New AICPA Tool Automates PPP Loan Forgiveness Process

Source: Journal of Accountancy

A new, free tool developed by the AICPA and fintech lender Biz2Credit is designed to help borrowers and their CPA advisers complete the forgiveness application for Paycheck Protection Program (PPP) loans.

Available at PPPForgivenessTool.com, the dynamic platform automates the forgiveness process for small business owners who received funds from the PPP. The tool incorporates the PPP forgiveness calculator developed by the AICPA and is available to any business approved for a PPP loan, regardless of the lender it worked with to receive funding.

Borrowers or their CPA advisers can use the tool to fill out the forgiveness application. The tool will produce all government-required forms automatically. The PPP applicants will be able to electronically sign the SBA Form 3508, PPP Loan Forgiveness Calculation Form, or Form 3508EZ, and the required source documents will be saved into a downloadable file that can be provided to PPP lenders.

The AICPA estimates that the tool will save hours of manual work for any applicant going through the PPP loan forgiveness process. Final Treasury and U.S. Small Business Administration (SBA) FAQs on PPP forgiveness are expected to be released soon, and the PPP loan forgiveness tool will be updated to reflect any new changes. Based on this, the AICPA recommends that borrowers and CPA firms wait for the final guidance before generating the final signed Form 3508.

More information on the tool is available at PPPForgivenessTool.com. In addition, videos are available providing a brief overview of the tool for borrowers and how CPA firms can use the platform.

The PPP in brief

Congress created the PPP as part of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136. The legislation authorized Treasury to use the SBA’s 7(a) small business lending program to fund forgivable loans of up to $10 million per borrower that qualifying businesses could spend to cover payroll, mortgage interest, rent, and utilities.

The loans are available to small businesses that were in operation on Feb. 15 with 500 or fewer employees, including not-for-profits, veterans’ organizations, Tribal concerns, self-employed individuals, sole proprietorships, and independent contractors. Businesses with more than 500 employees in certain industries also can apply for loans.

Congress designed the loans to support organizations facing economic hardships created by the coronavirus pandemic and assist them in continuing to pay employee salaries. PPP loan recipients can have their loans forgiven in full if the funds were used for eligible expenses and other criteria are met. The amount of the loan forgiveness may be reduced based on the percentage of eligible costs attributed to nonpayroll costs, any decrease in employee headcount, and decreases in salaries or wages per employee.

We will continue to send updates on this topic. At Zhong & Sanchez, we provide One-Stop-Shop Tax, Finance, Accounting and HR services for Startups and Entrepreneurs. We do it all, so you can stay focused on your business. Our experience in tax and accounting will free you from back office work; our extensive knowledge with start-ups will help you grow in the most efficient way. Located in the Silicon Valley, you can reach us at 510-606-6971 or schedule your first consultation today at https://calendly.com/zhongsanchez

PPP Loan - How do you apply for forgiveness?

Source: https://www.sba.gov/

The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll.

You got your loan. Now the question becomes; how do I apply for forgiveness?

The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 60% of the forgiven amount must have been used for payroll).

• PPP loans have an interest rate of 1%.

• Loans issued prior to June 5 have a maturity of 2 years. Loans issued after June 5 have a maturity of 5 years.

• Loan payments will be deferred for six months.

• No collateral or personal guarantees are required.

• Neither the government nor lenders will charge small businesses any fees.

Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease. The loan forgiveness form and instructions include several measures to reduce compliance burdens and simplify the process for borrowers, including:

    •    Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles
    •    Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the 24-week period after receiving their PPP loan
    •    Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness
    •    Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30
    •    Addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined

When in doubt, consult a CPA to get opinion on your situation. At Zhong & Sanchez, we provide One-Stop-Shop Tax, Finance, Accounting and HR services for Startups and Entrepreneurs. We do it all, so you can stay focused on your business. Our experience in tax and accounting will free you from back office work; our extensive knowledge with start-ups will help you grow in the most efficient way. Located in the Silicon Valley, you can reach us at 510-606-6971 or schedule your first consultation today at https://calendly.com/zhongsanchez

5 Types Of Fraud In Business That Could Put You In A Bind

Running a business is hard enough when everything goes smoothly. But when you’re an entrepreneur, the unexpected happens. You need to prepare yourself for every possible situation, including fraud.

Business fraud isn’t as rare as you might think. It’s important that you know how to prevent and deal with fraud if it comes your way.

Types Of Fraud In Business

Small businesses with less than 100 employees experience a median loss of $154,000 due to fraud, according to the Association of Certified Fraud Examiners (ACFE). This number is higher for small businesses than most large companies.

Employees and customers are just a few people who might take advantage of your small business. Recognize types of fraud in business and learn how to protect yourself.

Here are a few types of common small business fraud you might face.

1. Identity Theft

Identity theft could cost your business thousands of dollars. Fraudsters could steal your business’s identity and use it to access your credit.

People might get their hands on things like financial statements, bank statements, or your federal tax identification numbers. It’s also possible to have information taken from your computer.

To prevent identity theft, make sure you keep your statements and sensitive information secure. If you have physical copies, keep them locked in filing cabinets that only you can access. For digital copies, make sure you use difficult usernames and passwords, and avoid falling for phishing scams. Don’t hand your information out to anyone.

Fraudsters could also have access to your business bank account if employees lose paychecks. Paychecks are very sensitive since they contain your business’s routing and bank account numbers.

If a lost paycheck gets into the wrong hands, fraudsters could access and withdraw money from your bank account. To limit the damage this could do to your business, consider separating your payroll account from the rest of your business’s money.

Having a separate payroll account means potential fraudsters would only have access to a limited amount of funds. You only deposit enough money to cover employee paychecks with a payroll account.

You might also consider paying employees via direct deposit instead of paychecks. With direct deposit, you put the employee’s wages directly into their account. That way, you do not need to pass out checks with sensitive information. Some states allow employers to enforce mandatory direct deposit.

2. Payroll Fraud

Payroll schemes are twice as common in small businesses as opposed to large companies, according to the ACFE. There are a few different ways that payroll fraud can occur at your business.

Employees might ask for pay advances without paying them back. Or, employees might lie about hours worked on their timesheets. Employees could also get co-workers to clock in for them even if they aren’t at work.

Do background checks on all employees before you hire them. And, you should audit payroll accounts so you can catch fraudulent behavior early on.

Use SaaS payroll services so you can approve payroll before you pay employees and keep track of their pay rate and hours within your system. Don’t wait until your business has doled out huge sums of cash to start keeping an eye on things!

3. Money Fraud

Because there’s so much illegal cash circulating in the United States, you might come across fake bills. Money fraud can happen without you or the customer even noticing. But, counterfeit money is worthless when you go to deposit the cash at the bank.

The most common counterfeit bills are high-valued, like $100 bills. If you accept counterfeit money, you won’t receive any revenue from the sale. Worse, you could end up giving real currency as change for a fake bill.

Protect your small business from money fraud by learning how to tell if money is fake. There are different features you should be able to spot on legal currency, like raised printing, microprinting, watermarks, and color-shifting ink. And, teach your employees to check cash before accepting it.

4. Return Fraud

The majority of small businesses that sell goods have experienced return fraud in one way or another.

There are different types of return fraud. Some customers might purchase a product, use it, then return it even though nothing is wrong with it. Or, you might have fraudsters who steal products from you and attempt to return them to make a profit.

Return fraud can be damaging to your business. You might not be able to wipe out all return fraud, but you can limit it based on your policies.

To prevent return fraud, you can require receipts. And, you could tighten your policies so that customers only receive store credit after a certain time period. Although you want customers to be happy, you also don’t want your business to lose money from fraud.

5. Workers’ Compensation Fraud

Workers’ compensation fraud is another type of small business fraud you could come across if you have employees.

As a business owner, most states require that you purchase workers’ compensation. Workers’ compensation insurance pays your employees if they become injured or ill at work.

There are different ways workers’ compensation fraud can occur, so you need to be vigilant. Employees might get injured outside of work and say they got the injury at your business. Or, employees could make up an illness or injury.

How do you protect your business from workers’ compensation fraud? You need to document everything, keep accurate records, and look out for signs of fake injuries.

Author: Mike Kappel

Source: https://www.forbes.com/sites/mikekappel/2017/10/04/5-types-of-fraud-in-business-that-could-put-you-in-a-bind/3/#53b64fc91b60