Miller and Company Founder Paul Miller joined Yahoo Finance Live to break down the new stimulus bill means for small businesses from a tax perspective.
- Let's bring in Paul Miller. He's a CPA and the founder of Miller and Company. We want to look at the tax consequences of the new relief bill, the stimulus bill, what this means for small business, especially with the potential for more PPP to help these businesses survive the next phase of the pandemic. Thanks for joining us, Paul. What's the big thing--
PAUL MILLER: Thanks for having me.
- That you think most small businesses are going to have to deal with in this new round of relief? I mean, you have to have a certain drop in revenue just to be eligible. And there's still tax consequences, right?
PAUL MILLER: The tax consequences have been removed. If your loan is forgiven, you're allowed to double dip. It's a real double dip. It's what the law originally asked for, which is to give you the deductions without paying taxes on the loan, which is phenomenal. It just came out. It's going to help out a lot of businesses. I think that's a major. Also, the move from $50,000 on the EZ form to now $150,000, that's a big relief. But the stress test--
- That's the loan forgiveness? That $150,000, is loan forgiveness, right?
PAUL MILLER: That is correct. That is correct. And that's a huge help for a lot of people, that they don't have to go through that very big calculation to figure out if their loan is forgiven. The other thing is this time, you're going to have to do 25% drop in revenue, calendar quarter 2020 versus calendar quarter 2019. So in any calendar quarter, if you had a 25% drop in payroll-- in sales, excuse me, you can apply for the second round of the PPP.
- And you were saying there that if the loan's forgiven, that you don't have to deal with the tax headache. But what if you can't get your loan forgiven? Because there were requirements for getting those loans, right? You had to keep a certain amount of people on your payroll. So that was very challenging, with all the restrictions. So what kind of a hornet's nest is it for business owners who find themselves in that situation?
PAUL MILLER: Well, the the loan will have to be repaid back, and you will not be eligible for the second round of PPP, or you'll be limited to your availability in the second around the PPP. And I think the full time equivalent will get rolled out more. There was a lot of the SBA having to give clarification about what a full time equivalent would be. Because they recognize-- the government's been very good in all of these processes, in recognizing what the hurdles are, and trying to overcome them. So I think there will be more hurdles in this round, and the SBA will respond well as they did last time, I feel.
- Paul, do you have clients who are going to be eligible for this? And what are you hearing from them about what this means for their future?
PAUL MILLER: Every client is asking, when can I apply? We have a lot of clients who can apply, particularly the restaurant industry, which gets a little bit more money. They get a 3 and 1/2 times multiple, versus an average business, which gets a 2 and 1/2 times multiple. But I think everyone wants to know, when can I apply?
And the other thing that's not clear yet is, do you go back to the original lender that lent you the first loan, which would make a lot of sense to me, that you go back and apply to the same people who had the first loan? And I think that that's what the government should tell people to do. That's what I'm recommending clients do.