In this 4-minute read:
- Can tax preparers get PPP loans?
- What are the other PPP loan eligibility requirements for tax preparers?
- Recent updates to the PPP that can help tax preparers get more funding
The Paycheck Protection Program is still available to help small businesses through the financial hardships of COVID-19. Small business owners, self-employed individuals, sole proprietors, and independent contractors alike can and should apply for this forgivable loan to help their business weather this unprecedented financial storm (apply by May 31, 2021, since the PPP is extended).
With recent updates to the Paycheck Protection Program, tax preparers can get even more funding from their loan. Read on to see if you qualify and how this program can help your business.
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Can tax preparers get a PPP loan?
Almost all small business owners, independent contractors, or self-employed individuals are eligible for the PPP loan (as long as you were in business before February 15, 2020 and earned at least $4800 in 2019 or 2020.)
Sure, there are some additional requirements (which we’ve outlined below) but if you fit into the self-employed/business owner category, you check the first box.
That being said, it isn’t enough to be a self-proclaimed entrepreneur and business owner if you don’t have the documentation to back it up. If you are a tax preparer and you do 1099 contract work or own your own tax preparation business, you’re likely eligible for the PPP loan.
However, if you work as an accountant or tax preparer for an accounting firm or tax preparation business and receive a W2, then you aren’t eligible for the PPP loan for that job. If you do 1099/contract work on the side from your W2 job though, your W2 job wouldn’t prevent you from being able to get a PPP loan.
What are the other PPP loan eligibility requirements for tax preparers?
As we mentioned, if you’re a business owner, independent contractor, or self-employed tax preparation specialist, you’ll need to meet some more requirements before applying for the PPP loan. Currently, applicants can apply for a first or second draw PPP loan. First draw loans are for first-time applicants and second draw loans are for those who have already received a PPP loan.
First draw PPP loan eligibility requirements (this list is not exhaustive):
- In addition to being a contractor or business owner, you must have been in business as of February 15, 2020
Second draw PPP loan eligibility requirements:
- You have already received a PPP loan
- You have spent your first PPP loan funds on approved expenses by the time you receive the disbursement for your second loan
- You must be able to demonstrate a revenue reduction of at least 25% when comparing any quarter in 2020 to 2019
- (You can’t have more than 300 employees)
For additional information on eligibility requirements, please check out our FAQs:
Recent updates to the PPP that can help independent tax preparation specialists and accountants get more funding
We have seen tons of new changes to the Paycheck Protection Program lately that give America’s smallest businesses great advantages to receive more funding, and if you file a Schedule C (form 1040), this means means you!
Gross profit vs net
On February 22, 2021, the Biden-Harris administration announced new PPP rules for Schedule C borrowers that allow those who file their taxes with IRS Form 1040 Schedule C to elect to use their GROSS profits (line 7) instead of their NET profits (line 31) to calculate their maximum loan amount. This can make the difference between qualifying and not qualifying for a PPP loan in many cases.
School loan delinquency
Previously, individuals were not eligible to apply for the PPP loan if there were delinquent on any school loan payments. That rule has been lifted so individuals in this category can now apply for the loan. Read more about the PPP removal of student loan delinquency restriction.
When the Paycheck Protection Program was originally instated, only American citizens could apply for the loan. Now, non-citizen business owners with an ITIN who are lawful residents may apply. Read more about the ITIN PPP loan rule changes.
Important note: As you apply for the PPP loan, make sure you have a copy for your IRS Form 1040 Schedule C. You will need this for your lender to verify your 1099 income as they process your application.
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