A client owns a restaurant that got a PPP2 loan, and is, and will be for Q2, eligible for Employee Retention Credit. He has to spend $196,094 (60%) on payroll. His covered period ends on 5 August.
The restaurant is making payroll on its own. It is difficult to estimate future payroll costs, since the date that the restaurant can open up fully (they are now at 50% capacity) is unknown. It is estimated that to spend the entire 196k they would have to start their "PPP Payroll clock" in late March. This would eliminate all ERC money for Q2, since you can't get ERC on payroll funded by PPP. We are discussing some options. One of which is to delay the date that he starts paying payroll with the $196,094 PPP loan until 1 July. He collects ERC money for the entire Q2. On 1 July his payroll starts being applied to loan forgiveness. He is assuming 1 July through 5 August payroll will be $56,000 and his wife is already an employee so he can give her a bonus that brings her pay for the covered period to $46,154. This means that $93,940 has to be returned to the SBA because it was not used for payroll.
I am getting conflicting information on whether a relative other than a spouse can be included in PPP payroll. I have seen sites that state that no family members can be hired and paid with PPP loan money, and I have seen sites that state that any family member, friend, or neighbor can be hired and paid with PPP loan money.
If indeed a family member can be hired, the client would delay the PPP clock start date until 1 July, hire his mother and his mother-in-law (both offsite) as W2 employees and pay them $46,154, the max amount they can be paid over the covered period. This would use up virtually all the PPP payroll money.
The question, then, is...can he hire the two relatives?
