PPP Compliance
Now that you have received the loan it is important to take the right steps to convert it to a grant. The SBA and lending institutions will be charged with confirming and substantiating that the loan proceeds were used for allowable costs.
First and foremost is payroll. You must pay your employees. Do this in a manner that you are accustomed to. If you use a payroll service pay them thru that service. If you do payroll by yourself it may take a little more work.
DO ANY OR ALL OF THE FOLLOWING WITHIN 8 WEEKS OF THE LOAN PROCEEDS HITTING YOUR BANK ACCOUNT.
Records to keep for payroll
1. Payroll register showing gross pay, withholding and employer portions of taxes.
2. Copies of checks used to pay employees (copy of debit from business account)
3. Copies of direct deposit of taxes and net pay (copy of debit from business account)
4. Copies of quarterly payroll tax returns, both federal and state (for example, unemployment tax returns, state income tax withheld, workers compensation tax)
5. Copies of payments and receipts from custodians of 401K, IRA or other pension plans (copy of debit from business account)
Other records to keep – Copies of invoices and payments (check copies, bank statements showing debits from business account for)
1. Health insurance
2. Benefit Plans
3. Vacation and paid time off records
4. Utilities for the business
5. Mortgage or rent payments for the business
Follow these above guidelines and you should be able to convert the loan to a grant. Remember the 1% interest may also be forgiven. It would be advisable to assure that all of the above payments exceed the loan proceeds plus 1%.