Can you reduce employee pay with PPP?

If a business’s headcount and/or employee salary or wages were reduced during their covered period, that reduction might affect the business’s Paycheck Protection Program (PPP) forgiveness. Generally, reducing headcount or salary reduces forgiveness, but there are several exemptions from this reduction.

How much can I pay my employees with PPP?

Payroll costs under the PPP program include: Salary, wages, commissions, tips, bonuses and hazard pay (capped at $100,000 on an annualized basis for each employee)

Can you work while receiving PPP?

The amount you receive from the PPP won’t be impacted by working and earning income—you’ll still be able to receive 2.5 times your monthly payroll cost. But if you are receiving unemployment benefits and are still partially working, your benefits may be reduced.

What is an owner-employee for PPP forgiveness?

The employee cash compensation of a C corporation owner-employee, defined as an owner who is also an employee (including when the owner is the only employee), is eligible for loan forgiveness up to the amount of 2.5/12 of his or her 2019 or 2020 employee cash compensation, with cash compensation defined as it is for …

What is included in average monthly payroll for PPP?

If your self-employment income for 2019 or 2020 is above $100,000, the maximum amount you can include for yourself is $100,000. This would give you an average monthly payroll of $8,333.33, assuming you have no W2 employees. Member draws do not factor into this calculation at all.

Is PPP taxable income for employers?

A related question is, is PPP taxable income for employees? According to the SBA, the answer is yes; employees receive their standard paychecks with federal taxes withheld as usual. For the employer’s side, however, the payroll cost is counted as the full amount, pre-tax.

How does PPP loan affect unemployment?

Once you do report your PPP loan as income, your unemployment benefits may stop. Your state may ask you to repay some or all the unemployment funds for the period where you were receiving both. After your PPP coverage ends, you can resume collecting unemployment benefits, if you still require it.

Are employer payroll taxes included in PPP forgiveness?

No, the annualized $100,000 cap applies only to employee gross pay. Employer-paid state and local taxes, health care benefits and retirement benefits are uncapped.