Quick Answer: Do Independent Contractors Count As Employees For PPP?

Are 1099 employees covered by PPP?

Independent contractors receiving 1099-MISC forms and self-employed individuals are eligible to apply for these potentially 100% forgivable loans beginning on April 10, 2020.

The requirements are straightforward..

How do I calculate PPP payroll?

How to calculate your PPP loan amount as a self-employed borrowerLocate your annual net profit on your 2019 Form 1040 Schedule C, line 31.Divide your annual net profit by 12 to calculate your average monthly net profit.Multiply your average monthly net profit by 2.5.

How does PPP loan work for independent contractors?

Generally, the PPP loan amount that businesses qualify for is based on their average payroll expenses. However, since sole props and contractors usually don’t have payroll, their loan is based on 2019 net profit divided by 12, to get a monthly “average” net profit. This number times 2.5 equals your PPP loan amount.

When can independent contractors apply for PPP?

Independent contractors and self-employed individuals could begin applying for Small Business Administration loans under the Payroll Protection Program as of Friday, April 10.

How do independent contractors apply for PPP?

In order to apply for a PPP loan as a self-employed individual or independent contractor, you have to meet the following criteria:Must be in operation before February 15, 2020.Must have income from self-employment, sole proprietorship, or as an independent contractor.Must live in the United States.More items…•

Can PPP be used for back payroll?

Forgivable payroll costs must be incurred during the 8-week covered period. You can use the PPP loan funds to pay back-pay since they are an allowable use of PPP loan proceeds – but they may not be forgiven.

Do owners count as employees for PPP?

Do we count as “employees” for a PPP loan? If you are the sole owners and staff of your business, you can still receive PPP loans and use them towards your payroll costs. You are an employee of your business, so you can use your loans to pay yourselves.

Who qualifies for PPP forgiveness?

You must maintain at least 75% of total salary. If the employee’s pay over the 24 weeks is less than 75% of the pay they received during the most recent quarter in which they were employed, the eligible amount for forgiveness will be reduced by the difference between their current pay and 75% of the original pay.

What documents are needed for PPP forgiveness?

To prove payroll costs you’ll need to provide: Federal payroll tax filings (IRS Form 941) Income, payroll, and unemployment insurance filings from your state. Receipts for employer contributions to group benefit plans. Receipts for any retirement plan contributions.

Where do I apply for PPP forgiveness?

To apply for forgiveness of your Paycheck Protection Program (PPP) loan, you (the Borrower) must complete this application as directed in these instructions, and submit it to your Lender (or the Lender that is servicing your loan). Borrowers may also complete this application electronically through their Lender.

How do you count employees for PPP?

Take your employee’s total hours and divide by the number of weeks (to find the average hours worked per week). Then, divide this number by 40 (the hours in a full-time week).

What does the PPP mean for employees?

Payment Protection ProgramAs part of the $2 trillion aid package unveiled in the Coronavirus Aid Relief & Economic Security (CARES) Act, $349 billion was dedicated to the Payment Protection Program (PPP). This offers federal guaranteed loans to businesses with fewer than 500 employees to cover payroll and other essential costs.

What is the covered period for PPP?

24 weeksYour PPP loan is meant to cover 24 weeks worth of expenses. So, your loan forgiveness depends on your costs during that 24-week period. If you received your loan prior to June 5, you can elect to use the eight-week period. The PPP Flexibility Act extended the coverage period from eight to 24 weeks.

When should I apply for PPP forgiveness?

Borrowers may submit a loan forgiveness application any time before the maturity date of the loan, which is either two or five years from loan origination.