PPP loan
We are a small business with three people, myself, my husband and another employee. Our employee is not salaried, but works on commission. When we received our PPP loan we paid our employee a draw until we ran out of the PPP loan. Because we didn’t have enough work to cover his draw during that time, our CPA told us we could recoup the draw on future commission earnings. Our employee has stated he does not have to cover this draw because the PPP is forgivable.
I know its forgivable to the company, but is it forgivable to the employee as well? Can he keep the money he did not earn?
I’d like to know what is the correct way to rectify this situation. I am a big fan and have followed you for many years.
Thanks so much.
Paulina
Terry Says
I’m an employment lawyer. Buthere’s whaI I think:
You paid him, so this count as taxable earnings to him. Remind him this money will go on his 1099.
You cannot under the PPP law deduct it as wages. See note below.
Therefore, expenses reimbursed by the PPP loan for payroll costs or payments of mortgage interest, rents and utilities during the covered period are not deductible by the borrower.May 4, 2020
And if you want your PPP loan to be forgiven, you cannot ask for the money back.
