Payroll Treatment for Schedule C Type Businesses, Partnerships, & LLC’s
The Small Business Administration distributed additional Q&A on Tuesday to clarify how to treat Schedule C type businesses, partnerships and LLCs in PPP Loan applications.
Many businesses are organized as partnerships or limited liability companies and the rules were silent or unclear regarding the treatment of owner payments and distributions and which party could file an application for the PPP Loan. The SBA Q&A clarifies the treatment of these payments.
Partners and LLCs can include (up to $100,000 per partner) salaries, bonuses, distributions and net earnings as payroll costs in their applications to SBA lenders. So, if this is you, include your K-1 partners in your PPP loan request.
Many lenders had not been considering any “Payroll” costs that were not documented on Federal payroll tax reports such as form 940 or 941. Check on your submitted applications to see if they can be amended prior to being funded.
As a service to our clients and network – reach out to Hardesty with your questions on PPP and EIDL loans.
If you need more help than that, contact Hardesty today and we can help you with Fractional or Interim C Suite support. We are experts in ramping up companies and critical period management.
- Provide an experienced 3rd party re-opening plan review
- Analyze your options
- Develop alternative action plans
- Navigate through stakeholder negotiations
- Relaunch a healthier company