No employee business

[ILLMAS]

Random thought, now that the SBA is allowing independent contractors to apply, can they even apply if they have no employees?  How would you reconcile the loan application zero x 2.5 = zero and you cannot support it any payroll with 941's .  Or an 1120S owner that doesn't pay themselves, just receives a K-1?

[Lion EA]

The 1120S owner should've listened to us when we told him to put himself on payroll.

[ILLMAS]

Just now, Lion EA said:

The 1120S owner should've listened to us when we told him to put himself on payroll.

Some people are born with "it's not my problem" attitude or it comes to them naturally, I need to muster up my courage to say those words. 

[Abby Normal]

54 minutes ago, ILLMAS said:

Random thought, now that the SBA is allowing independent contractors to apply, can they even apply if they have no employees?  How would you reconcile the loan application zero x 2.5 = zero and you cannot support it any payroll with 941's .  Or an 1120S owner that doesn't pay themselves, just receives a K-1?

Net earnings from self-employment for 2019 divided by 12 x 2.5, plus retirement plans plus SEHI is what I've done. If they want to discard the health insurance because it's not group, then let them do that.

[Lion EA]

ILLMAS: I can say those words here. I would NOT be able to say them to a client. If I think of a polite-sounding way to say, "I told you so," I would. But, luckily my S-corp employee/shareholders DO take salaries, quite a lot of salary, in fact. So, their grumbles were about not being able to use the amounts over $100,000 in the calculations. And, they are all smart enough to realize that's a good problem to have, so tiny grumbles!

[DANRVAN]

 

As I read it there is a case for basing the the computation on draws by an owner vs strictly by SE net earnings.

per section 1102 of the ACT:

‘‘(bb) the sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from selfemployment, or similar compensation and that is in an amount that is not more than $100,000 in 1 year, as prorated for the covered period;

[Abby Normal]

I've read it too, and I believe the above parts are not excluded for the self-employed. The part you quoted just tells you how to calculate the wage, and it doesn't say that the other components do not apply.

[DANRVAN]

2 hours ago, Abby Normal said:

I've read it too, and I believe the above parts are not excluded for the self-employed. The part you quoted just tells you how to calculate the wage, and it doesn't say that the other components do not apply.

What are your thoughts on self employed showing a loss?  That is one scenario I see where owners' draws need to come into play.  Health insurance as you mentioned above would be part of that.