Local CPA Recommends Hiring Professional Help For PPP Forgiveness Application | Characteristics
It’s been roughly nine months since the COVID-19 pandemic hit Middle Tennessee, shutting down small businesses for a while and spurring countless requests for loans from the Federal Paycheck Protection Program (P3), and it Now is the time when businesses start asking for loan forgiveness. But this process is complicated, and a local accountant (CPA) offers help to companies taking on this delicate task.
Greg Lemons is the franchise owner of Padgett Business Services in Brentwood, which handles payroll, accounting and more for area businesses. Along with these responsibilities, Lemons and his team have adopted a sort of PPP Navigator role this year.
“Our natural work with small businesses on a monthly basis during their payroll and accounting etc. has kind of led us to try to be heavily involved in this whole PPP lending process, helping our clients with the get. Of course you can’t get it anymore, and now we’re looking at the forgiveness side, ”Lemons said, adding that he was also ready to offer his help to non-clients.
The PPP loans, made by banks to business owners in the Small Business Administration, provided federal money to cover hard-to-pay expenses for businesses due to the effects of the COVID-19 pandemic, such as payroll, rental of facilities and equipment, and utilities. If allocated funds have been used for these eligible expenses, businesses are eligible for loan forgiveness.
The details are tricky, however, and Lemons shared if businesses don’t have all of their ducks in a row, they may not end up with a loan written off entirely.
The PPP originally covered eligible expenses over an eight-week period, which was later extended to a 24-week period. While no additional money was allocated, this change allowed business owners to stagger the use of their loan money if they wished.
If a company doesn’t have all of its documents highlighting its spending, Lemons said the SBA might choose not to cancel part of the loan. For this reason, when requesting a rebate, he recommends that business owners request a 24-week rebate, providing documentation of eligible expenses throughout that period, even if they have not used the money. of the loan only during the initial eight-week period. This way the SBA has more qualified expenses to review to increase the odds of total forgiveness for business owners, even if they’ve made one or two documentation errors.
Lemons also recommends hiring a professional to handle not only loan cancellation requests but the 2020 tax filing as well, as the circumstances surrounding these two processes continue to change and business owners might not be aware of. of all the details.
Currently, expenses covered by PPP loans are taxable, but Congress expressed in a letter to the IRS that this was not its intention. Lemons’ suspicion is that Congress will have to intervene in an official capacity if the taxation of these expenses is to be rescinded, but he is uncertain if or when that will happen.
“We can start filing income tax returns as early as January. Will Congress act first? I don’t know, “he said.” Maybe I can choose to just file an extension for someone and see how it goes for a few months, because you might see a situation where I file an extension. tax return – I show that this money is taxable for my client – and then Congress takes action, and then guess what I should do? Guess I need to go back and file an amended return.
While some businesses may be able to manage a potential tax on these funds, Lemons said the additional spending could potentially be devastating for businesses that have been hit hard by the pandemic. For this reason, he said it was safer to hire a professional to keep up with the changing world of PPP loans.