Resources
Check out these videos to learn more about the information below
Ca.gov Covid-19 Resources
**Employers can defer the deposit and payment of the employers share of Social Security taxes along with self-employed individuals who can defer payment of certain self-employment taxes through December 31, 2020
Apply for PPP Forgiveness Directly Through the SBA Portal
- Some good news came out of the SBA this week: those who have borrowed $150,000 or less from the Paycheck Protection Program (PPP) can apply for PPP loan forgiveness directly through an SBA portal.
- This new program (called “direct forgiveness”) is aimed at streamlining and simplifying the PPP forgiveness process, and according to the SBA, will “help rush relief” to the small businesses that need it most.
- The majority of small businesses waiting for PPP forgiveness have debt under $150,000, so this streamlined forgiveness program will have a significant impact on borrowers. Lenders (meaning: banks) are required to opt in to the program by registering at this link.
- Borrowers will be able to apply for direct forgiveness at the SBA portal starting on August 4, 2021.
New Updates to the PPP: The Small Business Owner’s Complete Guide to PPP Round 2
- The deadline for PPP applications has been extended through May 31, 2021, but some experts say funding may run out mid-April.
- Applications for PPP are open through March 31, 2021; find a list of PPP lenders here.
- If your business operates in a low-income area or is owned by a POC, you may want to get your loan through a CDFI or MDI; we’ll give you the details here.
- If you’ve never received a PPP loan, you’re a first-draw borrower. See the application guide for first-draw PPP borrowers here.
- Going for a second-draw PPP? You’ll need to demonstrate a 25 percent revenue reduction. We show you how to do that and how to fill out the second-draw application step-by-step here.
- These new eligible expenses now apply to all PPP loans, including those obtained prior to August 8, 2020.
EIDL 2.0
- New Economic Injury Disaster Loans was signed into law on December 27, 2020, as part of the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act.
- The Targeted EIDL Advance provides businesses located in low-income communities with additional funds to ensure small business continuity, adaptation, and resiliency.
- Applicants may qualify if they: (1) Are located in a low-income community, (2) Can demonstrate more than 30% reduction in revenue during an 8-week period beginning on March 2, 2020, or later and (3) Have 300 or fewer employees.
- To qualify as low-income, you must meet one of the following criteria:
- The % below the poverty line is at least 20% or MORE
- The % of family median income compared to the state is 80% or LESS
- The tract median family income is 80% or LESS compared to the state median family income (make sure you’re comparing 2015 #’s to 2015 # as the chart will include 2015 and 2020 #’s) - Applicants do not need to take any action at this time.
- SBA will reach out to those who qualify.
- SBA will first reach out to EIDL applications that already received a partial EIDL Advance (between $1,000 - $9,000).
New law extends COVID tax credit for employers who keep workers on payroll
- The Internal Revenue Service urges employers to take advantage of the newly-extended employee retention credit, designed to make it easier for businesses that, despite challenges posed by COVID-19, choose to keep their employees on the payroll.
- eligible employers can now claim a refundable tax credit against the employer share of Social Security tax equal to 70% of the qualified wages they pay to employees after December 31, 2020, through June 30, 2021.
- Qualified wages are limited to $10,000 per employee per calendar quarter in 2021.
- Effective January 1, 2021, employers are eligible if they operate a trade or business during January 1, 2021, through June 30, 2021
Claim the Employee Retention Credit for 2020 on the 4th Quarter Form 941
- Under section 206(c) of the Taxpayer Certainty and Disaster Tax Relief Act of 2020, an employer that is eligible for the employee retention credit (ERC) can claim the ERC even if the employer has received a Small Business Interruption Loan under the Paycheck Protection Program (PPP).
- The eligible employer can claim the ERC on any qualified wages that are not counted as payroll costs in obtaining PPP loan forgiveness.
- You can also report on your 4th quarter Form 941 any ERC attributable to health expenses that are qualified wages that you didn't include on your 2nd and/or 3rd quarter Form 941.
Credits for Employers affected by COVID-19
- Employee Retention Credit: A refundable tax credit that is 50% of up to $10,000 in wages paid by an eligible employer
- Paid Sick Leave Credit: Businesses can get a credit for an employee who is unable to work because of COVID-19
PPP - Round 1
- Loans under $150,000 will qualify for using an easier version of the forgiveness application
- You may want to hold off on forgiveness as there may be more guidance 17 days from passage of this bill
- If you think you did not get the full amount for the PPP, you can reapply for round 1
- K-1s for partnerships and LLCs count as part of "payroll costs" and can qualify now. K-1s for S Corps still do not count as "payroll costs."
PPP - Round 2
- Income must drop in at least one of the quarters in 2020 compared to 2019 by 25% in order to qualify
- As long as you are eligible and can adhere to the terms of the loan, you can try to apply for Round 2 even if you didn't get the the PPP Loan in Round 1
- There will be more expenses that qualify for spending with round 2 PPP funds like productivity software, COVID related expenses and more
- Restaurants will get 3.5 times their monthly average payroll costs, versus 2.5
- Payroll costs will be based on 2019 figures or the past 12 months
- Here are some slides with more detailed information
EIDL
- If you did not get the full $10,000 EIDL grant, you can go back and apply for the rest of it
- PPP repayment/forgiveness will not include the EIDL grant as it did before
Tax Savings
- The PPP loan will not be taxed and expenses paid for using PPP funds will now be deductible
- The EIDL grant will no longer be taxed
- Business meals are 100% deductible in 2021 and 2022 as opposed to 50% deductible, this includes to-go and dine-in meals
- You can pay for your employee's student loans ($5,250) and the funds will not be taxable to your employee
Other
- Payroll Credits You may want to reach out to your payroll provider to find out more about these programs.
Retention Credit
- is a refundable tax credit against certain employment taxes equal to 50 percent of the qualified wages an eligible employer pays to employees after March 12, 2020, and before January 1, 2021.
- The employee retention credit is designed to encourage businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.
- Employers, including tax-exempt organizations, are eligible for the credit if they operate a trade or business during calendar year 2020 and experience either: the full or partial suspension of the operation of their trade or business during any calendar quarter because of governmental orders limiting commerce, travel, or group meetings due to COVID-19, and a significant decline in gross receipts.
- If an employer receives a Small Business Interruption Loan under the Paycheck Protection Program, authorized under the CARES Act, then the employer is not eligible for the Employee Retention Credit.
- In order to claim the new Employee Retention Credit, eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their quarterly employment tax returns, which will be Form 941 for most employers, beginning with the second quarter.
- May an Eligible Employer receive both the Employee Retention Credit and a Paycheck Protection Program (PPP) loan that is authorized under the CARES Act? No. An Eligible Employer may not receive the Employee Retention Credit if the Eligible Employer receives a PPP loan that is authorized under the CARES Act. An Eligible Employer that receives a PPP loan should not claim Employee Retention Credits.
https://www.irs.gov/newsroom/covid-19-related-employee-retention-credits-general-information-faqs
California Relief Grant
- California and the federal government are providing broad assistance to small businesses and employers impacted by COVID-19.
- Providing capital to the California Rebuilding Fund to support small business loans
- $50 million in state funding for the Small Business Disaster Relief Loan Guarantee Program and $50 million for the Small Business Loan Guarantee Program via IBank to provide loans to underserved small businesses
- Authorization for local governments to halt evictions for commercial renters
Families First Act
- requires certain employers to provide employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19.
- All employees of covered employers are eligible for two weeks of paid sick time for specified reasons related to COVID-19.
- Employees employed for at least 30 days are eligible for up to an additional 10 weeks of paid family leave to care for a child under certain circumstances related to COVID-19.
Main Street Small Business Tax Credits
- Senate Bill 1447 was enacted on September 9, 2020, and allows a small business hiring credit against California state income taxes or sales and use taxes to certain California qualified small business employers that receive a tentative credit reservation.
- On December 1, 2020, the California Department of Tax and Fee Administration (CDTFA) will begin accepting applications for tentative small business hiring credit reservation amounts through an online reservation system.
- Qualified small business employers must apply with the CDTFA for a credit reservation.
- This credit only applies to California small businesses that meet the following qualifications:
-Employed 100 or fewer employees as of December 31, 2019, and
-Suffered a 50 percent decrease or more in income tax gross receipts (generally, all income less returns and allowances), when comparing second quarter 2020 to second quarter 2019.
News Article (As of 12/01/2020)
Increase Funding for the California Rebuilding Fund by $12.5 million.
- Available $25 million to help impacted small businesses rebuild from the economic crisis and keep local economies strong.
- An increase of $12.5 million would allow the Fund to be fully capitalized.
$500 Million for New COVID Relief Grant for Small Business (12.28.2020)
- for small businesses that have been impacted by COVID and the health and safety restrictions.
- Funds would be awarded in amounts up to $25,000 to underserved micro and small businesses throughout the state by early 2021.
- Non-profits would also be eligible for these grants.
- Applications open now through Fri 1/8, 11:59 p.m. PT
Main Street Small Business Tax Credit
- On December 1, 2020, the California Department of Tax and Fee Administration (CDTFA) will begin accepting applications for tentative small business hiring credit reservation amounts through an online reservation system.
- Qualified small business employers must apply with the CDTFA for a credit reservation.
- Only applies to California small businesses that meet the following qualifications:
- Employed 100 or fewer employees as of December 31, 2019, and
- Suffered a 50 percent decrease or more in income tax gross receipts (generally, all income less returns and allowances), when comparing second quarter 2020 to second quarter 2019.
Public Health Orders
- All persons and businesses in Santa Clara County must comply with the county order
- Shelter in place remains in effect
Immediate Assistance for Businesses Impacted by COVID-19
- California will provide $500 million in new COVID-19 Relief Grant funding for small businesses.
- The temporary tax relief entails an automatic three-month income tax extension for taxpayers filing less than $1 million in sales tax.
Task Force on Business and Jobs Recovery Report
- $25 million for the Fund to help impacted small businesses with loans up to $100,000 to keep their doors open and local economies strong.
SBA Information
Economic Injury Disaster Loans (EIDLs)
- All small businesses affected by COVID-19 can apply
- EIDLs can be approved by the SBA solely on an applicants credit score
- Borrowers can receive a $10,000 emergency grant cash advance that can be forgiven if spent on paid leave, maintaining payroll, mortgage or lease payments or repaying obligations that cannot be met due to revenue losses, this portion of the loan is forgivable
- These loans do need to be re payed, but have long term re payment options up to 30 years
SBA Economic Injury Disaster Loans (EIDLs)
Paycheck Protection Program (PPP) **PPP new deadline to apply is 08/08/20
- To qualify for loan forgiveness, proceeds bust be used by whichever of these occurs first (1) within 24 weeks from the date when the loan was funded, or (2) by December 31, 2020
- Borrowers can receive two and a half times their monthly payroll costs incurred during the year before the date the loan is made
- In order for PPP loan forgiveness 60% of loan must be spent on payroll costs
- Employers can now defer the deposit and payment of the employers share of social security tax, even if the PPP loan is forgiven
COVID-19 Small Business Guide (as of 03/27/20)
SBA Payment Protection Program
How to Calculate Full-Time Equivalent (FTE) Employee Number
U.S. Department of the Treasury: CARES Act
California is not currently conforming, business may be taxed on loans that are forgiven
FTB California Conformity to Federal Law
Unemployment Work Share Program for Employer
- UI work share program provides employers with payroll assistance in order to keep employees on full time w/ their normal salary instead of reducing hours or layoffs
- UI program will make up the difference in pay if employer can't pay due to reduced production related to COVID-19
- At least 10 percent of the employer's regular workforce or a unit of the workforce, and a minimum of two employees, must be affected by a reduction in hours and wages
- Hours and wages must be reduced by at least 10 percent and not exceed 60 percent
Pandemic Unemployment Assistance (PUA)
- PUA is program that temporarily expands Unemployment Insurance eligibility to self-employed workers
- PUA provides benefits for 39 weeks, to qualifying individuals
- As of the first week of April the program is still being setup by the US Department of Labor
News Article (as of 04/07/20)
Social Security Tax Deferral -Employees
- Employees can Opt-In to defer their Social Security Taxes between 09/01/20 and 12/31/20
- As of now employees WILL have to pay back the amount that is deferred in 2021 - this could change pending further guidance from congress
News Article (as of 08/10/20)
Social Security Tax Deferral -Employers
- Employers can defer paying their share of Social Security tax
- 50% of the deferred amount must be paid by December 31, 2021 and the remaining 50% is due by December 31, 2022
News Article (as of 04/06/20)
IRS Stimulus bill - businesses
- Employers are eligible for a credit based on 50% of qualified wages paid up to $10k (for "disrupted" businesses that saw a 50% drop in revenue)
- Employers can defer the 6.2% Social Security payroll tax
Families First Coronavirus Response Act (FFCRA)
- The FFCRA gives businesses with fewer than 500 employees funds to provide those employees with paid sick and family leave for reasons related to COVID-19
- Full time employees are eligible for up to 80 hours or leave, part time employees are eligible for the number of hours of leave the employee is normally scheduled to work
- This applies to the time periods of April 1, 2020 and ending December 31, 2020 when an employee is unable to work
FFCRA: Employer Paid Leave Requirements
California Department of Tax and Fees Administration (CDTFA) offers relief to businesses that report Sales Tax
- Taxpayers who file a return less than $1 Million dollars will have an additional 3 months to file, between now and July 31,2020 (as of 04/30/20)
- If you qualify for this extension it is automatic and you do not need to apply
- Businesses can request an extension for filing a return
- Effective April 2, 2020 small business taxpayers, those with less than $5 million in taxable annual sales can take advantage of a 12-month, interest-free, payment plan for up to $50,000 of sales and use tax liability
- Small business relief payment plan: relief for sales and use tax due on returns between 03/01/20 and 07/31/20
COVID-19 Relief Information (as of 04/02/20)
CDTFA State of Emergency
Business Property Statement (571-L Form)
- Due date is 04/01/20, but there is no late fee until after 05/07/20
Assessors Calendar of Important Dates