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How to Qualify for PPP Loan Forgiveness

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Round two of the PPP loan program is here, and that means more small businesses are getting the funds they need. Once you receive your PPP loan, there are some important steps you need to take in order to turn your loan into a forgivable, non-taxable grant. Here’s how to qualify for loan forgiveness, and what documents you’ll need to apply.

What can I spend my PPP loan funds on?

Your eligibility for loan forgiveness depends on how you spend your funds. You can use your PPP loan for the following:

Payroll

Payroll includes salary, wage, vacation, parental, family, medical or sick leave, and health benefits. There are a few caveats, however:

  • At least 75% of your loan must be used for payroll costs. Payments to independent contractors cannot be included in the payroll costs.
  • You must maintain the number of employees on your payroll.
  • You must maintain at least 75% of their total salary.

If you had to let go of employees prior to receiving your PPP loan, you can rehire any staff and reinstate any pay that was decreased by more than 25% to meet the requirements for forgiveness.

You have until June 30, 2020 to rehire these employees and restore salary levels. Otherwise, your forgiveness amount will be reduced.

For example, if you had ten employees on payroll before and now only have eight employees, the amount of your loan that can be forgiven will be reduced by 20%.

Rent, Mortgage Interest, and Utilities

As long as your lease agreement, mortgage interest, or utility services were in effect before February 15, 2020 you can use up to 25% of your loan funds for these non-payroll costs.

Further Reading: PPP Loan Forgiveness: The Complete Guide

I’m self-employed with no employees—how do I use my funds?

If you’re self-employed, you’re entitled to use the PPP loan to replace lost compensation due to the impacts of COVID-19. However, new guidance prevents self-employed individuals from claiming the entire amount as income replacement.

If you have mortgage interest, rent, or utility expenses, you must have claimed or be entitled to claim a deduction for those expenses on your 2019 Form 1040 Schedule C in order for these to be eligible for forgiveness. This means that you need to either have your 2019 taxes filed, or prepared and ready to file.

If you worked in an office space in 2019 and did not have a home office, you cannot claim a deduction on your home mortgage interest. Even if you are currently working at home now, you are not eligible to claim home mortgage interest payments for forgiveness.

Further Reading: PPP Forgiveness for Independent Contractors and Sole Props

Keep track of spending during the eight-week loan period

Once your PPP loan funds have been disbursed, it’s critical to keep track of how you spend these funds over the next eight weeks. Make sure you have a digital receipt for every PPP-related expense—your lender will likely require these documents in digital format, so take the time to scan any paper documents and keep backups of your digital records.

Accurate bookkeeping will streamline this process, and make it easy for you to find PPP-related expenses when the time comes to apply for forgiveness.

If you don’t have a reliable bookkeeping solution in place, Bench can do your bookkeeping for you, all online. Learn more.

How to apply for loan forgiveness

Applications for loan forgiveness will be processed by your lender, and they’ll provide you with instructions on where to apply. Here’s what you’ll need:

  • Documents verifying the number of full-time equivalent employees on payroll and their pay rates, for the periods used to verify you met the staffing and pay requirements:
    • Payroll reports from your payroll provider
    • Payroll tax filings (Form 941)
    • Income, payroll, and unemployment insurance filings from your state
    • Documents verifying any retirement and health insurance contributions
  • Documents verifying your eligible interest, rent, and utility payments (canceled checks, payment receipts, account statements.)

Double-check with your lender to see if they require anything else in order to get your loan forgiven. Once you’ve fulfilled all their requirements, submit your forgiveness application to your lender with the proper documentation within 90 days after the final day of your eight-week loan term. After you submit your application for forgiveness, your lender is required by law to provide you with a response within 60 days.

Remember: if you need help getting your bookkeeping in order, or proving your PPP expenses, Bench can help. We’ll make sure your current financials are in order, and walk you through the statements, records, and documents you’ll need to apply for forgiveness.

[Learn More]

Ash Exantus aka Ash Cash is one of the nation’s top personal finance experts. Dubbed as the Hip-Hop Financial Motivator, he uses a culturally responsive approach in teaching financial literacy. He is also a speaker, and bestselling author of six books. Ash has established himself as a thought leader and trusted voice with Corporate America, Colleges, Churches, and Community based organizations. Ash is best known for helping people maximize their full potentials by giving them the inspiration, tools, and resources needed to live their best lives. For more info on Ash please visit www.IamAshCash.com

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JAY- Z Comes Full Circle With Monogram in Cannabis Industry

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If you haven’t already heard, JAY-Z has done it again. Working to shape the conversation surrounding cannabis, foster equality and fairness in the development of the industry, promote awareness for the many uses and benefits of cannabis and empower consumers to feel free to use cannabis how, when, and where they want, JAY-Z is the new face of the future.

JAY-Z has a partnership with California cannabis company Caliva. The 50-year-old, born Shawn Carter and married to pop-star Beyonce, is the latest celebrity to get into the cannabis business which has spread fast in the United States as more and more states legalize it for recreational purposes.

 

JAY-Z says he also wants to increase the economic participation of people returning from incarceration through job training and workforce development. Through research, I’ve learned; His role will consist of driving creative direction, outreach efforts and strategy for the brand.

HOW DOES THIS PARTNERSHIP HELP ECONOMICALLY?

The rapper, whose formal title with Caliva will be chief brand strategist, will also further his social justice efforts by increasing job training for former prisoners as well as fostering quality and fairness in the development of the legal marijuana industry.

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Teaching Your Children The Importance Of  Wealth

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You’ve worked hard to build your estate, and maintain it over time. Eventually, it will be time to leave your estate to your children. How will you make sure that they are prepared?

Just as you have a responsibility to manage your wealth, you have a responsibility to educate your children about how to manage it. Children also have a responsibility to learn. It’s your job to show them the way.

The dialogue about family wealth changes over time. Children might have a certain frame of reference as teenagers, but that dynamic changes once they marry and spouses are introduced into the family. The conversation about transfer of wealth happens over and over again, at different milestones in life. As the point of departure nears where there will be some significant asset transfer, all of the cumulative talks where you have been educating and steering the child over time will have to be used in their OWN lives.

Monday ( Sept 21) on the “Ash Cash Show” Ash Cash shared praise and admiration to his daughter, her growth and respect for money is inspiring, as she is active in the family  business. At the tender age of twelve, seeing her using her earned income to purchase her own items, was a delight for him to see.  Like most parents should, Ash Cash used the best time to start talking to his child about money and the family’s assets as early as he felt comfortable. The process ultimately has two parts that should be handled separately: teaching money skills, and revealing family wealth.

Think of it as a process of apprenticeship, where your children will learn from you how your family’s estate should be handled. Incremental learning and incremental responsibility will be the cornerstones of a successful education process.

When you feel like your children are mature enough to handle wealth management, and you respect the people they are becoming, it’s time to go to the next step and educate them about the family’s wealth and their inheritance. YES! THEIR INHERITANCE. Advisors say, that making them aware of your family’s wealth, and their responsibilities pertaining to it, early on will set them up for the best chance of success.

Allow your children  to sit in on business  conversations  and learn to communicate as a business owner. You need to allow the next generation to make their voices heard when it comes to philanthropic endeavors. Don’t just sit around a table and make decisions about which organizations to give family money to, encourage your heirs to participate in the work these organizations do, and experience the difference that money makes.

It’s important to teach children the story and context that’s behind the accumulation of family wealth. It involves other members of the family who built something that is being passed down. In that story, there are highs and lows, setbacks, victories, and all of this is important in setting the context for stewardship. Share with them how complex it was to achieve the wealth and what it takes to keep it.

The education is KEY. If you have a portfolio and you look at its value over time, your heirs need to understand how different withdrawal rates will affect that value. It’s frequently an eye-opener for children and families when they realize that they have to be very deliberate about this process in order to preserve the wealth through generations.

Remember: This sense of accountability will permeate their lives and help them behave in matters of generational wealth.

 

Peace.

 

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The Real Deal: Wealth Tax + Pros and Cons

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More and more you read about income and wealth inequality in the United States your learn it is on the rise. This fact has been highlighted by several 2020 presidential candidates, who believe that wealth is too highly concentrated at the top. One proposal to redistribute wealth from the top earners is a wealth tax (there are currently several versions of this tax being suggested). While most taxes hit a flow of money (like when you earn money via an income tax or when you buy a product via a sales tax), a wealth tax hits stagnant money, such as business assets, personal belongings, etc.

 

To be honest; as income and wealth inequality rise, so too does its prominence in political discussions. 

Americans “strongly agree” that the wealthiest individuals should pay higher taxes. According to a Federal Reserve Survey, “families at the top of the income distribution saw larger gains in income between 2013 and 2016 than other families, consistent with widening income inequality.”

This trend has led prominent government officials and various 2020 Presidential Candidates to recommend policies to curb wealth at the top income brackets. Some recommend increasing corporate taxes, others recommend increasing progressivity of existing income taxes, closing loopholes, increasing estate taxes, implementing a wealth tax or some combination of all proposals. The remainder of this article will specifically focus what we call Wealth Tax

Based on research ,

A wealth tax is most similar to a property tax, except instead of taxing property ownership exclusively, a wealth tax would be a tax on all assets. This includes personal belonging (i.e. clothes, jewelry, cars), business assets (i.e. Jeff Bezos’ interest in Amazon), investments (i.e. money that millionaires put into other companies), and may even include foundations (i.e. the Bill and Melinda Gates foundation).


The wealth tax is considered an aggressive plan and has been a topic of hot debate not only between politicians and business leaders, but also amongst economists. Both sides believe that the tax system should be equitable and promote growth.

WHO ARE THE SUPPORTERS?

Supporters of the wealth tax say it will promote a redistribution of wealth to those who need it most. Opponents of the proposal say it will be challenging to implement and will ultimately hurt economic growth and job creation

PROS OF A WEALTH CREDIT

A wealth tax would help reduce wealth inequality, which is at historically high levels. Typical income taxes are not an effective way to tax the ultra-wealthy as they earn most of their money via investments and other means. Another reasons is,Some self-made and inherited billionaires have called for a wealth tax. A group of nineteen billionaires and multi-millionaires signed an open letter supporting the wealth tax as a “moral, ethical, and economic responsibility” to improve the economy, health outcomes, and democratic freedoms.

Lastly on reasons A wealth tax will increase tax revenue to the federal government and allow funds to be redistributed.

WHAT ARE THE CONS ?

A wealth tax punishes success and will hurt the economy by discouraging business investments.

  • Roughly 80% of millionaires in the U.S. earned their wealth instead of inheriting it. A wealth tax unfairly punishes success of individuals who, on average, work more hours than lower-wage earners

 

To add a wealth tax may be deemed unconstitutional and an ineffective means to curb wealthy individual’s influence. However, we look at everything we are concerned with the political influence of wealthy individuals — we should strengthen campaign finance laws, not cap wealth potential.

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