Artist Questions
We have gotten some questions in advance and we have consolidated them here for answering.
These answers are as we understand the question and the information to answer it on April 6th at 1:00-2:00PM when this Podcast took place live.
Q: Do the art festivals or shows that are the venue for artists qualify for the PPP and
EIDL & its A
dvance too?
A:
Yes, whether they are non-profits (most are) or for-profit they qualify for this relief. There is some question about the government related shows (City/County) but they probably have other sources in the CARES Act.
Q
.
What is the quickest way to get funds?
A. This depends on your situation. Are you doing EIDL or PPP or Unemployment. Then all of those depend on speed that agencies and banks can get their systems up-to-speed.
Q:
Can I apply for more than 1 benefit?
A:
Yes, you can apply for PPP and EIDL but see interaction aspects in the
Click Here
Links in the Q & A above. It is all about timing to get maximum benefits.
Q.
Will we have to repay the money offered by the CARES Act? If so, will it "cost" us more than we have been given, therefore putting us more in debt, just later down the road?
A.
If you follow the rules and use the money as required then then both the EIDL and PPP are forgiveable and will not need to be repaid.
Q.
Can we apply to receive benefits from both PPP and EIDL? What are the advantages and disadvantages of doing this?
A.
Yes, there are some interactions between them that eliminate the use of the dollars to pay the same expenses - only fair. See the links in those sections above. And/or talk to your accountant and banker.
Q.
For PPP are
covered expenses the same for the self employed? Will there be a separate app for the self employed? Will we get funds instantly like the other companies that applied on April 3?
A.
Yes, the self-employed are treated the same as all other small businesses (your local hair salon, restaurant, etc.). The applications are the same - artists are small businesses. Funds will be availables as banks and SBA get geared up - the April 3 didn't help 99% of those businesses - the system will be slow.
Q.
After 8 weeks for the PPP benefits do you apply for unemployment or hopefully have an extension of the program approved by congress?
A.
Yes, that is a good way to "stack" your benefits. But it all depends on your individual situation. Do the math on your business and decide what to do when.
Q.
What documentation is needed for a self employed, sole proprietor like myself, to provide in order to be approved for the PPP loans and to prove how we used the money.
A.
For approval of PPP you need your 2018 and/or 2019 tax return. Schedule C or
S-Corp or C-Corp. If you don't have them then P&L with bank record back up may work but tax returns will be much easier and faster.
Q.
Is there a lending cap on the PPP funding. Will there be enough $ left for the self employed? Why is the self employed having to wait until April 10?
A.
$349 billion in forgivable PPP loans is in the CARES Act. The money may not be enough for all applicatio
ns so get your application in as soon a your bank is ready
. Don't wait for the April 10 date as the definition of "small business" vs "self employed" is fuzzy at best. The worst that can happen if you apply early is that they won't process it until April 10 batches go to processing. And the best case is you get processed faster.
Q
.
How do I compute payroll expense?
A.
This depends on your business structure. For easy-to-read details summary
Click Here.
In summary - -
- If you report your business on Schedule C of your personal tax return then - - Your salary will be determined by your net profit. If you were operational in 2019 and have filed your 2019 taxes, this will be reported on line 31 of your Schedule C. If you have yet to file your 2019 taxes, but have bookkeeping for your business through 2019, this will be the Net Profit line on your Income Statement. Your monthly average payroll expense will be your annual net profit divided by 12. If your annual net profit is over $100,000, you may only claim up to $100,000 divided by 12. If your income is significantly "seasonal" you may be better served if you have Net Profit computed by the month - talk to you accountant or banker.
- Business structured as a S-Corp or a C-Corp. must use payroll to pay their owners. Why? Because the corporation is taxed separately from the individual. If you own a corporation and have not been paying yourself a salary through payroll, you will not have a salary covered through the PPP. This is because distributions or dividends from a corporation are not considered to be a salary or self-employment income.
- Specifics for if you own more than 1 business or report income with your spouse - Click Here all the details.
Q. I work for a company and receive a W-2. My spouse is a self employed artist. We file a joint tax return. Can we file for PPP & EIDL benefits?
A. Yes, your spouse is self employed and qualifies.
Q. My spouse and I are both self employed artists and have 2 Schedule Cs. Do we each file for PPP and EIDL?
A. Yes, you are each eligible for these benefits. Do your individual applications based on each person's situation.
Q
.
When this says mortgage payments, does it include our residential mortgage interest if we use the “office in home” deduction and if so, will it be prorated by the same percentage as our office in home deduction?
A.
It is very unclear that a prorated portion of your home mortgage would be a valid use.
Talk to your bank or accountant.
Q.
if you have very small profits declared for your business are you still eligible for any of the programs? I’m making virtually no money on my taxes. Would I qualify for any help from these programs?
A
.
Amount for PPP are Net Profit based - the information on your 2018 and/or 2019 Schedule C. Apply for EIDL.
Q
.
My wife and I are set up as a Partnership LLC. What are we eligible for?
A.
An LLC or LLP should be treated like sole proprietors and other self employed. Any “payroll” benefits should be calculated based on Net Profit subject to self employment tax.
Q. Are PPP and EIDL taxable income?
A. No
Q.
How does the unemployment work? I filled it out and it said I don’t qualify because I don’t fit into having verified income from a business that pays into unemployment.
A.
You need to wait for your State to get their online system updated to include self employed. Most States are not there yet - they need to add the space for you to add self employed information. Keep an eye on their website and apply when they are ready. In the meantime look at PPP option.
Q.
I hear Square and Quickbooks may be processing PPP or EIDL. What is the best way to find out when these eligible lenders are open to accept applicants?
A. Google. And we expect that Quickbooks and Square and other sources that get approved to do this will contact you by email. At the moment it appears that they will only be providing these options to current customers.
Q
.
I work full-time at another job but I rely on my pottery to pay some bills. My pottery is a serious business 6-8 shows a year -- I was on the way to ACC Atlanta when I got a call it was cancelled. Another spring show has already been cancelled. Am I eligible to apply for any funding through this legislation?
A.
Yes, if you are "full-time" or "part-time" artist then you qualify for these programs. Hopefully you have been reporting your artist business on Schedule C or S-Corp or C-Corp - that is how you will prove your business to qualify for benefits.
Q.
What if you are a part time artist? I only do shows in the Spring, Fall & Winter - but not every weekend? is there something for me?
A.
Yes, if you are "full-time" or "part-time" artist then you qualify for these programs. Hopefully you have been reporting your artist business on Schedule C or S-Corp or C-Corp - that is how you will prove your business to qualify for benefits.
Q.
With respect to unemployment. Many of us are self-employed, can we claim?
A.
Yes, the CARES Act made self-employed people qualified for unemployment. Your State should have a provision for that soon on their website filing pages. They are all scrambling to get that setup.
Q.
Can booth fees be considered a lease - they are a significant expense and are the actual stand-ins for a brick and mortar store?
A.
We don't know but it is doubtful. Ask your accountant. But question to you - almost all art festivals refunded booth fees so do you still have an expense?
Q.
Why are the resources being delayed for the self employed when we are among the hardest hit? Art festivals were among the first to be shut down.
A.
It isn't really a matter of "being delayed for self employed". The CARES Act is an overwhelming piece of legislation and it will take time for the regulations and activation by banks and SBA and Unemployment Offices to get in place and money to start flowing.
Q.
Can I file somewhere for that lost income?
A.
That is what PPP and EIDL are for. See all the information above and get your applications submitted.
Q.
I have looked on IRS website and did not see anything Where & how do self employed artists file for CARES Act.
A.
You are correct, CARES Act is NOT an IRS issue. PPP is through your bank and EIDL is through SBA. See links in topics above
Q
.
I don’t cut myself an official or regular pay check. But as far as I’m aware, we need to show them proof of payroll to apply for it. How do we deal with that?
A.
Self employed people use their 2018 and/or 2019 tax return. Schedule C or
S-Corp or C-Corp. If you don't have them then P&L with bank record back up may work but tax returns will be much easier and faster.
Q.
H
ow do we get around the problem where banks are creating their own rules to weed people out? For example, I’ve heard my bank, Bank of America, won’t let you apply if you don’t have a business credit card through them.
A.
It is probably not the case that banks are trying to '
weed people out". Rather they are trying their best to provide support as fast as they can without the benefit of regulations or adequate guidance from Federal government. Banking is a highly regulated industry and they are probably doing the best they can. Talk to your banker and see how to comply so you can get your application submitted And know that everything is changing everyday so their requirements may have changed by the time you read this.
Q.
The $10,000 EIDL Advance is about as much or more than we made in the past year?
Would they even bother with us?
A. The whole point of the EIDL is to provide support to "the little guy" as well as larger businesses. Apply for your benefits.
Q.
The $10,000 EIDL loan. it says "up to" $10,000. How is this amount determined? & when might we receive it since the 3 days have passed and as far as I can tell, no one has gotten it.
A.
We don't reply to the "up to" question. Submit your application at link to SBA above. There is a delay in processing payments - think how many there are. But get your application in line.
Q:
T
he
EIDL A
dvance does not need to be repaid under most circumstances and may be used to specific costs.
I can't seem to find any more specific information to define these items. Would things such as credit card debt for art supplies, show applications, show fees, fuel and travel costs, etc., etc., etc. qualify? Would my home studio space qualify as a portion of my mortgage?
A:
Please talk with your accountant for this question - the detailed answer is beyond the scope of our knowledge. That said, m
any of these items are business expenses and
based on current information availabl
e
business expenses are valid uses of
EIDL
advance and loan.
It is very unclear that a prorated portion of your home mortgage would be a valid use.
But
if you apply for
SBA Economic Injury Disaster Loan (EIDL) and its $10,000 Advance you need to keep employees (including yourself) paid. Or the $10,000
could
become playable as a loan, but that could be OK based on your situation.
