The historic Economic Stimulus Package passed, and with it, a lot of questions are being asked. CPA Steve Barnes recently joined us on Lenard Team Connections us to discuss how the package will impact businesses and individuals. 

Can you start by sharing exactly what the stimulus package is, and what it means for the average American?

So the stimulus package is meant to keep the economy going while we have our current shutdown of various businesses. It is going to provide individuals with stimulus money, businesses with Small Business Administration (SBA) assistance, and unemployment assistance.

Individuals

Every single individual with an income under $75,000 or if they're married and they have income under $150,000, will get a stimulus check for $1,200 dollars each. If your income is over those dollar amounts, you get a smaller amount until it's phased out. Some people may will not get it at all, because their income is too high. You do get $500 per child if the child is 16 or under. 

This is in advance of a 2020 credit. If you do not get the credit right now or there's some kind of problem, you will get it when you file your 2020 tax return. 

Small Businesses

The second piece, is for small businesses. There are a couple of different avenues or paths for the small business owner to take in order to continue on. 

The first one is to go to sba.gov where there's an application for small businesses to apply for a loan. The application is pretty straightforward, but it is a loan meaning you'll have to pay it back. 

The newest one, the one that comes out soon is Payroll Protection. They will take an average and give you two and a half times whatever your payroll is. At the end of eight weeks you reconcile out, there's a good chance - assuming you kept your employees -  that the loan will be forgiven. 

That's very powerful that you may get this loan and have it forgiven. The purpose of the Payroll Protection is to keep employees on the books. They want you to continue paying the payroll. If you do that, at the end of it, you will get the loan forgiven. 

Unemployment

One last thing, if you are a self-employed individual who does not have employees, you are eligible to go for unemployment. 

What if you're a small business owner, and you have an employee who makes over $100,000 per year. Are you able to count their income? 

For the Payroll Protection, the annual income is capped at $100,000. So, when you're calculating your payroll to get your 2.5%, you have to limit salaries to $100,000. You can include $100,000 of their income, not eliminate them entirely. 

For this unemployment program that has been extended through the CARES act, what does an individual need to be able to provide?

They're going to have to provide either a copy of a tax return or bank statements, or something from their employer showing how much they've received so far this year on 1099. You'll have to be able to substantiate the dollar amount for them to provide you with that unemployment. 

What is the ETA for funding? What is the deadline to sign up and do we have any idea when people might start receiving their first checks?

Right now they haven't put out a timetable, except for the stimulus checks that are going to the individuals, those are supposed to be out within three weeks. As far as the SBA loans go there has been no timeframe given for. I'm sure they're inundated so that as fast as they process them, they'll get the loans out.

More information is becoming available every day. Make sure you reach out to your CPA to determine what actions you need to take.