In a letter written to Congress by the NCCPAP it states that businesses with loans under $150,000 were often those hit hardest by the pandemic, and at this time, might not be able to afford professional help to complete complicated forgiveness applications. The group suggested these PPP loans should be automatically forgiven.

“We have spoken with many of these business owners and they are intimidated by merely glancing at the current forgiveness application,” they wrote. “This would leave them open to a miscalculation of the amount of forgiveness for which they would be entitled.”

“In addition, as CPA professionals, we speak with bank management on a regular basis,” they continued. “They have intimated that they simply do not have the capability to properly review the barrage of forgiveness applications that they will receive. If all amounts under $150,000 were to be automatically forgiven, they would have a better opportunity to properly scrutinize and review the larger PPP program loans that were issued.” 

NCCPAP also expressed its support for S.3612, the Small Business Protection Act of 2020, a bill introduced by Sen. John Cornyn, R-Texas, which would clarify that business expenses paid for with PPP funds that are forgiven are deductible.

The IRS has interpreted, correctly, that a section of the CARES Act that created the PPP which says that any loans received under the program and forgiven “shall be excluded from gross income” to mean that business expenses paid for with those funds should also be excluded from business deductions for income tax purposes. To allow an expense deduction when using tax-free PPP funds would be a double tax benefit. 

This ruling is in direct contrast to the intent of Congress,” NCCPAP wrote, and urged Congress to pass S. 3612, or incorporate a similar provision into future legislation.

The PPP landscape has been ever-changing, which has added to the uncertainty of an already complicated process. However, in this case, the NCCPAP’s great idea may come to the rescue, so thank you NCCPAP! The NCCPAP’s proactive advocacy on behalf of the small business community in these difficult and uncertain times exemplifies the quality, contributions, and concerns our profession provides to the financial and economic wellbeing of our country and individual clientele. We are still all hoping for the best, so keep your fingers crossed!

For more information please visit: https://www.accountingtoday.com/news/nccpap-calls-for-automatic-forgiveness-for-smaller-ppp-loans 

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For more information please visit: https://www.kiplinger.com/store/letter-promo/index.html

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On April 30, the IRS issued a notice that said small businesses couldn’t deduct these expenses and that no tax deduction is allowed for an expense that’s otherwise deductible if the payment of the expense results in forgiveness of a PPP-covered loan.

On May 6, lawmakers introduced a bill that would effectively nullify the IRS notice by introducing

The Small Business Expense Protection Act, which would clarify the PPP so that small businesses could deduct the expenses they have paid with a forgiven PPP loan from their taxes. Under the bill, the receipt and forgiveness of coronavirus assistance through the PPP would not affect the deductibility of ordinary business expenses.

Senators noted that the goal of the PPP was to maximize small businesses’ ability to maintain liquidity, retain their employees, and recover from the pandemic as soon as possible.

What seemed like a PPP walk in the park is turning into a back alley brawl. IRS said it is going to audit every PPP Loan of $2M or more and threaten to press charges if they find misappropriated funds, and now issuing a notice eliminating deductions. Sounds kind of anti-stimulus. And if your loan is less $2M, don’t be too relieved. A loan less than $2M doesn’t mean you won’t get audited, just not “every” loan will get audited. 

Here’s our Best Practices recommendation: this is not business as usual, get things situated so that you can prove everything was done properly. Guaranteed, the IRS will do things “By the Book”, so dot your I’s and cross your t’s.

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Approved Uses for the PPP Loan Funds

As you get ready to spend your newfound funds, it’s crucial that you utilize them exclusively for approved uses. To make sure you don’t accidentally misuse the money from your PPP loan, we’ve listed out the core spending options for your business:

We’ve listed some of the core spending options for your business:

• Payroll Costs
  • Salary, wages, commission, or similar forms of compensation
  • Paid vacation, parental, family, medical, or sick leave
  • Allowance for dismissal or separation
  • Healthcare benefits (including insurance premiums)
  • Retirement benefits
  • State or local taxes assessed on the compensation of employees
• Other Business Costs
  • Interest, but not principal on your mortgage 
  • Rent
  • Utilities
  • Interest on any other business debt that was incurred before February 15, 2020

Despite being lumped into only 2 categories, the ways you can safely spend your Paycheck Protection Program (PPP) loan are incredibly diverse, so it’s important to keep them in order. Also if you received any Economic Injury Disaster Loans (EIDL) and/or related Emergency Economic Injury Grant (EEIG), you need to be aware that any crossover in funds could result in you losing out on the chance for total loan forgiveness. As scary as that scenario sounds, there’s a pretty spectacular solution.

Ferrone & Associates PPP Bookkeeping Program

At Ferrone & Associates CPAs, we can assist you with tracking these expenses with the setup and aid of our  Online PPP Bookkeeping Program. PPP bookkeeping is the online tool we use to track all of your expenses and stay on top of your PPP loan use. Packed with all manner of exciting features, this service can help your business grow while keeping an eye on your operations. And the best part is—it’s completely affordable.

An impressive expense tracking system is built right into the program. 

Once you’ve joined our program, we will assist you in linking the bank account and credit cards for your business, and all of your expenses and income can be automatically categorized. These incredible features mean every time you use the funds from your Paycheck Protection Program (PPP) loan, you know exactly where it’s going, how it’s being used, and how to report on all the details when the time comes. No stress, just easy bookkeeping, that we do for you. 

The Financial Features Your Business Needs

The practical applications of this robust bookkeeping system go way beyond monitoring expenses as they relate to the PPP. There’s a laundry list of incredible features designed to make your life easier. Ferrone & Associates CPAs can:

1. Put Your Business on the Fast Track to Future Capital Any business owner who has applied for loans, grants, or any other form of financial aid can attest to the red-tape rigamarole that goes along with it. When other small businesses scramble to organize receipts, bills, and other expense details, Ferrone & Associates CPAs can set you up for success. Using our PPP Bookkeeping Program, we can keep and categorize your information with automatic expense tracking and financial reports, which can help you satisfy the requirements of the government or other lenders, as well as identify areas of operational improvement that will help reduce stress during crises like the coronavirus (COVID-19) pandemic.

2. Help You Manage Cash Flow PPP Bookkeeping offers highly customizable invoices. These invoices allow you to plug in your logo, business, and billing information, add sales taxes based on the location of your customers, and more. You can also send individualized quotes and estimates that easily convert into invoices with one click. You can also add discounts, handle refunds, and see where your invoices sit, whether they are paid, unpaid, or overdue.  At Ferrone & Associates, CPAs, we are highly experienced in implementing and aiding you in the customization of your invoices.

3. Give You a Personal Business Bookkeeper For business owners who don’t have the inclination, knowledge, experience, or even the time to mess with bookkeeping, using Ferrone & Associates CPAs will give you access to a real-life, professional CPA. Starting at only $149 per month, you can sync your expenses and offload the hassle to an expert. We can handle the monthly closing of your books, help with your taxes, and be available to answer all of your questions by email or text.

The Right Call for Your Business

Whether it’s to track the relevant expenses for your PPP loan, EIDL, and EEIG or to make sure your customers are using your high-quality invoices to pay you on time, PPP Bookkeeping is an excellent addition to your daily small business setup. Whether you use the basic bookkeeping version or upgrade to other services that we provide, Ferrone & Associates CPAs is capable of taking your business to the next level. Now’s the time to join in, you’ll be glad you did.  

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