Questions and Answers from the “How to Survive the Financial Crisis” Webinar
Updated as of July 4,2020
Here are some of the questions raised during the recent webinar “How Your Family Child Care Business Can Survive This Financial Crisis.”
The webinar was delivered in English and Spanish. A recording of the webinar can be found here.
The webinar and the questions and answers were translated by Angela Bayer-Persico, a nationally Accredited group child care provider from New York.
SBA Loans
Q: What does a forgivable loan mean?
A: It means that it doesn’t have to be paid back.
Q: Is the $1,000 I received from the EIDL loan taxable income?
A: We don’t know yet. The SBA has not answered this question.
Q: Do I have to do anything to have the EIDL loan forgiven?
A: You can spend this money on any business expense except repairs and fixed assets that last longer than one year. Keep records and receipts of how you spent it and it will be forgiven.
Q: Can I use the EIDL money for payroll for myself or an employee?
A: Yes.
Q: How do I get the PPP loan forgiven?
A: It will be forgiven if you spend it on the following expenses during the 8 to 24 weeks after you receive the money: Payroll (including payroll for yourself), utilities, mortgage loan interest, rent, credit card and car loan interest. You cannot count expenses for cable television, sewer or your mortgage payment. Apply your Time-Space % to these other expenses.
Q: How much can we pay ourselves as payroll with the PPP?
A: You can pay yourself 75% or more of the PPP as payroll for yourself, if you have no employees.
Q: Can I apply for both the EIDL and PPP loan programs?
A: Yes. If you do get both loans, you can’t use money from both programs for the same expense.
Q: If I receive a grant from my state, can I also apply for the PPP loan?
A: Yes.
Q: Is someone who receives a Form 1099 eligible to apply for the PPP?
A: Yes. Update: Originally, I answered "no." Yes is correct.
Q: The PPP cam as one payment. Will it affect my unemployment for one week or eight weeks or 24 weeks?
A: Each state is different on how they want you to report this income.
Q: If I don’t spend all the PPP money in 8 or 24 weeks can I use it for any other expense?
A: Yes. Money not spent within 8 or 24 weeks will turn into a 1% loan that you will have to pay back within 5 years.
Unemployment
Q: If I choose to close because of COVID-19, can I claim unemployment benefits?
A: Probably yes. File for unemployment in your state.
Q: I am currently closed due to COVID-19. If my husband was my assistant, can he apply for unemployment?
A: Only if you treated him as an employee and paid payroll taxes, including unemployment taxes.
Q: I am not charging parents, but they want to give me a donation. Do I have to report this to unemployment?
A: Each state has its own rules about what you must report as income when filing a weekly unemployment claim. In general you must report all income, but check with your state to be sure.
Q: When qualifying for unemployment, do they look at gross income or net income after deductions?
A: Each state answers this differently. Some ask for gross income and some ask for net income.
Q: Can I apply for unemployment if some of my parents are still paying me?
A: You can always apply for unemployment. Each state has its own rules about how much you can earn and still be eligible for unemployment. Once you file you will find out if you are eligible.
Q: Does CACFP reimbursements count as income when filing for unemployment benefits?
A: It is income. Some states ask for gross income and some ask for net income. If they ask for net income you can subtract your food costs from the CACFP income.
Q: I have an employee who is not laid off but doesn’t want to work because of COVID-19. Can she receive unemployment?
A: Probably yes. She should apply and find out. Each state has different rules about this.
Q: Can an employee volunteer their time and still collect unemployment?
A: Probably yes. Each state may have different rules about this.
Q: When reporting income do I report it in the week I received it or the week I earned it?
A: Report it in the week you earned it.
Q: If I get money from my state for child care, do I need to claim that as income while filing for unemployment?
A: Yes.
Contracts and Policies
Q: Can I terminate a part-time child and keep full time children?
A: Yes. If you terminate a child you should follow your own rules about whether you must give a parent a notice of a week or two before terminating.
Q: Parents signed an agreement that they would pay 25% per week. Do I have to apply that for future payments or can this be considered a holding fee?
A: It can be either. Whatever you want.
Q: Can I ask to be paid for my two-week vacation before I take my vacation, even if the parent has already left my program?
A: You can ask to be paid for your vacation anytime you want, as long as this is in your contract. It will be practically impossible to get paid for vacation time after a parent leaves your program.
Q: What kind of changes should I make in my policies and contract to reflect my future temporary shutdowns and parent layoffs?
A: You are free to set whatever policies and contract terms you want. You can continue to charge your regular rate, or half your rate, or whatever rate you want. You can also allow parents to pay you different rates depending on their special circumstances.
Stimulus Check
Q: Why didn’t I get a Stimulus check for my 18 year old child while she is attending college full-time?
A: If you are entitled to claim your child as a dependent who is age 17 or older, you are not entitled to get a Stimulus check for your child. If you child is not eligible to be treated as your dependent he or she is entitled to receive their own Stimulus check.
Other
Q: I am having state and federal taxes withheld from my unemployment benefit check. Do I still need to file quarterly estimated taxes?
A: Maybe. You must pay in at least 90% of the total taxes you owe as a family each quarter to avoid paying a penalty.
Q: Are we liable if a child gets sick with COVID-19 while in our program?
A: Not unless you are negligent. As long as you are following safe health practices as described by the Centers for Disease Control, it is highly unlikely you will be held liable.
Q: If I get a state grant and EIDL and unemployment, how does this affect each program?
A: Money from a state grant or EIDL must be reported as income when claiming unemployment benefits. You should apply for every program you can.
Tom Copeland - www.tomcopelandblog.com
Image credit: https://www.pxfuel.com/es/search?q=preguntas
