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Do I need to have employees on payroll to file SBA Paycheck Protection Program?

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SGB

Member
What is the name of your state? IL

I have an S-Corp with just myself as the employee. My contract with client where I was working as a contractor through my company ended last year and since then I have been filing zero tax returns each month and not paying myself anything.

Do I qualify to file for Paycheck Protection Program if I'm currently not paying myself? I hear that a company can bring back laid off employees into payroll under this program - can I bring back myself into payroll after applying for this program?

Also, I hear the PPP funds are running out fast - is it possible to apply for SBA 10,000 grant and also PPP at the same time for the same business?

Stimulus Check:

I made 100K salary in 2018 but 70K in 2019. However, taxes for 2019 are not filed yet. If I file 2019 taxes, will SBA look at my 2018 income or 2019 income? If they mail out checks to people next week (not paying me based on 2018 income) and I file my 2019 taxes next week, will they look at the reduced income in 2019 and re-process for the check?

Thanks!
 


SGB

Member
I don't have any existing loans.

I'm the only employee of my s-corp. However, I'm not paying myself since last year when my contract with the client ended. Does that make me an employee of my company?

I hear the PPP loan allows us to bring back laid off employees. If I laid off myself by not paying myself, can I bring back myself after getting the loan and put back on payroll?
 

FlyingRon

Senior Member
Again, if you had no employee on Feb 15, it would appear you are not eligible. You'd have to show you paid something out (even to yourself) as an employee in the time frame defined.

Read the document I linked above.
 

SGB

Member
I availed unemployment last year as an individual.

On page 6 of the above PDF, it says:

ii) You were in operation on February 15, 2020 and either had employees for whom you paid salaries and payroll taxes

My S-corp is still active and incurring payroll costs as under.

Page 10:

Payroll Costs:
payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums, and retirement;

On page 15, it says:

The proceeds of a PPP loan are to be used for:
ii) costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums;
iv) rent payment
v) utility payments;

My S-corp is still paying for my health insurance, SEP-IRA (paid for last year employer contribution), life insurance, home office rent, phone/internet, education expenses, repairs and maintenance of auto, auto insurance, travel expenses for job interviews.

It is confusing when I'm the sole owner and the only employee of my company - if I'm not paying myself a salary because there is no contract with a client to work for but still paying for health insurance, retirement contribution, etc as payroll costs, how does that work? I understand as an S-corp, I'm considered self-employed. Even though I'm not paying myself, I would start paying myself again during this year when I find a job soon after this pandemic situation.

Check the video at 10:40 on Inc magazine (this video goes into a countdown if in popup mode from scrolling page down) where Bradley says, "Yes, we can bring back employees already laid off even if the company is not open with a PPP loan"
(link removed)

This one says - "Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels"
(link removed)

(link removed)
 
Last edited:

Zigner

Senior Member, Non-Attorney
Sorry - commercial links are not allowed on this forum.

EDIT: To be clear, I'm referring to links to commercial sites. I am not accusing you of spamming.
 

SGB

Member
Sorry - commercial links are not allowed on this forum.

EDIT: To be clear, I'm referring to links to commercial sites. I am not accusing you of spamming.
For SEO viewpoint, a site's credibility and authority increases drastically from linking to other relevant sites as long as it is not spam.
 
Last edited:

PayrollHRGuy

Senior Member
For SEO viewpoint, a site's credibility and authority increases drastically from liking to other relevant sites as long as it is not spam.
I'm sure the owners are aware of that and I'd be willing to bet they have weighed that against this forum becoming an advertising forum. But the IMPORTANT NOTICE below is clear.
 

SGB

Member
Hi All,

After discussing with a CPA, filing 2019 taxes and showing him the videos, I applied for the PPP loan and it got approved. The funds of 11K got deposited on 5/7.

Will the lender/SBA ask for payroll register for Feb 2020 while forgiving the loan? Or register for just the 8 weeks (May and June)?

I'm currently on an extra 13 weeks of UI (due to COVID-19) for a total of 11K ending in June which is the same amount as PPP loan and I can use only one of them and there is no additional benefit to having PPP loan. If I use the PPP loan for payroll, I need to inform UI and they may discontinue payments. There is NO intention to defraud the government (I was making more than 12K per month until June 2019). I'm just trying to get back on a paid contract instead of depending on paltry UI and loans so the government could offer that money to the needy people. If I do not try to get approved for a PPP Loan and rehire myself, doesn't that amount to a UI fraud because I'm refusing offers to be re/hired as per UI terms?

As of the date of applying for the PPP loan, my company did not have paid employees Do I qualify even though I was laid off and not getting paid and I can rehire myself?

TIA
 

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