The QuickBooks Desktop Cash compensation report for PPP Loan Forgiveness reflects certain cash compensation identified in your QuickBooks account based on the time period you select. Before you use the data in this report in connection with a Paycheck Protection Program (PPP) Loan Forgiveness Application, make sure to read and understand the important information below regarding how we identified the cash compensation on this report, and how it may include costs that are not eligible for PPP loan forgiveness.
Before applying for PPP loan forgiveness, you must review this report and determine whether it includes cash compensation amounts that are not eligible for forgiveness. Learn more about PPP loan forgiveness, including which payroll costs are eligible for forgiveness.
Borrowers will be asked to certify that costs claimed for forgiveness in their PPP Loan Forgiveness Application are eligible for forgiveness. Regulations and guidance from the SBA and the U.S. Department of Treasury on the PPP are evolving rapidly. Please refer to the PPP Loan Forgiveness Application, Application Instructions, and the latest guidance from SBA and Treasury to confirm current program rules and how they apply to your particular situation.
Time period used for this report
The QuickBooks Desktop Cash compensation report for PPP Loan Forgiveness uses the time period you select for purposes of your PPP Loan Forgiveness Application. You should select a time period consistent with the SBA’s guidance on payroll costs eligible for forgiveness.
Each borrower has a Loan Forgiveness Covered Period (LFCP) (described below). Cash compensation is eligible for forgiveness if (1) paid in your LFCP (even if incurred before the LFCP), or (2) incurred in the last pay period of your LFCP and paid by the next regular payroll date. Costs incurred after your LFCP won’t be forgiven.
Your LFCP generally begins on the date you received your PPP funds (or if you received them on more than one date, the first date you received PPP funds). If you received your PPP loan proceeds from your lender on or after June 5, 2020, your LFCP is 24 weeks. However, if you received PPP loan funds before June 5, 2020, you can choose to use either an 8-week or 24-week LFCP.
If you’re a borrower with a biweekly or more frequent payroll schedule, you may choose an Alternative Payroll Covered Period (APCP) that aligns with your payroll cycle. The APCP begins on the first day of the first pay period following receipt of your PPP funds. If you choose this alternative period, it applies only to, and must be used for, payroll costs (including cash compensation) and certain required reductions in your PPP Loan Forgiveness Application.
If the covered period you choose extends beyond your history with QuickBooks Payroll, you’ll need to provide some additional payroll information to complete your forgiveness application.
Paychecks included in this report
This report contains 3 tables:
- Cash compensation
- Prorated cash compensation
- Total eligible cash compensation
The Cash compensation table (table 2) lists paychecks in your QuickBooks account with a paycheck date falling within your selected period (which may be referred to on the report as your “covered period”). This includes paychecks dated on the start or end date of your selected period.
The Prorated cash compensation table (table 3) lists paychecks in your QuickBooks account where the pay period start date is within your selected period but the paycheck date falls after your selected period. If there is more than one such paycheck per employee, this table will only include the paycheck with the earliest paycheck date. Where applicable, the cash compensation amount for paychecks in this category is prorated as follows:
((Total cash compensation/days in the payroll period)*days of the pay period that fall on or before the end of your selected period)
This table may include cash compensation amounts that were neither paid during your covered period nor incurred during the last pay period of the covered period, so you will need to check current program rules to determine whether you need to make any adjustments to those amounts before you apply for forgiveness.
The Total eligible cash compensation table (table 1) adds up the cash compensation for each employee from tables 1 and 2, and applies an annualized cap of $100,000 per employee prorated for your selected period. The last column in this table shows cash compensation that may be eligible for forgiveness, but you will need to check current program rules to determine whether you need to make any adjustments to those amounts before you apply for forgiveness.
The report is limited to paychecks for employees whose addresses recorded in QuickBooks are in the United States. The report includes paychecks associated with non-owner employees, and if applicable, owner-employees. The report identifies each person’s name as recorded in QuickBooks, the pay period covered by the paycheck, and the date on each paycheck.
Cash compensation included in the report
“Cash compensation” shown on tables 1 and 2 includes the following categories of cash compensation included on the relevant paycheck or pay stub:
- Gross salary, gross wages, gross tips, and gross commissions
- Paid leave (vacation, family, medical or sick leave), except to the extent you have identified those wages as qualified sick and family leave wages covered by the Families First Coronavirus Response Act (FFCRA)
- Allowances for dismissal or separation pay.
Where a pay period associated with a given paycheck or pay stub ends after your selected period, we estimate the amount of the cash compensation earned in the selected period. We do this by dividing the cash compensation amount by the total number of calendar days in the pay period (including weekends and holidays) and then multiplying by the number of calendar days in the pay period that fall in your selected period. This amount is shown in the “Prorated cash compensation” column.
Cap on individual employee cash compensation
The third table sums up, for each individual listed on tables 2 or 3, cash compensation amounts associated with all paychecks included on table 2 and the prorated cash compensation amount associated with any paycheck included on table 3.
For each individual, the total amount of cash compensation eligible for forgiveness may not exceed an annual salary of $100,000, as prorated for the LFCP/APCP. For an 8-week LFCP/APCP, that total is $15,385 (($100,000.00/52)*8). For a 24-week LFCP/APCP, that total is $46,154 (($100,000.00/52)*24). Note, we apply a cap based on the length of your selected period. If your selected period is not 8 or 24 weeks, we apply the cap as prorated for the number of weeks in your selected period. If your selected period does not align with full week periods (e.g. the period is 23 weeks and 4 days), we apply a cap by rounding down to the nearest whole week (($100,000.00/52)*23).
The sum of the cash compensation and prorated cash compensation amounts after applying the employee-cash compensation cap is shown in the Total eligible cash compensation column.
Guidelines for interpreting and using this report
Borrowers will need to certify that the payroll costs claimed in their PPP Loan Forgiveness Application are eligible for forgiveness, that those costs were used to retain employees, and that they have verified the payments.
For example, depending on how you’ve identified transactions in QuickBooks Payroll, this report may contain costs ineligible for forgiveness, including cash compensation for those whose principal place of residence is not in the US, tips and commissions paid by someone other than the borrower, and qualified sick and family leave wages or wage equivalents covered by the FFCRA. You must review for and exclude from your forgiveness application costs that do not meet the required criteria, and will need to determine whether the proration methodology used here produces an accurate result for your business. If QuickBooks did not process your payroll for the entirety of your selected period, this report will not return any data for the selected period and you will need to provide this payroll data to your lender. If the covered period you choose extends beyond your history with QuickBooks Desktop, you’ll need to provide some additional payroll information to complete your forgiveness application. Payroll costs are considered incurred on the day the employee’s pay is earned and are considered paid on the day that paychecks are distributed or the borrower originates an ACH credit transaction.
As noted above, we have applied forgiveness caps applicable to individual employee compensation. There are different caps that apply to owner-employee compensation. For example, total owner compensation is capped at $15,385 (8-week LFCP/APCP) and $20,833 (24-week LFCP/APCP) across all businesses. There are additional caps for owner-employees that depend on whether the business is an S-Corporation, C-Corporation, Partnership, Schedule C filer, Schedule F filer or an LLC. For owner-employees with less than 5 percent ownership in a C-Corporation or S-Corporation, the individual employee caps apply, not the owner-employee caps. QuickBooks does not have a designation for owner employees, so this report does not distinguish between owner-employees and non-owner employees. You must review and exclude any compensation in excess of the caps that apply to owner-employees.
QuickBooks has provided this report to assist borrowers applying for forgiveness of their PPP loans. This report should not be considered financial, legal, accounting or other advice, or a substitute for obtaining advice specific to your business.
Additionally, this report does not account for any reductions in forgiveness due to reductions in headcount, salaries, or wages, or any reductions related to the requirement that 60% of your forgiveness amount is attributable to eligible payroll costs. It also does not account for non-cash compensation payroll costs or non-payroll costs that may be eligible for forgiveness. Your actual forgiveness amount will be determined by your lender following rules set by SBA and Treasury.