurt the ppp? No, you can still get it. It's not gonna hurt you getting it, but once you get it, you gotta get those employees back. And we had a client down in Vegas that. That went back to their employees and said, hey, I got the ppp. They're like, how much you pay me? I make it more on unemployment. And she couldn't get her employees back, so she had to go out and recruit new employees and train them now. So Kitchen search and all of your

hard lady customers to serve.

Yeah, yeah. Now here's one last strategy, and Matt and I talked about this on a prior webinar in regards to retirement and planning. You may need to go dip into a little 401k loan, get them back. Then when you get the money, pay yourself and turn around and reimburse the 401k loan. As long as you can pay yourself and reimburse the loan through you, you can still get that money forgiven. So you might need to charge your bank account with a little loan in the meantime and then get that PPV money in here. Just a thought. I know you're in a precarious spot, but Kitchen Search, it's not going to hurt you to send them off to unemployment. I'm just worried if you're going to get them back. That's my concern. All right, Got t on YouTube. Where from where? I mean, sorry, Facebook.

Do you think it will honor the $10,000 original idle grand? I got the 1,000 only. If so, should I reapply?

Oh, good comment. T from Facebook says, do you think the SBA is going to go back to the $10,000 grant and honor it? Nice. She throws a little passive aggressive term honor.

So.

And then she said, I already got 1,000 from, and I applied. Yeah. And she goes, should I apply again? T, you're done. You're going to get the thousand. There's no way they authorize 60 billion for EIDL, but I think they just Want to get those $1,000 checks times employees out there and they're not going to have enough money to do go another route.

Now let me chime in on kitchen search on that last comment. Now keep in mind what we're saying there. What Mark saying is if you do have employees who are unemployment who are not going to come back, that's okay. You can still use the ones that do come back or new ones to pay out on ppp. That's okay. It's even if they're still, they're at home and you're not open for business, they do not have to be working for you to pay them under ppp. Okay. And that's going to happen for a lot of businesses. So don't freak out if you're like, well, I'm paying them and they're sitting at home. I know it sucks. We want them to be back in business. Find things that they can do at home, but it's not a requirement in order for you to pay them that. We have some questions pop up on that. It's okay, don't worry. But don't spend the money. Anything else. Spend it on payroll a little bit. You can spend 25% of what you want forgiven on non payroll, but focus on paying it on payroll. It's okay if they're working from home or even working.

Okay, now I got a final comment and we've got about two minutes left here. I want to say to everybody, we love small business. We love Main Street America. I hope that you bumped into us during this devastating time and it's a blessing in your life. We hope that you'll stay in touch with us. Please subscribe to the newsletter. Please follow us on Facebook and YouTube. Hit the bell, icons. We're not cheapskate attorneys out there trying to sell garbage to people they don't need. We try to keep our prices low and affordable for so many people. And I just, we just pray the best for all of you out there and we hope things get a little better in each one of your lives. And if you like what we've been trying to do and say, please continue to follow us and share our links and our bios and our blog articles. I didn't mean to say bios. Blog articles with other people and your network. Matt, any final words? In a minute here.

No, just hang in there. We know it's a tough time. Make sure you figure out how the stimulus works for you. We'll be back next week, of course. Another podcast. We'll be back on, entrepreneur. We'll be writing. You know where to find us. Thanks for living the American dream. And stay healthy.

Stay healthy. Thanks, everybody.