PPP Payroll Allocation

You can't reduce headcount and you can't reduce pay by more than a percentage.

You can pay a different person. Otherwise, forgiveness would be tough.

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Also, you have until 6/30/2020 to accomplish this.

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I was told yesterday I had 8 weeks from the date you were funded...so if I was funded yesterday I have until June 21st

We received funding in the first round of PPP. We are keeping a running total of our payroll and other forgivable costs (rent, utilites).

Once we get to week 6 or so if we look like we won't spend the full allocation, we will look at paying commissions/bonuses etc. to our employees as a form of "hazard pay" in order to maximize our use of the forgivable loan.

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Commission is a yes. Bonuses are a gray (ish) area

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That's what we are seeing as well. We are pretty conservative financially so we will probably wind up bumping annual commissions up to fall within our 8 weeks and send the rest of the $$$ back to the bank. It's tempting to get really creative with it, but we are doing okay and would rather not open the door for a never-ending stream of audits.

I talked to our CPA at length about this yesterday and all the comments in here are correct. If your FTE is 10, you may want to hire 2-3 extra people for the next 8 weeks just to make sure your head count is above your baseline. Also, make sure that you understand what non-payroll you're allowed to pay. Everyone knows rent and utilities but there are also approved expenditures for transportation and interest payments. The transportation has not been clarified yet, but my assumption would be that any gas that is used for company vehicles is an approved expense.

We are also keeping a spreadsheet of all expenditures over the next 8 weeks that would apply and will be paying out commissions to some of our people to ensure we come as close to our loan as possible.

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You can pay a different person. Otherwise, forgiveness would be tough.

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I'm not sure this is correct. The language I'm looking at says "for any employee who did not earn during any period in 2019 wages at an annualized rate more than $100,000, the amount of any reduction in wages that is greater than 25% compared to their most recent full quarter."

I have been under the assumption that any employee that was employed in 2019 needs to be paid atleast 75% of their 2020 first quarter wages otherwise the forgiveness is reduced dollar for dollar. The question then becomes what to do with the employees who worked in 2019, but quit for some other reason other then COVID?

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And group health insurance premiums (which fall under payroll).

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We’re also sending a portion to our SEP accounts.

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This is false.
FTE has to match, you don't have to pay someone that worked for you last year but is no longer there. That would be foolish.

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Ok I'm sure that's how the final rules are going to come out, but it doesn't seem to be that way right now. But the bigger issue is that I don't think you can just hire and pay any random employee. It's going to look at each individual employee's salary in the prior quarter as a comparison. So anyone's salary that drops more then 25% will reduce the forgiveness amount.

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I'm not sure this is correct. The language I'm looking at says "for any employee who did not earn during any period in 2019 wages at an annualized rate more than $100,000, the amount of any reduction in wages that is greater than 25% compared to their most recent full quarter."

I have been under the assumption that any employee that was employed in 2019 needs to be paid atleast 75% of their 2020 first quarter wages otherwise the forgiveness is reduced dollar for dollar. The question then becomes what to do with the employees who worked in 2019, but quit for some other reason other then COVID?

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Let me clarify.

You need to pay your employees you currently have working for you.

If you paid them in 2019 and they are working for you in 2020 you need to pay them.

If an employee who worked for you in 2019 decides not to come back to work, and you hire a new employee to take that employee's place, you need to pay the new employee.