Additional PPP Loan Forgiveness Guidance Released on May 22, 2020

As you may be aware, more guidance for the PPP loans was released on Friday, May 22, the day after our webinar on the release of the initial guidance. The following are the items of note that were included in this most recent guidance:
  • If you are paying employees that are not working – you, the borrower, can establish the schedule. (Canon Comment: We would try and base it on some average if possible.)
  • Bonuses and hazard pay are allowed. (Canon Comment: We would still shy away from arbitrary bonuses if possible. If there’s a business reason, or it’s standard this time of year, then go for it. Otherwise, we think there are better optics for using hazard pay.)
  • Owner employees’ total forgiveness is capped at the lesser of 8/52 of 2019 compensation or $15,385.
  • Corporate owner retirement and health insurance are indeed part of the forgivable amounts. Note – general partners or self-employed do not have additional forgiveness for these amounts. Their forgiveness is based on self-employment income, which already include these.
  • Non-payroll costs can be PAID OR INCURRED. Thus, you may have three sets of utility bills, rent payments, etc. in your 56-day period. There will also be payments after your 56-day period that were INCURRED DURING your 56-day period. You’ll have the opportunity to deduct these if they are paid by their next normal billing cycle.
  • Borrowers will not be doubly penalized for the salary/wage reduction related to FTE reduction. That is, if you cut a 40 hour person to 20 hours, but kept their hourly pay rate steady, you won’t get dinged for both the FTE reduction and the wage reduction. (Canon Comment: We are not sure how this works with the existing application. We are guessing this will be another “off-application” adjustment allowed – as long as it’s documented.)

Please also be aware that both the House and Senate are working on and are close to passing changes to the PPP Loan Program. Some items of note are to extend the 8-week period, extending the loan amortization period, and possibly scrapping the 75/25 percent test. So, stay tuned…

In the meantime, if you have any questions, please contact us via phone at 215-723-4881 or via email.

“PPP Loan Forgiveness – What We Know as of 5/21/20” Seminar Recording

The long-awaited guidance on the CARES Act Payroll Protection Act (PPP) has been released. This seminar, co-presented on May 21, 2020, by Steven Moyer, CPA, PFS, CGMA, CSEP – Owner and Director of Tax Services and Brent Thompson, CPA CMA CGMA – Director and Manager provides details on what we know to be certain about the guidance at this moment.

Watch the recording of the seminar and access a PDF copy of the presentation.

Here is a PDF of the PPP Loan Forgiveness Application.

As always, please contact us online or via phone at 215-723-4881 with any questions. We continue to provide updates to this and other CARES Act guidance as information becomes available.

Eight Reasons to Outsource Your Payroll

If you are working in-house as a bookkeeper or are running your own business, we know that you are already busy with the daily demands of your position. If processing your company’s payroll is among your responsibilities, we are here to bring you relief.

Here is why you should outsource your payroll:

  • It saves time.
    If your company does not have a dedicated payroll department, chances are it is a task assigned to you in addition to your current work. If you are running your own business, you would probably rather be working on growing your business instead of processing your payroll.
  • It saves money.
    Outsourcing your payroll saves money in many ways. Taking it off your plate frees you up to do the work you are meant to do. You will also lessen the risk of missing critical deadlines, which could result in penalties.
  • It provides convenience and value to you and your employees.
    From direct deposit and an online employee portal to tax filing and reporting, the efficiency of outsourcing your payroll provides value to you and your employees.

At this point, you are likely thinking, “That sounds great, but why should I outsource our payroll to you, Canon Capital?”

Why You Should Choose Canon Capital Payroll Services

  • Customization
    We fully customize your payroll to suit your company’s size and specific needs.
  • You don’t know what you don’t know.
    You have your expertise; we have ours. At Canon Capital Payroll Services, it is our responsibility to know about the updates affecting taxes and human resources that impact your payroll.
  • Responsive Service
    We can answer your questions quickly and be responsive to your unique needs, thanks to our payroll professionals and the support of our Certified Public Accounting and Technologies departments.
  • Added Value
    We provide services that are not always available with other payroll groups, such as withholding and reporting local and LST taxes.

We also offer these optional add-on services:

  • 1099 Payments
  • 1096 Annual Preparation
  • New Hire Reporting
  • FICA Tip Credit Report
  • Workers Compensation Report
  • Labor Distribution Report
  • General Ledger Report
  • Vacation/Sick Accrual Report
  • 401(k) Report
  • Check Reconciliation Report
  • Certified Payroll Report
  • Customized Reports
  • Direct Deposit Service
  • Vacation/Sick Accrual Tracking
  • Job Costing/Labor Allocation
  • Check Signature
  • Checking Stuffing
  • QuickBooks GL Interface

Canon Capital Takes the Hassle Out of Payroll

Conversion to our payroll service is simple and you will find that our comprehensive, easy-to-read reporting is thorough.

In short, outsourcing your payroll to Canon Capital Payroll Services saves you time, money, and stress.

Ready to learn more? Send a note online or call 215-723-4881 so we can begin customizing a payroll plan for your business.

“You’ve Applied for the PPP Loan, Now What?” Seminar Recording

If you are among the thousands of small business owners who have applied for relief under the Payroll Protection Program, you may be thinking: “Now what?”

Co-presented on April 16, 2020, by Steven Moyer, CPA, PFS, CGMA, CSEP – Owner and Director of Tax Services and Brent Thompson, CPA CMA CGMA – Director and Manager you may now access a recording of this seminar, which provides details on:

While the funding for this program has met its capacity, this seminar has information to help those funded currently or those who may be funded should the program receive additional funds.

Download a PDF of the seminar presentation slides here.

If you have any questions, please contact us via phone at 215-723-4881 or email.

 

 

COVID-19 Quick Guide to Pennsylvania Unemployment Compensation

Are you unsure if the COVID-19 CARES Act provisions for Pennsylvania Unemployment Compensation apply to you? Here is a quick guide provided by the Pennsylvania Department of Labor and Industry Office of Unemployment Compensation. Complete, up-to-date information is available at the Office of Unemployment Compensation’s COVID-19 page.

MontcoStrong: $1 Million Grant Program to Aid Montgomery County Small Businesses Opens to Applications April 8, 2020

Owners of small businesses located in Montgomery County, Pennsylvania have an additional opportunity to apply for COVID-19 relief funds thanks to the MontcoStrong Small Business Grant Program.

This program is open to for-profit businesses with a physical location in Montgomery County that was operating on or before March 23, 2020, with no more than 50 total employees (full- and part-time) and who can identify as being impacted by the economic disruptions surrounding COVID-19.

The application process for this grant program opens Wednesday, April 8, 2020, at 11:00 a.m. Both the online application and information regarding the items you will need for the application can be found here. You can also download a PDF summary of the MontcoStrong Small Business Grant Program here.

As more relief information becomes available we will be certain to share it with you. If you have any questions, please email us or call 215-723-4881.

Additional Individual Provisions Included with the CARES Act: Part 2

We continue our series on the Individual Provisions available within the CARES Act. Revisit Part 1 here.

Expanded Unemployment Benefits

While taxpayers will continue to apply for and receive unemployment benefits from their state, the federal unemployment insurance will add $600 per week to the amount provided from the state through July 31.  There is no repayment or reduction provision in the law if the $600 additional weekly amount makes your unemployment compensation higher than your base earnings from employment.

In addition, part-time, self-employed, and gig economy workers now have access to unemployment benefits.

Penalty for Early Distributions from Retirement Accounts Waived

Early distributions from eligible retirement plans will not be subject to the 10% excise tax “aka penalty.” Distributions must be between January 1, 2020, and December 31, 2020, to an individual who is diagnosed with SARS-CoV-2 or COVID-19, whose spouse or dependent is so diagnosed, or who experiences financial hardship because of quarantine, furlough, laid off, reduced work hours, or lack of child care due to closure of a business. Coronavirus-related distributions may not exceed $100,000 in the aggregate.  In addition, taxpayers may elect to ratably spread the income over a 3-year period beginning with the tax year 2020.  Taxpayers may also avoid income by repayment of the distribution within three years of receipt.

In addition, loans from qualified retirement plans have been increased from a maximum of $50K to $100K for loans made within six months of the CARES Act becoming law.  For outstanding loans, any repayment dated between March 27, 2020, and December 31, 2020, has been delayed for one year.  Subsequent payments, as well as interest accruals, should be adjusted accordingly.

Waiver of Required Minimum Distributions (RMD)

For 2020, the RMD requirements have been waived for IRAs and defined contribution plans.  Beneficiary distributions made over a five-year period may also disregard 2020.

Plan amendments to comply with this provision will have to be made.

Definition of Qualified Medical Expenses for Tax-Free Reimbursement

Reimbursements for medicine through an account-based plan may be made without a prescription.  However, the medical deduction for itemized purposes continues to require a prescription.  Certain other products are also treated as amounts paid for medical care for reimbursements.  For HSAs and Archer MSAs, the law is effective for amounts paid after December 31, 2019.  For FSAs and HRAs, the law is effective for expenses incurred after December 31, 2019.

We will continue to keep you posted on new information on the legislation and resources available to help you through the COVID-19 crisis. If you have questions or would like more information, we are available by calling 215-723-4881 or by email.

Additional Individual Provisions Included with the CARES Act: Part 1

Before we discuss the additional individual provisions included in the CARES Act, we want to remind you about individual tax filing and payment due dates. Individual filing dates and payment due dates have been pushed back from April 15, 2020 to July 15, 2020.  This includes first quarter estimates due April 15.  As of this writing (March 31, 2020), the due date for the June 15 estimate has NOT been postponed.  But we highly suspect it eventually will be pushed back as well.

As stated previously, the CARES Act was a mammoth bill, both in costs and scope.  Here’s a summary of some of the individual provisions in the law.

Recovery Rebates and Credits

By far, the most widely-known provision is regarding the rebate checks. Eligible individuals are allowed a credit of $1,200 ($2,400 for joint filers), plus $500 for each qualifying child for the tax year 2020.  An eligible individual is any individual who has a Social Security number, is not a nonresident alien, who can not be claimed as a dependent on another taxpayer’s return. A qualifying child means a qualifying child of the taxpayer, as defined for purposes of the dependency exemption who hasn’t turned 17.

The credit is phased out by 5% of the eligible individual’s adjusted gross income in excess of $75,000 (all filers other than joint and head of household), $112,500 (head of household), $150,000 (joint filers).  Thus, the credit phases out entirely for taxpayers without dependent children at $99,000 (single) and $198,000 (joint filers).

The rebates are based on information provided on the taxpayer’s 2019 return.  If an individual hasn’t yet filed a 2019 income tax return, the IRS will determine the amount of the rebate using information from the taxpayer’s 2018 return.  If 2018 was not filed, IRS will use information from the individual’s 2019 Social Security statement.

The IRS may make the rebate electronically to any account to which the payee authorized the IRS to deposit a refund on or after January 1, 2018.

If the taxpayer receives an advance rebate during 2020 that was less than the credit to which the taxpayer is entitled, the taxpayer will be able to claim the balance of the credit when filing their 2020 return.  If the taxpayer receives an advance rebate during 2020 that was for more than the credit to which the taxpayer is entitled, the taxpayer will not have to pay back the excess.

New $300 Charitable Deduction and Suspension of Limits

For 2020, individuals who do not itemize, a new $300 charitable deduction is allowed “above the line” for any qualified charitable donation.

The Act also removed the limitation on cash contributions. For 2020, qualified cash contributions may offset 100% of income vs. 60%.  If an individual’s contributions exceed their income, the amount may be carried forward. In addition, contributions to a donor-advised fund or a 509(a)(3) organization do not count as qualified contributions towards the 100% limit.

Should you have any questions or concerns regarding this or any other aspect of this new legislation, please contact us via email or by calling 215-723-4881.

COVID-19 Update: Additional Small Business Assistance Available from the SBA, State, and Local Sources

While much of the press – rightfully so – has been focused on the Paycheck Protection Loans created as part of the CARES Act, there are two other loans offered by the SBA that should be evaluated.

Your lender will have to give you guidance on how these three different loans work and coordinate with each other. In addition to the Paycheck Protection Loans, there are SBA Disaster Assistance Loans and Express Loans.

Disaster Assistance Loans come in the form of Economic Injury Disaster Loan (EIDL) programs or EIDL grants.

Entities eligible under EIDL loans are sole-proprietors, and other entities with under 500 employees. The loan amount is eventually determined by the SBA, but is capped at $2M. Interest rates are 3.75% for businesses and 2.75% for non-profit entities. Terms can be up to 30 years. What’s nice about these loans is that the SBA can approve them based solely on credit score and not require tax returns and other documentation. SBA also has waived the “credit elsewhere” clause and there are no personal guarantees for loans under $200,000. Applicants do need to be in business for one year.

Under this EIDL loan program, you will receive up to a $10,000 EIDL grant within 3 days of application. This is a grant and not required to be paid. If you are later approved for a loan under the Paycheck Protection Program, the grant will reduce the amount of the loan forgiveness.

You can apply online at the SBA’s website, in person, or by mail. Likewise for the SBA Express Loans. You will need some documentation however for the application process.

Philadelphia, Pennsylvania, New Jersey, Florida, New York State, New York City, Los Angeles and many states and cities have also put into place grant or loan packages.  We encourage you to visit any state and city website that you may be doing business in.

Continue to gather all your relevant financial information including your company formation documents, three years of financial statements, personal financial statements for owners over 20%, three years of tax returns – both business and personal — payroll records for 2019 and 2020, and a schedule of all debt.  You may need these documents at different times during any of the loan processes you go through.

We are here to answer your questions. Please contact us via phone at 215-723-4881, email, or our contact page.