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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.

Note: The Paycheck Protection Program reopened on January 11, 2021. The SBA may issue additional guidance and we will update our resources accordingly. Please refer to the SBA and Treasury to confirm current program rules and how they apply to your particular situation.

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the SBA and the U.S. Department of Treasury on the PPP are evolving rapidly, and the information contained herein be outdated.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 SBA and Treasury to confirm current program rules.

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

The funding described herein 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 Financing Inc. (d/b/a QuickBooks Capital)  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 Financing Inc. (d/b/a QuickBooks Capital)  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.

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