Update on COVID-19 Relief Options for NJ Small Business Owners and Independent Contractors

Yesterday we interviewed accountant Chris Whalen on the COVID-19 relief options available to small business owners and independent contractors in New Jersey. In this video we discuss the latest details on the PPP (Paycheck Protection Program) and EIDL (Economic Injury Disaster Loan) offered by the SBA to small businesses/independent contractors. We also cover the newest details on PUA (Pandemic Unemployment Assistance) that those affected, specifically 1099 independent contractors sole proprietors.

Here's the transcript of the entire video: 

Jay Garrett:

My name's Jay Garrett and I'm the co-owner of NJ Realty Pros with Alan Hack who's not here and Anna Safonova who is here. We're here with a special guest and repeat guest now, Chris Whalen, who is a phenomenal accountant who is very, very well-versed on everything that's going on for relief options for business owners and independent contractors. We're going to keep this close to a half hour. We're going to try to finish up by 11:45. We're going to have Q&A, so type your questions in the chat box. If we don't get to immediately, we will get to them and we're going to just cut to the chase and get started because we have a lot to cover in a little bit of time. I'm going to let Chris get started.

Chris Whalen:

Good morning everybody. I'll share my screen in a second. Thanks for having me. The idea today is to dispel a lot of myths to relieve a lot of anxiety, but also to manage everyone's expectations about where they should be with unemployment, what's happening with these different loans, and are you behind or you're not behind? Without further ado, I'm going to share my screen and get started. All right. That looks good, guys?

Anna Safonova:

Yeah. [inaudible 00:01:14].

Jay Garrett:

Yeah. Great.

Chris Whalen:

All right. Great. All right. We're going to be talking about independent contractors or business owners, coronavirus loans, grants, free money, tax implications and stimulus details. Please take a deep breath. I know all this could be overwhelming, but we have to take our time and be patient. A lot of these systems are being created as we speak, so we have to give it a little bit of time.

Chris Whalen:

The money is not running out and there's no rush right now. The most important thing is to get your paperwork together, applications in, and make sure they're in good order. That's the important thing. Don't rush anything until we have all our supporting documents. When I'm done today, hopefully you're going to have a better understanding to know where you should be, and so you can give yourself an action plan to get everything done. A little marketing here. I'm a full service CPA firm. Of course, anything that a CPA can do that you can think of, we will do. We specialize heavily in businesses and high net worth individuals and we service the entire country.

Chris Whalen:

Of course, my motto is if we aren't working for you, then you aren't working at your best. You're almost there, Jason and Anna. You're almost 100%, but you need to hire me to get to that highest level, right?

Anna Safonova:

Okay.

Chris Whalen:

Get all my posts in your inbox, subscribe to my blog, send an email to me at chriswhalencpa@gmail.com, and put blog subscription in the subject and I'll make sure that you'd get on my list. Here's my blog page though. Tons of fantastic coronavirus related and other information. You should be looking at that all the time. If you subscribe, you'll get everything in your inbox before everybody else does.

Anna Safonova:

[inaudible 00:02:55].

Chris Whalen:

Yes?

Anna Safonova:

I'm sorry to interrupt you, Chris. Great informative stuff, videos, very up to date. That's not just the regular CPA and he is following actually rules and regulations, guidelines, changes. It's very, very important now.

Chris Whalen:

The Q&A, everyone, if you have questions, give a message in the chat if you can, but I often try to say that I'm going to give you so much A that there's very little Q, right? Overview, most independent contractors should apply for all three of these. The PPP, the SBA EIDL as we've been calling it and unemployment. Now, you can only take one of the PPP or the unemployment. A lot of people don't know that. Very important point, so you take the higher benefit. You want to apply for both of them and analyze what gives you the greater benefit. Now, even with current income, that's a big question. I'm a real estate agent. I'm having closings. Yes, that doesn't apply to the federal unemployment benefits necessarily. Important, no matter what. Even if you have current closings today, you want to apply for all three of these and see what you get.

Chris Whalen:

Remember, these are the steps. You get all your applications in, you wait for responses from the agencies. Now, they're going to want additional information and then you received the funds. I ask everyone as soon as you're approved and receive funding on any of these three programs, be sure to call me or email me. I want to know your timeline because I'm keeping statistics. Okay? Anna apply for PPP, let's say on the 15th of last month. Okay. She got her money today and what was the bank? Those are very important things. Please share it with me. I'm giving a lot of information for free, but I need it back because I'm sort of a clearing house for a lot of these statistics to tell people what their expectations should be. Does that make sense?

Jay Garrett:

Yeah, absolutely.

Chris Whalen:

I hope so. There's no rush. These programs will be funded the EIDL through September 30th. That's the promise, and PPP and unemployment through December 31st. That's the promise to keep the funding coming as long as it's applications through those dates. That's still the current promise from the government. Now, there are many unknowns with these programs and I know that causes anxiety, but for example, how do they calculate the EIDL loan amounts? If you look at the application for the economic injury disaster loan, there is no place to put a loan amount and that confuses people and they think it's incomplete. It's not.

Chris Whalen:

They're going to take that application and some basic, basic info, eventually get back to us and then calculate a loan amount based on other support. When is the money coming? We're not sure. How much extra federal unemployment will we receive? That's a very important point here for sole proprietors and self-employed people and I have to discuss that. I'll discuss it in a moment in that section. How exactly do we get forgiven, right? We're going to get this money from the PPP. We want it to be forgiven money and how do we get that forgiven so we don't pay tax on it? Please be patient, the kinks are being worked out.

Chris Whalen:

What I'm telling everybody is take your current internet related instantaneous results that we get for the past 25 years and multiply that by 30 and that should be your expectation. Everyone is so spoiled by hitting a button, getting a result. This is more like the Pony Express is going from Denver to San Francisco and we're waiting for the horse. You got to keep looking over the horizon, but that's the level we're at right now. Okay? Remember, these applications are very short, so that means what? That we're going to need to give more information eventually. But the SBA and state unemployment agencies most likely will be requesting many supporting documents, so don't be surprised if even after they contact you for the unemployment, for example, or the SBA EIDL, that it's going to take longer than you think. Everyone's waiting. They say, "Great. I have an SBA EIDL confirmation number and I'm going to get my money." No, there's going to be someone looking for more information.

Chris Whalen:

An important point here. People that are used to dealing with SBA in the past know they're onerous with underwriting, especially with credit rating. But remember, like the unemployment, this is a federal program going through the SBA system, so the underwriting criteria is much less severe, so please apply. You don't have to apply for all of them. No. Only ones you feel apply to you. A good note here... This is a frequently asked question. If you have an IRS installment plan that's in good standing, meaning you owe the IRS money, but you're paying a plan in good standing, this should not impact your funds, meaning they should not garnish that. People are worried about, "Oh, it's federal money. They're going to grab it like they do my refund if I owe money." That should not be the case, except if you have outstanding child support where there's a garnishment or a levy, they're going to take that most likely.

Chris Whalen:

I'm not saying not to apply for things, but if you're in arrears for child support and there's some kind of leaner levy, they might take some or all of the money you're going to get. All right. Very important point here. If you're a sole proprietor, you are your business name. You are your boss. On all these applications, do not put anybody that gives you a 1099 a as your boss or employer because they're not your employer. You are and use your social security number for federal ID. These are all of these. You get PPP, the SBA EIDL and an unemployment. This is all it should appear in terms of your employer, the technical employer or the ID number for that employer. Do not use who pays you on a 1099. A lot of realtors get paid one 1099 for say, Weichert. They've been putting Weichert down. That's not true. Weichert is not your boss. You're your boss.

Chris Whalen:

Stimulus checks. These will be sent automatically. If you filed an 18 or 19 return, 1,200 for each adult, $500 for dependents under 17. Now, dependents over 16 get nothing. I know this seems unfair. Do not barrage me with questions. I know your 22-year-old is a vital part of your family and a dependent, but they're not getting any stimulus. That's all I can say about it. Here are some income limits. It's not for everyone. For example, if you're single and you make over $75,000, you're going to be phased out eventually. Same thing with head of household. Look at those limits. If you're well above those within those statuses, you might get zero or no stimulus. The PPP. Now, this is a 73% forgivable loan and this is brand new. I just did this, this morning.

Chris Whalen:

73% forgivable loan if used to replace your earnings from your schedule C. How much? Well, how do we calculate your PPP amount? You take your net schedule C, which is line 31, plus any payroll if you paid it. A lot of you don't. Let's say your net schedule C divided by 12 times two and a half. Okay? This is based on your 2019 schedule C. Now, no, you can't use a 2018 schedule C. You can't use an estimated 2019 schedule C. You need to have a real schedule C done. Not your entire return, but this has to match what you're going to file for 2019 when all is said and done or else when they do auditing later, it's going to negate your loan because your numbers don't match. No. Everyone, you cannot use an estimated 2019 schedule C or your 18 numbers.

Chris Whalen:

Okay? This is applied through any SBA lender and the applications are available online or through a portal usually, and you don't need to be a full year in business. It's important. A lot of like Bank of America was terrible that they said if you're a sole proprietor with only a checking account in your personal name, even though you use it for a business use, it's going to not be counted as a business and they're not giving you a loan. We need to find other banks. There's other banks out there. I'm continually trying to find them to post, but call your bank directly. This is where the PPP is done and find out how they're doing it. If they say they're not doing it or they say you're not a real business because you only have a business account in your personal name, fire that bank and find a new one.

Chris Whalen:

Valley National has been fantastic by the way. Here's an example. We have an independent contractor. Net schedule C, 85,000. Your forgivable loan request is 17,708, which is 85,000 divided by 12 times two and a half as I just mentioned. Now, when you do this application for the PPP, you want to enter zero cost of goods sold on the application. As I said before, you can't get both the PPP or the unemployment, but you must calculate which is better and take the larger number. That's the smart thing to do. Now, PPP has limited forgiveness. This is very, very important. Everyone, pay attention if you get this loan. For sole proprietors and independent contractors, only 73.85% of that loan is forgivable. Here's my example. Let's take a minute and talk about it. We have our $85,000. That's our continuing example.

Chris Whalen:

We know that our forgivable... Our loan amount is 17,708, but the forgivable portion is based on that same net schedule C number divided by 52 weeks times eight weeks. It gives you a weekly average times eight, so you see that there's a non-forgivable portion of 4,631. Okay? This is important to remember that if you do get the full 17, 708 in this example, so 13,077 should be fully forgivable, not taxable to you, free money, but the 4,631 would probably need to be paid back eventually. What I'm saying is be careful with that $4,600, move it to a separate account, keep it there. Eventually when they start asking to be paid back, you can just give that amount back just to be safe. That $13,000 from what I see right now in our example here is money that's free for you under this example.

Chris Whalen:

Okay? Very important. There's a very important slide. Now, 75% supposed to be used for payroll. This is an important point or a net schedule C replacement. In this example, we have a net schedule C replacement, and we know what that is. If you do have payroll, you need to use the PPP for 75% of payroll within eight weeks when you get the money. All right? If you're a business owner where you have payroll and you have $100,000 PPP, you need to spend $75,000 of that on payroll within eight weeks of when that money gets funded. Very important point. Now, funds available after 75% can be used for rent, utilities, and mortgage. In my example I just gave, I could have $100,000 PPP. I can spend 75,000 on payroll in eight weeks and I have 25,000 to be used for rent, utilities and mortgage interest. You can use part of the PPP for other things, very specific we see at the bottom of the screen, right? But we have to use the majority for payroll as shown there.

Chris Whalen:

All right. The SBA EIDL. Now, this is the free $10,000 you've been hearing about, but there's a big catch. This is based on $1,000 for each full-time employee you had before the quarantine. A sole proprietor without employees would technically only be eligible for a $4,000 free. There is no obligation to repay that $1,000 and the loan amounts, as I said before, are decided after applying. Let me go back and remember, these are netted against each other, which I'll get to. If you did get the $1,000 for the SBA EIDL, and you did get the 17,708 the PPP, the $1,000 is not forgivable. It's larger of the two. Very important point. I don't want people to think both of those are forgivable because they're not.

Chris Whalen:

All right. You want to apply here and I'm checking every day to see if it's available because they just got new money funded. Let's see. Give me one moment. Yeah. It's not available yet. The EIDL's not reevaluate again, but don't be concerned. It's only temporarily not accepting apps, but they should be soon. Remember, as I told Jason, the SBA has taken in 14 years of applications in 14 days. Very important to remember that. Imagine you had your work and you suddenly had 100 times to work. It's going to be back on. Be patient. Check back with my blog. Once this is back up, I'll announce it on my blog, so it saves you time. Remember as I just said a minute ago, that the free grant or advance for the EIDL has to be netted against the forgivable loan request. In this case, the forgivable loan could only be 7,708. Right? Remember, the free money can exceed the PPP forgivable loan request.

Chris Whalen:

In this case, your forgivable amount could be 17, 708 but less that non-forgivable portion we went over. Now, unemployment,. Very important, everyone. Everyone's freaking out about unemployment. The federal government is using the state unemployment systems to get you the money. Business owners who don't have W2 are not receiving state unemployment benefits at all. States are still programming this linkage to the federal PUA, it's called, but you want to get to the point where you are denied and then wait. Here, we have pandemic unemployment assistance coming from the federal government. They're simply using the state unemployment system as a vehicle or conduit to get you the money. Right now, you're dealing with all of the variables and programming of state unemployment, which we don't qualify for. Remember, if you're getting weird emails that's saying you don't have benefits, you don't.

Chris Whalen:

That's good. You want to get to the point where you're denied. Remember, use your name and your social as your business and trade name and your federal ID when you do this, and I'm telling people, I'll show you. Now, everyone thinks we're going to get $600 for 13 weeks. We don't know. The $600 is for full-time employees who had a W2 who were laid off fully and got unemployment. They should be getting $600 a week on top of that already. But for us, self-employed people, we're not sure. Again, what is it going to be based on? Your net schedule C? We're not sure. Amounts will vary. I want to manage your expectations when you don't... When someone gets $599, I don't want them to freak out and think they're being gypped because that's not the case.

Chris Whalen:

When applying, we went over this already, but important point here, I'm telling everyone to act as if you were terminated on February 28th and this sole proprietor without W2's of their own or that they're giving, use of February 28th. Remember, you can't do both the PPP and unemployment, but apply for both. Right? State systems may deny you at first and that's good because Jersey is almost at a point where they're making this linkage to a federal portal, then that's going to be a whole new world, wild west of what's going on.

Chris Whalen:

Even if you have current self-employment income, apply for unemployment, right? If asked by the unemployment system to verify weekly earnings, put zero earned everybody. Now, there is New Jersey guidance for sole proprietors found in my blog. There's a blog post. If you went to my blog, you'll see this down the page. Click on it and this is a PDF that Jersey just put out that gives some guidance exactly for what I'm talking about. They finally put it out. Here's my blog page. While you're listening now, you can go check it out if you want. Remember, it's all still a work in progress. Remember, it's the Pony Express. We're looking over the eastern horizon for the horse to come from Denver to San Francisco and we don't see the dirt flying up yet, so we have to wait.

Chris Whalen:

Here's something separate. I'm almost done. That they've given a special relief of the 10% penalty for premature pension and IRA withdrawals up to 100,000. This is good for people. If you want to take out that money, you still have to pay your ordinary tax, but you don't pay the 10% penalty. If you want it to move some money, if you don't mind paying the tax on it, but you've been delaying that because you want to avoid the 10% penalty, well you can do it now. Okay? Most important slide. If your current CPA or tax preparer hasn't proactively been in touch with you about this, I urge you to find a new one as soon as possible. I know a good one. All right?

Anna Safonova:

Thanks for sharing that. That's great.

Chris Whalen:

All right. Here's my information. That's my blog page and that's my contact info. I'm going to unshare my screen. Let me know if there's any questions out there?

Jay Garrett:

Yeah, one person did. Let's see. We have... Brandon asked what are considered utilities exactly? I think that was in regards to the PPP.

Chris Whalen:

Well, any of your gas... I am not considering it waste removal. Gas, electric and natural gas. Gas and electric, your normal utilities right now.

Jay Garrett:

Water, sewer, I guess too, if you have that as well.

Chris Whalen:

I haven't gotten confirmation on that. I would say you could possibly include that, but not garbage removal. Some people think of that as a utility and I usually don't.

Jay Garrett:

Okay.

Anna Safonova:

There is another question if you want to read that, Jay? I get unemployment from my full-time job. That's from [inaudible 00:20:16]. I don't know how to add real estate. If you are fully employed somewhere else, were employed, then you get an appointment already, can they apply for PPP if they're part-time or...

Chris Whalen:

Well, if they're already getting the federal unemployment addition, then they're getting the max they can get.

Jay Garrett:

No. I think they're already getting the state unemployment.

Chris Whalen:

Right. They'll eventually get up there in the state unemployment system. This is an employee, former employee that was a W2 that applied for unemployment. Let's ignore the fact that they're a sole proprietor right now. If they're in the system and they're getting full benefits as a former employee, they should eventually get the $600 a week or some part of that eventually. That would mean that they're getting the max they can get. There's no need to do the sole proprietor application.

Anna Safonova:

Okay. What happens if you receive a paycheck in between? Hypothetical, let's say you're on unemployment or you get PPP or you get anything really in between. You're getting paychecks, per se [crosstalk 00:21:17].

Chris Whalen:

Well, if you're a W2 person. Let's separate it. If you're a W2 person who's on unemployment and you have to follow those normal rules. If you got a job, if you got some pay, you got some part-time work in your weekly benefits area, when you go to verify that weekly earnings or not, you have to tell them that. Ignore the fact that you're a sole proprietor. In that case, if you are an employee that's in the employment, unemployment system as an employee, you want to then address it that way. You would have to go and tell them you got some work and how much you made because that's going to reduce your benefit as it should.

Anna Safonova:

That's W2?

Chris Whalen:

Right.

Anna Safonova:

Okay. What about 1099?

Chris Whalen:

Now, 1099, I'm saying put zero now because we don't even have direction on that because I don't think for the federal portion, I don't think that matters. Right? Let's split this in half. Your state unemployment number that you could get in our last example with the W2 person, that's reliant on your current earnings or not, ongoing, but the federal, I don't think has nothing to do with that. I don't think that. Let's take the federal unemployment. Let's remember, like I said earlier, the state unemployment rules don't apply to the federal portion.

Chris Whalen:

If your PPP person is sole proprietor, that's what you're going for. Again, we aren't even in the federal system yet, has even asked us that question. If you're a sole proprietor, as I said before, that's not getting state benefits yet because you don't deserve them, if it asks you for weekly earnings, put zero. Then, when we get to the federal system for us, then we're going to see what to do, but for now, put zero. But if you are a W2 person, put it in. You have to put that in if you're making other W2 money now because it might affect your state unemployment portion, maybe not affect your federal 600. Does that make sense?

Anna Safonova:

Yes. Yes. Yes. Absolutely. For people who already applied and let's say they made a mistake, because I know you said your social security for your name because you're self-employed. Now, anybody who made a mistake per se, again, if you're in real estate, and you put let's say brokerage that you're working for, if there is a mistake in place, should you reapply? What should you do with that?

Chris Whalen:

No. Don't go scrambling. Don't worry. Again, you have a record in there already that you've applied for unemployment. This is very common. It's sitting there, you've probably been denied because when you put Weichert or you put landscape, whatever you put down, our contractor's name and ID number, it's going to deny you so you're good. You're at a point where you're denied and you should be because you didn't have wages with them. Let's wait to see... Again, follow my blog as soon as the state's ready, to grab these records and bring them forward. That's going to be a whole nother webinar on what because I don't have the machinery that I've seen, what's going to be the spec? That person's in good shape. The best shape you can be is the best denial you can have.

Jay Garrett:

Does that go for PPP? We say there was a sole proprietor that accidentally used his business number, his EIN instead of his social.

Chris Whalen:

Yeah, exactly. It's another company. Eventually, we should have the facility to change that. I'm expecting that once we get up in the system, it's going to allow us to go in and change things or give us some kind of exception report. "Hey, Chris. You put down Joe Smith, CPA you worked for, but you're an independent person. That doesn't make sense. Can you change it?" But they also might take automatically because you do put your individual name and your social on these applications. We should have the facility. I don't want [inaudible 00:24:57]. They should allow us to change things. It doesn't mean that if you made this mistake, you're out of the system. That doesn't mean that at all. We just have to wait. Again, it's a long time. It's going to take a while and it could be a week, it could be four weeks.

Jay Garrett:

Yeah. Like you said before we started the call, how many years worth of loans and how quick was it that [crosstalk 00:25:21]?

Chris Whalen:

They took in 14 years worth of loans in 14 days.

Jay Garrett:

Yeah. Just as an example, I'm doing a PPP. I missed two initials. I submitted to the bank on the ninth. Something that took me four minutes to fix, I didn't get a call to the 16th but that's how many they got before they got to mine. I understand. Just [crosstalk 00:25:45].

Chris Whalen:

Right now, for example, we say that Pelosi finally approved the new money in that. Well, wait a second. Why is the EIDL application not up yet? Well, maybe they just need to take a break and file... Process what they've gotten already. I follow my blog. I'm checking it multiple times per day. As soon as it's open again for the SBA EIDL, I'm going... That's why it's important. Go to my website, everybody and you'll be able to click contact or go to one of my blog posts. I have [inaudible 00:26:13] have. If you want to subscribe to my blog, click here, put in your email. You'll automatically be in my system at that moment, and you'll get every blog post I do from now on.

Jay Garrett:

Awesome. We have some questions, I guess on the live feed here. I received my PPP and my EIDL. Can you say that again? Which one has to be repaid? That was EIDL, just 1K. Who was to be repaid...

Chris Whalen:

All right. They got 1K of EIDL is what they got. Correct?

Jay Garrett:

Yes. I think that's what she meant.

Chris Whalen:

Okay. Good. This is important that... You didn't get your loan yet, so you got a grant. This is how it works. The EIDL wants to give you up to $10,000 of quick money to help you pay other expenses in payroll. In this case, she's a sole proprietor. Like my example exactly said, she's one person on payroll and so she got $1,000. Remember, that person let them know SBA is still going to get back to her now and try to tell her what kind of loan she could get. It'd be a very low interest loan over a longterm. That $1,000 is not also free along with the PPP, so she should watch and check out my forgivable amount part of this presentation. You can't get both. Let's say her PPP was $15,000. She can get approximately 73% of that forgiven, but that $1,000 is now a loan that she has to pay back. She can't get both free. Make sure you know what is not for free and keep that money separate unless you definitely want the loan. You got it?

Jay Garrett:

Yep. Then, there was a followup question that she had on the PPP, and this is actually a great question because I know a lot of people that Anna and I know are in the same situation. If you have no employees, you're an independent contractor, you're getting PPP, how do you prove the money, so it's forgiven?

Chris Whalen:

Well, if you will, the moment you get the money and it's in your account, if you're a sole proprietor, that's part of your net income you're draw. You're done basically getting it forgiven. You don't have any payroll, right? Eventually if you did have W2's or payroll, you'd have to show that. But for a sole proprietor only getting a number, let's say that 17, 708 in my example, that simply goes into an account and once you draw that money out at the portions forgivable. The main thing is going to be do we have that much net income in 2020, I believe is going to be the answer, right? If you didn't make 17, 708 net, which remember, you had made 85,000. I think just this simple example from what I've read, that percentage of it should be forgiven once you get it.

Jay Garrett:

Okay.

Chris Whalen:

You're going to have to show, I think the proof will be that your 2020 net income did exceed that, right? Let's say you made 17,709 in 2020. If I've taken the 17,708, my net income is thought of as payroll cost for this purpose, right? That 17,708 going out to you at this moment when you got it and you've made 17, 709, then you fulfill the requirement of the portion that's forgivable.

Jay Garrett:

Now, say I come up with an awesome idea, I have great growth by the end of the year after this is done, if I make more than 25%, does that mean I got to pay back that [inaudible 00:29:50]?

Chris Whalen:

No, not at all. No. The more money that... You just want to make sure you make enough money. Right? In my example, if I make more than 17, 709 net, right? I had made 85,000. I think it's going to be very hard to not meet the requirement, right? At 17,708, if I do a calculation here. In this case, 17,708. That's 20% of my net, so 21%. In our example, if you're a sole proprietor, if you make 21% or more of your 2019 net schedule C, that would mean to me that it's fully forgivable the moment you get it. Well, forgivable to that extent that I mentioned earlier. Right?

Jay Garrett:

Awesome. Let's see we have one more.

Anna Safonova:

Yeah. I have...

Jay Garrett:

Oh, you have one, Anna?

Anna Safonova:

Yeah. Yeah, yeah, yeah.

Jay Garrett:

You [inaudible 00:30:38], and then I have one too.

Anna Safonova:

I think we've covered that, but if the realtor has impacted due to COVID, and business slowed down on business, I was still eligible. I think regardless, you should apply for PPP, right? Even if you have a slow down, if you're completely not working.

Chris Whalen:

Well, especially that's what it's for. The idea of this with this eight-week period and all of this, it's meant to like... Especially people that say, "I have current closings or current income." I know, but the idea of this is that we're having a two or two-and-a-half-month period of quarantine. That means that after that, we're going to have a two-and-a-half-month slow down of receipts. Especially, that's what the money's for. It's for you to have to get you past the patch when now you're going to have a slow down in receipts because of the slowdown in business through the quarantine. You're exactly the perfect person to apply for this stuff.

Anna Safonova:

Okay. Jay, do you have another one?

Jay Garrett:

We had one. Also, if PPP is based on 2019 and you have half as many employees as before but didn't lay anyone off, can you raise their pay to use the whole amount? If not, is there another way to use it?

Chris Whalen:

Well, are you an owner? What is their situation? Are they an S corp owner? Are they an LLC?

Jay Garrett:

That, I'm not sure. It may be hard to get because we're on a limited [inaudible 00:32:06].

Chris Whalen:

Okay. Right. To me, I usually use a 75% rule is what they're giving us. I think of that as 75% of head count and payroll. Right? They didn't say it necessarily, but that's what I... If I have 100 people that were on payroll before the quarantine, I want to have 75 people, not necessarily the same people, 75 people, so I'm paying 75% of the payroll. Of course, if you give people raises that are a little unreasonable, that might not look good. Again, it's meant to be forgiven for payroll you pay

Jay Garrett:

He has an LLC, he said.

Chris Whalen:

Okay. Right. If you're a sole member LLC, make sure you give yourself your draw, right? Make sure out of the PPP, the owner sometimes has the largest amount because they're net schedule C, right? That's more example. Make sure that person, I hope they're listening, take that net schedule C amount. You're out of the bank account right away because that goes towards that 75%. Okay? Then, fill in the net difference of that 75% number less your net schedule C to try to hopefully come up with the gross amount you need to be forgiven.

Jay Garrett:

Awesome.

Anna Safonova:

Okay. Awesome. A lot of good information. Thank you so much for that. Jay, do you have another question?

Jay Garrett:

One more. just to recap, anyone who received PPP cannot apply for the unemployment, right?

Chris Whalen:

Well, you can't receive unemployment. What I usually say is depending on your PPP. Let's say here, this is a good rule of thumb. Let's say that you're going to get $600 times 13 weeks of unemployment, right? That's the max number anyone's going to get, right? That's $7,800. If you calculate your PPP and it's more than that, then you most likely should ignore the unemployment, right? Because you can only take that $7,800, right? Right. If your PPP is 12, 13,000 and we know that 73% of that's going to be forgiven, then it's more.

Chris Whalen:

That's the rule of thumb. If your PPP is low, some people have a small schedule C last year. There's PPPs of four grand or five grand. Well, the unemployment might be better. In those cases, unless you dramatically exceed that unemployment potential, which is 7,800 and I don't know if that's going to come anyway, but if you know you're well above that and you know you're going to guess, if you do get the PPP and you're sure you have it, then you could ignore the unemployment. Okay?That's a good rule of thumb. It's based on the amount of PPP and you are... Like I said, $7,800 is your maximum unemployment possibly. Right?

Anna Safonova:

That makes sense.

Chris Whalen:

I can take the greater of the two and so we're going to go with the PPP.

Anna Safonova:

Okay. Good.

Jay Garrett:

I think that's all the questions that I had from the chat. I think Anna, you asked yours? You have everything?

Anna Safonova:

Yes. No, I have everything that was asked hopefully.

Chris Whalen:

I'd have one more thing. Hold on one second, if you don't mind.

Jay Garrett:

Free money for all of us?

Chris Whalen:

There you go. It's the bonus. You waited until the end. Here, so I'm going to share my screen one more minute. Okay? This is for everyone who does their own income taxes, which of course, we know it's a terrible mistake. Here we go. Right?

Anna Safonova:

Yes.

Chris Whalen:

I'm not going to turbo cardiologists, so just a little fun and I appreciate everyone listening. Hope you got something out of it. Please gain, for your own good, subscribe to my blog. I'm actually putting out a podcast right after this all about that forgivable portion going a little more detail [inaudible 00:35:53] of the PPP for sole proprietors. Okay?

Jay Garrett:

Awesome. Well, thank you so much for your time again. This was great. I think a lot of good information. Everybody, if you have any additional questions, reach out to Chris, reach out to me and Anna and we'll be back soon with somebody else and some more info for you guys to help you through this. Thanks so much, everybody.

Chris Whalen:

Thank you everybody.

Anna Safonova:

Thank you.