Within the CARES Act is the Paycheck Protection Program (PPP) Loan, a $350 billion allocation of money to support small businesses. As of April 16th, 2020, the original funding for the PPP ran out. But as of the end of last week – April 23rd, 2020 – both the Senate and the House voted in favor of a second wave of stimulus money to provide additional funding to the SBA. As of earlier this week, the SBA started accepting applications once again.
If you’re interested in applying for the Paycheck Protection Program, the Borrower Application Form can be found here for future reference. If you haven’t applied for the PPP Loan yet and your business needs support, you’ll need to prepare the appropriate forms in order to apply.
Form 940 is the Employer’s Annual Federal Unemployment (FUTA) Tax Return. The purpose of Form 940 is to pay unemployment compensation to unemployed workers. To complete the FUTA, you’ll want to have your Employee Identification Number (EIN) and information (such as the address and name of your business) nearby.
Additionally, you’ll need to have the total payment to all employees to complete the Form 940. An employer can’t charge an employee for a FUTA tax; it can’t be deducted from their paycheck either.
Form 941 is the Employer’s Quarterly Federal Tax Return. The purpose of this form is for an employer to report any withheld federal income tax, Medicare tax, or social security tax. It is important to note that you must submit this Form quarterly.
Form 944 is the Employer’s Annual Federal Tax Return. Like Form 940, having an EIN and other business information is essential to complete his Form.
The difference between this Form and Form 941, other than frequency, is who will have to complete a Form 944. Only business owners who have received a letter from the IRS regarding Form 944 will have to complete it.
Form 1065 is the U.S. Return of Partnership Income. This form reports monetary information (gains, income, losses) from a sole proprietor to those involved in a partnership. A partnership can include those in a group, joint venture, or unincorporated organization.
Form 1099-MISC is used to report awards, prizes, royalties, and other items with previously undisclosed value. To complete this form, you’ll need a TIN (Tax Identification Number), along with the value of any item that you are seeking to report.
You’ll need a Form 4506 within the PPP Loan application to request for a copy of a tax return. This form will require you to provide your name, address, Social Security Number, and a third party’s contact information if needed.
This Form has a $50 fee to submit; if you’ll need more than one type of tax return, then you’ll need to complete and submit another Form 4506.
Form W-3 is the Transmittal of Wage and Tax Statements. Household employers are typically employers that file this Form. Like Forms 940 and 044, an EIN will be required. You should not file this Form on its own.
Schedule C (of Form 1040)
Schedule C of Form 1040 is the Profit or Loss From Business for those involved in Sole Proprietorships. Its purpose is to detail profit or loss from businesses for sole proprietors. To complete this Form, you must have your income, expense costs, the costs of goods that you’ve sold, and other expenses handy. Finally, you’ll need to attach a Schedule C Form to:
- Form 1040
- Form 1040-SR
- Form 1040-NR
- Form 1041
After submitting these Forms, you should have your PPP Loan within days of submitting your application – provided there’s enough funding. There are additional documents, unrelated to the Forms, that will facilitate applying for a PPP Loan.
If you can’t get an application submitted for a PPP loan – or if your business doesn’t qualify – there are local disaster relief resources in many states you can utilize. There also may be other disaster relief options in the CARES Act if your business doesn’t qualify for a PPP loan.
If you’re unsure how to apply for the Payment Protection Program, it could be helpful to work with an accounting professional. Do not hesitate to seek advice from the experts to guide your business through this global crisis.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. 1-800Accountant assumes no liability for actions taken in reliance upon the information contained herein.