You can use the PPP funds to pay yourself through what’s called owner compensation share or proprietor costs. This is to compensate you for a loss of business income. To take the full amount of owner compensation share, you will have to use a covered period of at least 11 weeks weeks.
People also ask, how can I spend my PPP loan?
Generally, PPP funds can be used for four purposes: payroll, mortgage interest, rent/lease, and utilities. Payroll should be the major use of the loan.
Just so, how much can owners pay themselves with PPP loan?
For example, the amount of loan forgiveness for owner-employees and self-employed individuals’ payroll compensation is capped at eight weeks’ worth (8/52) of 2019 or 2020 compensation (i.e., approximately 15.38% of 2019 or 2020 compensation) or $15,385 per individual, whichever is less, in total across all businesses.
Is self-employed PPP taxable?
However, there is some good news for self-employed individuals, who are taxed on business profit. The forgiven amount of the PPP loan is not subject to income tax (or technically a reduction of costs eligible to be expensed for tax purposes) as it was never claimed as a business expense.
What can I spend my PPP loan on as an independent contractor?
Use at least 60% of your loan to cover “payroll costs,” which for self-employed workers is essentially their salaries (including wages, commission, and tips), up to $100,000 on an annualized basis. Use 40% or less of your loan on the remaining eligible expenses: rent, utilities, and/or mortgage interest.
What can sole proprietors use the PPP loan for?
Forty percent or less of the loan can go towards other eligible expenses, including business mortgage interest payments, business rent or lease payments, business utility payments, covered operations expenditures, covered property damage costs, covered supplier costs and covered worker protection expenditures.