Payroll Protection nd Program 2 Draw What you

Payroll Protection nd Program 2 Draw: What you need to know! In Partnership with the KKA Chamber of Commerce Tuesday, January 12 th ~ 2 pm Presented by: Chris Cluff, President Paper Trails chris@papertrailspayroll. com

PPP Second Draw Loans • Very similar to round 1 • Eligibility requirements are more strict and require revenue drop • More favorable to hospitality • Forgiveness expanded • Good idea to have Round 1 loan forgiven before applying for 2 nd draw • Max Loan size $2 million vs $10 million

When does this round go live? • First time borrowers can apply Monday, January 11 th • Borrowers who use a community bank can apply Wednesday, January 13 th • Borrowers using a national bank can apply Monday, January 18 th

2 nd Round PPP Eligibility • Less than 300 employees • Must be able to demonstrate a 25% reduction in gross receipts in any given quarter of 2020 • Compare 2020 Quarter to 2019 • Example: Q 2 2020 to Q 2 2019 • Use Quickbooks P&L Previous Year Comparison Report

How to Calculate Loan Amount • Based on average monthly payroll costs • 2. 5 x your average monthly payroll • 3. 5 x average monthly payroll for hospitality (NAICS codes beginning with 72) • Total payroll costs include: • Wages, tips, commissions, bonuses • Wages capped at $100 k per employee • Non-US employee wages exempt (J 1/H 2 B) • State unemployment tax paid • Retirement contributions (SIMPLE IRA, 401 k, etc) • Any insurance benefit company contribution (now includes health, dental, vision, etc) • You can use total payroll costs for either 2019 OR 2020

How to Calculate Loan Amount - Example Wages 1/1 to 12/31/2020 $440, 928 Retirement Contributions $2, 169 SUTA Tax $6, 159 Insurance Premiums $2, 147 Total “Eligible Payroll Cost” $451, 405 Monthly Average (divide 12) $37, 617 Factor (2. 5 x or 3. 5 x) Total Loan Amount 3. 5 x $131, 660

How to Calculate Loan Amount – Spreadsheet Download from papertrailspayroll. com/blog

How to Calculate Loan Amount • Seasonal calculation • Any 12 -week period of wages instead using the whole year • Must not be operational more than 7 months per year • (OR) • In the preceding year has gross receipts for any 6 months of the year that were not more than 33. 33% of gross receipts for the other 6 months

How to Apply • Do your loan calculation – use our spreadsheet • Gather copies of payroll reports used to produce calculations • Gather quarterly payroll tax returns for year used • Gather sales reports used to justify application (<$150 k not required until forgiveness) • Complete application (available on our website or SBA website) • Submit complete package to your bank!

How to Apply

How long do I have to use the funds? Your PPP period: • Begins on the funding date of loan • Ends 168 days (24 weeks) later • “Cash Basis” – whenever the check is written, not “earned” Alternative Payroll Covered Period • For administrative convenience… • PPP period may begin with the first day of the pay period immediately following funding & extend 168 days

What can I use these funds for? To ensure full forgiveness: • You MUST spend 60% of funds on Payroll • Wages, tips, commissions, bonuses, etc • State unemployment, Retirement & Insurances • Wages paid over $100 k are excluded • Rent or Mortgage Interest • Utility Payments • Interest payments on any other debt incurred before 2/15/20 • Operations Expenditures • Property Damage related to vandalism or looting in 2020 • Supplier costs for goods that are essential to business • Worker protections/PPE

What does the forgiveness process look like? • • • No new forgiveness applications have been released yet Similar process New “streamlined” application for loans under $150, 000 You can apply at any time after funds have been spent Tax handling has changed – expenses are now deductible • Essentially a tax-free grant – Thank you Uncle Sam! • State income tax will still apply! Auntie Janet will take her piece! • Paper Trails will again help you apply forgiveness

Other Thoughts • Employee Retention Tax Credit now available in concert with PPP Loans • However, you cannot “double dip”

How to Access Reports in isolved Download “Periodic Payroll Register” Go to Reporting > Client Reports

How to Access Reports in isolved

How to Access Reports in isolved To gather quarterlies: Go to Reporting > Return Archive > Select Quarter you need > Click Filter > Download Reports To get W 3: Go to Reporting > Year End Report Archive > Choose Year > Download W 3

Getting Calculation Spreadsheet Posted at papertrailspayroll. com/blog

Help! • Paper Trails will help clients pull reports and calculate loan amounts at no cost for second draw loans. • When you’re ready to calculate forgiveness and apply forgiveness, Paper Trails will complete all forgiveness paperwork on your behalf just as we did last year for $350.

Questions?