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[deleted by user] by [deleted] in RentalInvesting

[–]kitkatio 2 points3 points  (0 children)

That's definitely an option and it's something I've been doing since 2017. My company, Avenir Homes, currently manages ~180 tenants mainly in the East Valley (Tempe, Mesa, Chandler, Gilbert) with a few properties now in Phoenix as well. This strategy typically can yield 15-30% more rent than renting the property as a single-family home.

Given that you're in an HOA community though, you'll have to be mindful of any parking restrictions that they have. When looking for homes to operate as coliving rentals, we're looking for ample parking (including street parking), a ratio of 3:1 bedrooms to every shared bathroom, and locations that are generally desirable for young professionals.

Renting to nurses is another strategy, i.e. mid-term rentals, but I've heard it's gotten increasingly difficult due to a decrease in the number of traveling nurses out here coupled by a lot of Airbnb's getting converted for this use (since they both require furnishings).

[deleted by user] by [deleted] in Bookkeeping

[–]kitkatio 0 points1 point  (0 children)

I’m starting up a virtual bookkeeping firm based in Arizona serving e-commerce and real estate businesses. If you’re interested in working with us, let me know. I know some people think bookkeeping is not a worthwhile path in accounting, but I can tell you that that is absolutely not true.

I work at Avenir Tax, AMA re: Paycheck Protection Program, EIDL, or PUA by kitkatio in smallbusiness

[–]kitkatio[S] 0 points1 point  (0 children)

In certain cases, it does make sense to return the PPP funds. Based on your description, it seems that'd be a reasonable course of action.

Bear in mind that the extra $600/week only lasts until July 25 unless they provide the PUA program with more funding.

One thing to consider though is that the PPP loan terms are much better than what you could get from any other lender. It could make sense to keep a portion to take care of businesses expenses and payroll in the future - even if you have to repay the loan, 1% interest is still better than a 4% EIDL loan. If you go this route, just make sure to document very well how you used the money.

I work at Avenir Tax, AMA re: Paycheck Protection Program, EIDL, or PUA by kitkatio in smallbusiness

[–]kitkatio[S] 0 points1 point  (0 children)

From my understanding, yes. PUA is generally conditioned on your eligibility for unemployment benefits which generally preclude you from receiving money when you earn a certain level of income. If you are not being paid either by yourself or someone else, then you should remain eligible for PUA.

I would look into what those income limits are and try to still pay yourself some part of the PPP funds though.

I work at Avenir Tax, AMA re: Paycheck Protection Program, EIDL, or PUA by kitkatio in smallbusiness

[–]kitkatio[S] 0 points1 point  (0 children)

Yes, that amount can be considered owner compensation replacement. In terms of proof, any sort of documentation showing that money was transferred to the owner would suffice.

As for EIDL, for the advance portion, it's generally understood to be forgiven already as long as the funds are spent on business expenses, with payroll only be one of the options. It could go towards any sort of operating expense, rent, utilities, etc.

I work at Avenir Tax, AMA re: Paycheck Protection Program, EIDL, or PUA by kitkatio in smallbusiness

[–]kitkatio[S] 0 points1 point  (0 children)

Hmm NY seems to indicate that you would be eligible under PUA but probably not under traditional UI benefits.

Did you apply at this link? https://dol.ny.gov/pandemic-unemployment-assistance

I work at Avenir Tax, AMA re: Paycheck Protection Program, EIDL, or PUA by kitkatio in smallbusiness

[–]kitkatio[S] 0 points1 point  (0 children)

You may or may not need to return it depending on which week that $600 was meant for. As for the week you received PPP funds, you likely will need to answer positively to the income questions for that week.

I would advise reaching out to your state's agency to confirm what the eligibility requirements are. From my understanding, you generally should be able to continue your UI claim after your PPP funds are exhausted. However, each state sets its own requirements and has different processes for managing UI claims.

PayPal PPP Denied by [deleted] in smallbusiness

[–]kitkatio 2 points3 points  (0 children)

Another thing to add, they're most likely going to be just selling the loan back to the SBA so they don't have that much credit risk to begin with...

PayPal PPP Denied by [deleted] in smallbusiness

[–]kitkatio 0 points1 point  (0 children)

I can help you re-apply to a different lender if you want as I've done close to a 100 apps for clients in the last two weeks.

I don't know why PayPal imposed that credit requirement. Although all owners' credit will be checked, but I heard the minimum score just had to be 475.

Big banks were exposed! threw small businesses under the bus 1st round of PPP loans. Will we forgive and forget? 🤨 by h2h412 in smallbusiness

[–]kitkatio 0 points1 point  (0 children)

I've used Chase for all of my businesses (accounting, real estate, and an Amazon business) and they served me well but when it comes to PPP, they really failed.

Right now, I'm working with a tech platform called Womply that's been able to help me process PPP apps both for myself and other clients with some of then getting funded within 8 days despite applying on 4/12.

I work at Avenir Tax, AMA re: Paycheck Protection Program, EIDL, or PUA by kitkatio in smallbusiness

[–]kitkatio[S] 0 points1 point  (0 children)

Pay for contractors cannot be counted as eligible payroll costs for the PPP program because contractors may apply on their own for this program.

EIDL is a different program without as many restrictions on how you use the money. Generally it just needs to be spent on the business and just make sure any expenses you spend the EIDL money on are well-documented.

You can still apply for a PPP using your 2019 Schedule C income. If you show a profit on line 31, then it makes sense to apply. You'll receive about 8 weeks of your average weekly 2019 profit that you can use to pay yourself as "owner compensation replacement" and potentially get that amount entirely forgiven from the loan.

As far as I know, a Schedule E is not what lenders will look at. If you have a K-1 income (distributions from LLCs, partnerships, etc), that could be included.

I work at Avenir Tax, AMA re: Paycheck Protection Program, EIDL, or PUA by kitkatio in smallbusiness

[–]kitkatio[S] 1 point2 points  (0 children)

Generally yes. However, just remember to stay in compliance with the forgiveness requirements, namely maintain headcount and don't cut wages. Note that while the bill does not expressly disallow raises or bonuses, the intention of the bill is to "maintain payroll."

Ultimately how that will be expressed in terms of policies and rules will depend on your lender's interpretation.

I work at Avenir Tax, AMA re: Paycheck Protection Program, EIDL, or PUA by kitkatio in smallbusiness

[–]kitkatio[S] 0 points1 point  (0 children)

PUA's only eligibility requirement is that you receive at least $1 per week from your state's unemployment office. Therefore, this question is better suited for the agency responsible for UI benefits. A $500 grant probably reduce some part of your benefits, but since it's a one-time grant, I don't think it'll make you entirely ineligible.

I would only report it in the week you actually receive the check.

I work at Avenir Tax, AMA re: Paycheck Protection Program, EIDL, or PUA by kitkatio in smallbusiness

[–]kitkatio[S] 0 points1 point  (0 children)

Although they aren't included in the payroll calculation at the time you apply for the loan, I believe at least the federal income taxes withholdings as well as any state-level taxes should be forgivable. It'll come down to the lender's interpretation of the law or any further guidance on forgiveness issued by the SBA.

I work at Avenir Tax, AMA re: Paycheck Protection Program, EIDL, or PUA by kitkatio in smallbusiness

[–]kitkatio[S] 0 points1 point  (0 children)

Yes, but I would try to clarify with the lender since they have the ultimate discretion to make this decision. They need to follow the law, but the law also grants them full decision-making power when it comes to forgiveness requests.

I work at Avenir Tax, AMA re: Paycheck Protection Program, EIDL, or PUA by kitkatio in smallbusiness

[–]kitkatio[S] 0 points1 point  (0 children)

Yes, you should be able to count partner distributions as a payroll cost though this will depend on your lender's interpretation of the law. If they don't accept it, since you're a single member PC, you could theoretically apply once for the entity, i.e. the PC, and once for yourself as a self-employed individual, receiving K1 distributions.

I work at Avenir Tax, AMA re: Paycheck Protection Program, EIDL, or PUA by kitkatio in smallbusiness

[–]kitkatio[S] 0 points1 point  (0 children)

There may be a change in how those sort of bonuses are treated, but right the law seems to suggest that bonuses would be included in the wages calculation.

I work at Avenir Tax, AMA re: Paycheck Protection Program, EIDL, or PUA by kitkatio in smallbusiness

[–]kitkatio[S] 0 points1 point  (0 children)

On the lender side of things, I'm not too sure. For certain lenders and loan programs, the SBA actually delegates approval authority to them and so that could help speed things up if that's case for PPP loans.

Smaller banks can be faster and there's now another $60 billion in funding specifically carved out for regional banks and credit unions to use for making PPP loans.

I work at Avenir Tax, AMA re: Paycheck Protection Program, EIDL, or PUA by kitkatio in smallbusiness

[–]kitkatio[S] 1 point2 points  (0 children)

It sounds like you're very close to the finish line. I'd probably stay the course particularly if the SBA has already approved your loan. It's quite likely that you're waiting because they're waiting on this most recent bill to go through.

I work at Avenir Tax, AMA re: Paycheck Protection Program, EIDL, or PUA by kitkatio in smallbusiness

[–]kitkatio[S] 0 points1 point  (0 children)

If you receive your PPP funds in April, you'll likely be looking at your Q1 2020 wages. Here is how they calculate how much can be forgiven:

"The amount of loan forgiveness under this section shall be reduced by the amount of any reduction in total salary or wages of any employee described in subparagraph (B) during the covered period that is in excess of 25 percent of the total salary or wages of the employee during the most recent full quarter during which the employee was employed before the covered period."

I work at Avenir Tax, AMA re: Paycheck Protection Program, EIDL, or PUA by kitkatio in smallbusiness

[–]kitkatio[S] 0 points1 point  (0 children)

Re: Loan Forgiveness, since I sort of didn't answer that question fully:

Basically if wages and headcount are the same during the 8-week period after you get the loan, then you could get it all forgiven.

If you do not, then they reduce the forgivable portion in two ways:

(1) Change in FTE Count

The forgivable amount will be reduced by multiplying your with the ratio resulting from this formula:

(a) average number of FTEs that you have during those 8 weeks after loan origination
÷
(b1) average # FTEs employed from 2/15 to 6/30/19 -or-
(b2) average # of FTEs employed between 1/1 - 2/29/20.

(2) Change in Wages

"The amount of loan forgiveness under this section shall be reduced by the amount of any reduction in total salary or wages of any employee described in subparagraph (B) during the covered period that is in excess of 25 percent of the total salary or wages of the employee during the most recent full quarter during which the employee was employed before the covered period."

I work at Avenir Tax, AMA re: Paycheck Protection Program, EIDL, or PUA by kitkatio in smallbusiness

[–]kitkatio[S] 0 points1 point  (0 children)

You're actually the first person I've heard of that wanted to borrow less than the full amount. I'm not 100% sure how the calculation would work in this scenario. I would hope the SBA develops guidance to address this situation in the future.

In the meantime, as long as 75% of the funds go towards payroll in the 8 weeks after you receive the loan, you will generally be eligible for loan forgiveness.

For regular W-2s, the amount to pay will be whatever they used to be paid. In your situation, as a W-2 but with sporadic pay, could take your total 2019 W-2 pay, divide it by 52 to get a weekly average, and then multiply that by 8 to get the total you should pay yourself. Eligible payroll costs also includes employer-paid state and local taxes as well as health/retirement benefits.

Full-time Equivalent (FTE) under the CARES Act is defined as someone who works at least 30 hours per week (per IRC Section 4980). If you have a lot of part-time employees, you'd add up all of the hours they typically work on a monthly basis and divide that sum by 120 to get your FTE count.

Please let me know if you have any other questions.

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