A Quick Introduction To The Paycheck Protection Program
The Paycheck Protection Program or PPP is a $660 billion forgivable loan program which was created in order to aid small businesses suffering from the terrible impact of COVID-19. The PPP helps keep the company running under these exceptional circumstances, keeping employees paid, and costs covered, allowing a company to survive the impact the Coronavirus has had on our country.
So How is the PPP different for individuals who are self-employed?
A large number of small businesses were able to start applying for their Paycheck Protection Program loans as early as April the 3rd, whereas self-employed individuals couldn't get their applications accepted until the 10th of April.
Who is affected by this?
This separate guidance mainly applies to businesses which aren't incorporated, such as Limited Liability Companies, Sole Proprietorships and 1099 contractors.
What makes things different for this group?
The Paycheck Protection Program loan amounts are generally calculated using the businesses average payroll expense. When it comes to a business which doesn't have employees or payroll, the loan amounts taken into consideration have to be calculated based upon the profit the business is making.
When it comes to sole proprietorships and LLCs, they are not affected by separate tax liabilities in the same way corporations are. Their businesses are taxed differently, on a personal basis, which would make following the same regulations impossible due to the way Corporations pay their employees and pay tax.
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