To support family offices in today’s challenging times, Family Office Networks spoke with Roland C. Manuel, EA who has been president and CEO of Palm Beach Tax Group since 2014. He offered insights on navigating the CARES Act for family owned and other businesses.
Palm Beach Tax Group is a third-generation family established firm that has evolved over 50 years into a Proactive Tax & Financial Planning Agency. This integrated approach is designed to meet the tax, accounting and financial needs of multi-family offices, business owners and taxpayers alike in order to create a sustainable and successful business and lifestyle. The firm’s goal is to advise clients on what a business needs to better run their organization and build wealth along the way. Keeping clients’ tax aware is a key component of what differentiates Palm Beach Tax Group from the competition and the firm is proud to have established a legacy of integrity based on its commitment to being results driven, trustworthy and reliable.
In addition to the government relief efforts, you should position yourself and your business to sustain the crisis at all cost. Take maximum advantage of the recovery and opportunities available.
Q. The CARES Act excludes from the definition of payroll costs any employee compensation in excess of an annual salary of $100,000. Does that exclusion apply to all employee benefits of monetary value?
No. The exclusion of compensation in excess of $100,000 annually applies:
- only to cash compensation, not to non-cash benefits, including:
- employer contributions to defined-benefit or defined-contribution retirement plans;
- payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums; and
- payment of state and local taxes assessed on compensation of employees.
Q. What if an eligible borrower contracts with a third-party payer such as a payroll provider or a Professional Employer Organization (PEO) to process payroll and report payroll taxes?
In these cases, payroll documentation provided by the payroll provider that indicates the amount
of wages and payroll taxes reported to the IRS by the payroll provider for the borrower’s employees will be considered acceptable PPP loan payroll documentation. In addition, employees of the eligible borrower will not be considered employees of the eligible borrower’s payroll provider or PEO.
Q. What time period should borrowers use to determine their number of employees and payroll costs to calculate their maximum loan amounts?
In general, borrowers can calculate their aggregate payroll costs using data either from the previous 12 months or from calendar year 2019. For seasonal businesses, the applicant may use average monthly payroll for the period between February 15, 2019, or March 1, 2019, and June 30, 2019. An applicant that was not in business from February 15, 2019 to June 30, 2019 may use the average monthly payroll costs for the period January 1, 2020 through February 29, 2020.
Q. The amount of forgiveness of a PPP loan depends on the borrower’s payroll costs over an eight-week period; when does that eight-week period begin?
The eight-week period begins on the date the lender makes the first disbursement of the PPP loan to the borrower. The lender must make the first disbursement of the loan no later than ten calendar days from the date of loan approval.
Q. How do the $10 million cap and affiliation rules work for franchises?
Under the CARES Act, any single business entity that is assigned a NAICS code beginning with 72 (including hotels and restaurants) and that employs not more than 500 employees per physical location is eligible to receive a PPP loan.
Q. Do businesses owned by large companies with adequate sources of liquidity to support the business’s ongoing operations qualify for a PPP loan?
In addition to reviewing applicable affiliation rules to determine eligibility, all borrowers must assess their economic need for a PPP loan under the standard established by the CARES Act and the PPP regulations at the time of the loan application.
For information, call (561) 655-5777, visit PalmBeachTaxGroup.com, or email [email protected]PalmBeachTaxGroup.com
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