Payroll Protection: Are You On Salary?
Does your business compensate you with a salary or pass-through income - that is, you take money out whenever you wish? If a salary, you're a great candidate for the new Payroll Protection loans now available through SBA lenders. If pass-thru, you're not eligible. Which leads to the question:
Has a tax or legal professional recommended an S-Corp structure for your business, but you were reluctant to take the step? The Payroll Protection loans are the perfect reason why you should have taken the step. It is available to protect payments to salaried and contract workers, but as the owner of the business - not to you. A substantial benefit of an S-corp is your ability to take a regular salary, thereby avoiding some of the payroll taxes. But now there's a huge new benefit: If you are taking salary from your S-corp, you are eligible to get a payroll protection for your own salary as well as your employees, and the loan may be forgiven as long as you continue paying your employees (you). If you're a sole proprietor taking pass-thru income, that opportunity does not exist for you. If you want to know how to change to an S-corp structure, and the full tax implications, I can help with that.