A couple of weeks ago, I was debating pulling the trigger on a high-cost course/certification that I had been wanting to tackle for quite a while. I mean, this thing wasn't cheap - it's a five-figure investment for the course and certification.
I decided the time was right and so I went for it!
So I'm talking to a buddy about it and he says "How do you even know if your business can afford something like this? I feel like when it comes time for me to make big spending decision I either get paralyzed and do nothing or I'm just crossing my fingers and hoping it works out."
Believe it or not, as an outsourced CFO and a business coach, questions about "can I afford to do this" or "how much cash do I need in the bank" are probably THE MOST COMMON questions I get asked.
Just like my friend said, most entrepreneurs get stuck in one of two places when it comes to spending decisions:
1. They get paralyzed and don't spend out of fear or
Many of us have been anxiously awaiting for Congress to pass a new stimulus package that would include language around automatic forgiveness of PPP loans. Some of the bills were pushing for loans of less than $150k to be automatically forgiven; other bills had language for loans of less than $50k to be automatically forgiven.
As you probably know, Congress has done nothing and the President recently informed the GOP to cease all discussions related to further stimulus bills.
Today DOES hold good news for businesses that have PPP loans of less than $50,000!
Here's the deets:
On October 8, 2020 the SBA came out with a whole new form and process for businesses who have loans of less than $50,000.
What it isn't: automagical forgiveness
What it is: a super simplified form and new rules that say borrowers who took less than $50k are exempt from reductions in forgiveness based on FTEs or reductions in employee...
Many of you have been looking for some clarity around how the President's recent executive orders related to payroll tax deferrals might impact your businesses.
On August 8, President Donald Trump signed an executive order authorizing a temporary payroll tax deferral. The order defers the withholding of Social Security taxes from employees’ paychecks for the period between September 1, 2020 and December 31, 2020.
The Social Security tax is paid by employees and employers, each pay half of the total 12.4% due for each worker.
Any employee whose pretax wages or compensation during any biweekly pay period that is generally less than $4,000 would be eligible for the deferral.
Under this order, employers would not be obligated to withhold the 6.2% from the employees’ paycheck.
As an example, this means that an employee that earns $50,000 a year would receive an extra $1,033 in total during the four months.
The order also...
One of the most common questions I get asked about the PPP is will we be able to apply for a second round of PPP loans?
It looks like we might be VERY close to getting that answer.
This week, details about a potential second round of PPP loans started to surface along with news about a super-simplified forgiveness process.
On our July 30 Business Money Made Simple Weekly livecast, Carlos and I covered the details of the proposal but here's the tl;dr for you...
The Continuing Small Business Recovery and Paycheck Protection Program Act was introduced by Senators Marco Rubio and Susan Collins in a series of bills that make up the Health, Economic Assistance, Liability Protection, and Schools (HEALS) Act. The legislation is in the early stages but it looks like there's overwhelming bipartisan support - so we're kind of expecting this to get fast tracked into law.
Here are the four big takeaways from the proposed legislation:
I'm SURE you got started in business for the same reasons that I did:
We have a passion for service!
We want to share our gift with those that need it most!
We want to change the freaking world!
Oh yeah...and we also want to get PAID!
There's no shame in that game.
But figuring out the differences between all the ways we can get paid can be tricky and confusing. Salaries, draws, guaranteed payments. Meh. What does it all mean? Is there a difference between this gibberish?
Let's break it down so you can sound like a seasoned pro when you talk about it!
The Owner's Draw
Who it's for: Sole proprietors, side hustlers, and LLCs - but any business owner can do it (trickier if you have partners or investors).
How it works: It couldn't be more straightforward! You literally just do a bank transfer from your biz bank account to your personal bank account. Bam-o. Owner draw complete.
Andrea Sager is a small business attorney shaking up the legal industry with her Legalpreneur plan that provides all-access to her firm for small businesses. After working for a large law firm working with large businesses, Andrea realized her true passion was helping small businesses embrace and protect their business and intellectual property. In just under 2 years, Andrea has become the go-to attorney for entrepreneurs, protecting everything from their brand names to their courses and blog posts. Andrea is also host of the hit podcast, The Legalpreneur.
Connect with Andrea:
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Whew. This was a busy week for the SBA!
EIDL - If you previously wanted to apply for the EIDL grant or loan only to find that they weren't allowing new applications then you're in luck. The SBA has opened the program back up for new applicants! How long will it be open this time? IDK but I suggest you apply sooner than later if you want the grant or loan. Link here.
PPP - On June 5, the Paycheck Protection Flexibility Act of 2020 was signed into law. With the PPFA came more questions for us small business owners...
As anticipated, the SBA and Treasury stepped up and released new details about forgiveness criteria AND they dropped TWO new applications on us (a long form and an EZ form).
We're going live to explain both forms and to answer questions. Register here if you'd like to join us!
Here are SOME of the highlights:
The brand new EZ Application:
BENEFIT: It's easier!
BONUS BENEFIT: If you...
Before we dive into who needs to deal with W9 and 1099 forms, let's first cover what they are:
Form W9, aka the Request for Taxpayer Identification Number and Certification, is a form you have your subcontractors fill out so that you can later report the money you paid to them to the IRS. It's more or less just asking for their name, address, and SSN (or EIN).
By January 31, you should fill out a 1099-MISC form for each subcontractor that you hired during the previous calendar year. You'll use the information on the W9 to fill out the 1099-MISC and then add in how much you paid the contractor. A copy is then sent to the IRS and to the subcontractor.
In short, it's a way for the IRS to know how much subcontractors get paid for their work during the year so the IRS can make sure the subcontractor is paying taxes on their income.
The process is...
You don't have time to research all of the financial things every day.
Let me do that for you!
I'll email you whenever we have important blog updates so you can stay informed.