Due to the wide media coverage over the availability of PPP Loans, the subsequent funding drought, and the numerous complexities involved in obtaining these loans, many business owners overlooked a different way to recover employee payroll costs if their business had been mandated to shut down by a governing authority or if their revenue had plummeted due to the Covid-19 pandemic. The Employee Retention Credit, under the CARES Act Section 2301, offers a viable and alternative way to recover payroll costs for any type of employer, except state and local government entities, regardless of their size.
Up until now, the PPP Loan proceeds for Schedule C filers was based on the 2019 net profit (referred to as the net earnings from self employment) plus payroll costs if employees worked in the business. The Interim Final Rule (IFR) effective on March 3, 2021 allows a business owner to use either their gross income or net income as the basis to compute its PPP Loan request amount.
As an intermediary, I have many conversations with business owners about how much their business is worth. As these conversations progress, owners realize that it’s not how much they make, it’s how much they can keep that truly matters.
The Small Business Administration (SBA) issued a Procedural Notice on October 2, 2020 which offers business owners and lenders guidance on how Paycheck Protection Program (PPP) Loans are to be handled when a business has a change in ownership.
This post summarizes the notice and includes an Infographic to assist business owners. It includes the following topic:
When does a Business Sale Require the SBA’s Approval Does a Business Sale Require the PPP Lender’s Approval or Notification Required Steps Pre and Post-Closing for PPP Borrowers SBA Timeframe to Approve a Sale or Merger when a PPP Loan Transfers Does the EIDL Grant Impose Additional Steps When Selling a Business
In our PEO series, we’ve talked about what a PEO company is and who is the employer in a PEO relationship. Here, we’ll discuss PEO for nonprofits, and whether or not using a PEO for your nonprofit might make sense.
On June 15, 2020, the Small Business Administration reopened the Economic Injury Disaster Loan (EIDL) applications to businesses with no more than 500 employees and non-profit organizations operating and suffering substantial economic injury as a result of the pandemic in all of the U.S. states, Washington D.C., and territories. Independent Contractors, sole-proprietors (with or without employees), gig workers and freelancers are also eligible to apply for the EIDL.
On June 5, 2020, President Trump signed into law the Paycheck Protection Program Flexibility Act (PPPFA), which is the latest attempt to save struggling businesses from permanent shutdown. The Flexibility Act offers business owners seven significant changes to the original Paycheck Protection Program (PPP) Loan terms. The House and Senate were driven to make these changes due to the lengthy pandemic and the fact that many PPP Loan recipients have not been able to re-open their doors for business during the required eight-week ‘covered period’ set forth in the original PPP Loan Act. The PPP Loan Flexibility Act will make it much easier for business owners to achieve full, or nearly full, loan forgiveness. The new law provides business owners with seven significant changes to the original law and those include:
If you are wondering what a PEO is and whether or not this type of outsourcing may be a good option for your small or medium-sized business, this first article in our series of four posts will help you decide if it’s the right move for you.
In this post, we cover everything you need to know about a PEO company including:
• What’s the meaning of PEO? • PEO payroll • PEO benefits • PEO tax implications, and more.
In this post, I will be addressing how to pay yourself as a business owner and these related subjects:
Business owner compensation overview Why does Reasonable Compensation of business owners matter S-Corp Shareholder Employee compensation C Corporation Shareholder Employee compensation Distribution of Property & Cash to Other Shareholders Taxes Applicable When a Business is Sold to a New S Corp or C Corp owner Partnerships – Compensation, Distributions & Sale Proceeds Tax Consequences Sole Proprietorships Compensation,Distributions & Sale Tax Consequences LLC Member Compensation, Distributions & Sale Tax Consequences
Doing deals can be expensive. A lot of entrepreneurs want to save money by not hiring an advisor or they don’t know when they should make the investment on an advisor. It’s important to understand the roles of the broker and other advisors, especially legal counsel, and to know when to bring in a professional. Here are some milestones in a deal, and how to know when to hire a business advisor.
The method chosen to transfer ownership of a business for sale is one of the most important factors to consider as a business owner. And the reason for its importance is related to the wide differences in the amount of cash received (net of taxes) by the business owner across the various methods of transfer or sale. An ESOP or Employee Stock Ownership Plan is one method of ownership transfer or sale many business owners consider when they decide it’s time to retire. That said, let’s explore the ESOP as a potential method of transfer or sale from both the business owner’s and employees’ perspectives.
Unfortunately, owning a business does not make someone an expert in financing. The lenders are the ones who know the ins and outs of rates and terms and documents. To even out the playing field, it is important for a small business owner to ask the right questions and consider the following factors when deciding whether to refinance:
Check out the website of your favorite fast food chain and you will see most have multiple business entity structures noted in the fine print. For a large business, this practice has been commonplace for decades. It involves layering one form of a business entity either alongside or in conjunction with an operating business.
According to the Fair Labor Standards Act there is a distinct difference between an independent contractor and an employee. This difference lies mainly in the way they are paid and the way taxes are withheld. Understanding the difference between them and times when both are appropriate to use can help business owners determine which is best for their situation.
During the initial negotiations of a business sale, one of the primary issues is whether to structure the sale as an asset sale or a stock sale. Typically the seller and the buyer have opposing preferences in this regard. The seller generally prefers a stock sale; while the buyer generally prefers an asset sale.
As I meet with entrepreneurs, I’m often asked the same question: “When is the best time for me to sell my business?” The answer to this question is not the same for every business owner, for many reasons.
EBITDA is an acronym for Earnings Before Interest Taxes Depreciation and Amortization. EBITDA is often used as a measure of a business’s cash flow. Also it is used frequently in many business valuation formulas, depending on the business’s specific industry.
In part 1 of this series, we discussed the various options to incorporate multiple businesses while keeping each business as a separate entity. But what if you want to keep all of your businesses under one roof?
It takes a special kind of person to start a business: a rare combination of drive, ambition, creativity, tenacity and impatience for action. But even within the community of business experts and entrepreneurs there is a special breed of person known as a “serial entrepreneur.”
Throughout the lifecycle of a business, it is important for a business owner to remain focused on increasing the profitability, competitive advantage and market reach of the business. An entrepreneur typically accomplishes these objectives by (i) reinvesting the profits of the business to increase its workforce, customer base and cash flow and (ii) using business profits (along with other financing) to acquire competing businesses. Such business acquisitions typically serve two purposes by eliminating competitors and increasing the growth rate, product and service offerings, and market share of a business.
