In addition to the permitted use of Paycheck Protection Program (PPP) funds, a sole proprietor may use PPP funds for owner compensation replacement per the following guidelines below:
Owner compensation replacement for a sole proprietor is defined as 2019 Schedule C net profit (limited to $100,000).
Steps to calculate the loan forgiveness amount:
- 2019 Sch C net profit (up to $100,000).
- Multiply amount calculated in step 1 by 8/52 to represent 8 weeks of profit.
- Reduce amount calculated in step 2 by any qualified sick or family leave amount for which a credit was claimed under the Families First Coronavirus Response Act.
Additional guidance from the SBA will be provided for self-employed individuals who were in business on 2/15/20 but were not in business in 2019.
Contact Our Team:
Tene Thomas, CPA
Tax and Small Business