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Intuit

Do contractor payments count in my average payroll costs for the calculation of my PPP loan request?

Learn the difference between contractors and employees and why it matters with your Paycheck Protection Program loan application.

With your Paycheck Protection Program loan application, you can only include payroll costs for employees* who receive W-2s.

As you're calculating your payroll costs, you can't include contractors because contractors are their own entity and may apply for a PPP loan on their own.

Not sure if you have an employee or contractor?

The difference between independent contractors and employees is important to know and depends on the facts in each case. There are many factors that you should consider when determining whether individuals providing services are employees or independent contractors.

Note: If you need help determining if your worker is a contractor or employee, please contact an accounting or legal professional.

Before you can determine how to treat payments and how it may affect your payroll liabilities, you must first know the business relationship that exists between you and the person performing the services.

You must consider all the information that provides evidence of the degree of control and independence of the individual providing the service for your business.

You can refer to IRS.gov for more information about independent contractor classification.

While both types of workers may do similar work, the way you pay them and how they affect your payroll liabilities, in part, helps determine whether or not they're a contractor or employee, and if you can include them in your payroll costs.

*The average number of full-time equivalent employees is determined by calculating the average number of full-time equivalent employees for each pay period falling within a month.

Regulations and guidance from the SBA and the U.S. Department of Treasury on the PPP are evolving rapidly, and the information contained herein be outdated. Please refer to the latest guidance from SBA and Treasury to confirm current program rules. The funding described in this email is made available to businesses located in the United States of America and are not available in other locations. This content is for information purposes only and should not be considered legal, accounting or tax advice, or a substitute for obtaining such advice specific to your business. Additional information and exceptions may apply. Applicable laws may vary by state or locality. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. Intuit Inc. does not have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. Intuit Inc. does not warrant that the material contained herein will continue to be accurate, nor that it is completely free of errors when published. Readers should verify statements before relying on them.

Paycheck Protection Program (PPP) loans offered within QuickBooks Capital may be made by Intuit Financing Inc. (d/b/a QuickBooks Capital) or by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC. QuickBooks Capital is licensed as Intuit Financing Inc. (NMLS # 1136148), a subsidiary of Intuit Inc. In California, loans are made or arranged under CFL Licensed #6054856. Minimum loan amount varies by state. Intuit Financing Inc., (d/b/a QuickBooks Capital) is an authorized SBA Paycheck Protection Program Lender.

The QuickBooks Capital enabled Paycheck Protection Program loan application process supports certain single-owner businesses and self-employed individuals who do not have employees. Users who have received an EIDL loan between January 31, 2020, and April 3, 2020, are not eligible to apply through QuickBooks Capital. QuickBooks Capital does not support users located in AK, NV, nor the U.S. Territories.

Given the large demand for additional authorized Paycheck Protection Program funds, not every qualified Paycheck Protection Program applicant will receive a loan.

Loan and forgiveness calculations and eligibility may vary. Refer to the SBA.gov for information about your particular situation.

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