Many are asking if you can do both, and the answer is yes. They are no longer mutually exclusive events. What you cannot do is claim the ERC on the same payroll that you use for forgiveness on the PPP.
You can do both if you don’t put in for forgiveness on the PPP Loan. Given that it’s a one percent interest loan, maybe that’s not the worst thing in the world if you need the money. Another option is to only claim the ERC on the periods in the first and second quarter where your payroll is not used for forgiveness. Let’s set up a scenario to explain.
Your entity employs five people who are paid $3,333 per month, and your entity is down the requisite 20% necessary to claim the Employer Retention Credit for the first and second quarters of 2021. That credit is now 70% of the first $10,000 in wages per quarter.
The entity also qualifies for the PPP2 Loan because it was down 25% in a quarter last year vs. the same quarter in 2019. Since your monthly payroll is $16,665 you qualify for and receive a PPP Loan in the amount of $41,662 on February 1, 2021.
Just because you received the loan doesn’t mean that you cannot also receive an Employer Retention Credit for the first two quarters of 2021. You apply for and receive the 70% credit on $50,000 in payroll per quarter totaling $70,000. Given the fact that the first two quarters of 2021 encompass the covered period on your PPP2 Loan, you cannot put in for forgiveness on the loan.
You can put in for forgiveness if you don’t claim the credit during the covered period on the loan. Certainly that would include the January payroll given the fact that you didn’t receive the loan until February 1st. Also any payroll in the second quarter not used for forgiveness could also be used for the 70% credit.
I need all of you thinking about these planning tools when it’s time to make decisions about the first and second quarter of 2021.
Let me leave you with this.
The stupidity continues in the politics that divide our great nation, and you have a choice. You don’t have to be part of the problem. We can all be a part of the solution.
How about you forget all the drama and nonsense, choosing to rise above?
As entrepreneurs, we are required to lead, and the best way to do that is by example. How you conduct your life as a person has everything to do with the overall tone of how your business is conducted and the manner in which your employees follow.
Choose to stay above the fray. We’ll all be better off in the long run.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. If there is anything you need, whether you are a current client or not, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
www.AccountingSolutionsLtd.com
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Note that the only professional services provided by Accounting Solutions Ltd. are those specified in a written communication from our office detailing the scope of services to be rendered and the terms and conditions applicable to the engagement.
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
www.AccountingSolutionsLtd.com
CONFIDENTIALITY NOTICE AND LEGAL DISCLAIMER. The information contained in this email message, including any attachments, is legally privileged and confidential and intended only for the addressee(s). If you are not the intended recipient, you are hereby notified that any reading, use, or dissemination of this message is strictly prohibited. If you have received this message in error, please notify us immediately and delete this message from your system.
Although this email and any attachments are believed to be free of any virus or other defect which may affect any computer system into which it is received and opened, it is the responsibility of the recipient to ensure it is virus free. Accounting Solutions Ltd. accepts no responsibility for any loss or damage arising from receipt and use of this email.
Note that the only professional services provide by Accounting Solutions Ltd. are those specified in a written communication from our office detailing the scope of services to be rendered and the terms and conditions applicable to the engagement.