As a self-employed person (sole proprietor) does talk of the various stimulus benefits for businesses surrounding the COVID-19 response have you feeling left out? Don’t despair!
As a non-employer without payroll expenses, you qualify for two programs:
- Pandemic Unemployment Assistance benefits
- Payroll Protection Program (yes, even without payroll expenses you qualify with income from your Schedule C!)
Pandemic Unemployment Assistance
The Pandemic Unemployment Assistance (PUA) requires you to apply through the state unemployment system. Both states provide a detailed line-by-line instruction guide and short videos to assist you with preparing the applications. Both states require you file a weekly claim beginning the week after you file the claim (even if not notified that you have been accepted yet).
- Washington – https://esd.wa.gov/unemployment/self-employed
- Requires 2019 tax forms and the 2019 net earnings by quarter.
- Requires that you apply for regular unemployment and get denied before you qualify to apply for PUA.
- Washington unemployment ranges from $188 to $790 per week and covers the period of March 8 – Dec 26, 2020 (may be able to backdate further). The $600 per week federal addition is available from March 29 – July 25, 2020.
- Application filed via online account.
- Oregon – https://govstatus.egov.com/ui-benefits/CARES
- Requires 2019 forms only if you apply for more than the minimum assistance (2019 Sch C net income of $16,480 is minimum base).
- Oregon unemployment ranges from $205 to $648 per week and covers the period of Feb 2 – Dec 26. The $600 per week Federal addition is available from Mar 29 – July 25.
- Application can be filed via email, fax, or mail.
Payroll Protection Program
If you are a sole proprietor with income reported on your 2019 Sch C, you can apply for the Payroll Protection Program (PPP). You apply for a small business loan through a local lender and the 2019 Sch C will be required as part of the application.
The PPP is a loan but if the funds are used for accepted expenses most or all the loan will be forgiven and treated as non-taxable income.
- The loan amount is based on the 2019 Sch C net income. The business must have reported a positive income to qualify and the maximum income used is $100,000.
- The available loan amount is 20.833% of the net income reported on the 2019 Sch C (line 31). This is based on providing 2 ½ months of the reported income and the maximum loan would be $20,833 (example based on $100,000 of net income).
- Loan forgiveness is based on qualified use of the funds during the first eight weeks of the loan as follows:
- An amount equal to eight weeks of the 2019 Sch C income is deemed compensation and forgiven; about 73.8% of the loan or $15,384 in the example.
- The remaining 26.2% of the loan ($5,449 in the example) can be forgiven if used to pay for business interest, rent and utilities. You will need to keep a detailed record of these expenses.
- Any amount remaining after the forgiveness would be treated as a loan with a 1% interest rate, deferred payment schedule and a two-year payment.
The US Chamber of Commerce has provided a guide on applying for a PPP loan that can be found at: https://www.uschamber.com/sites/default/files/023595_comm_corona_virus_smallbiz_loan_final.pdf
Please don’t hesitate to reach out if you have any questions.