FLORIDA SMALL BUSINESS DEVELOPMENT CENTER AT IRSC
TCBusiness.com 17
2019 to determine whether gross receipts
were reduced by at least 25%.
If you were not in business during the
first or second quarter or third quarter of
2019 but were in business in the fourth
quarter of 2019, then you may compare
any quarter in 2020 with the fourth quarter
of 2019 to determine whether gross
receipts were reduced by at least 25%.
A business must have been in business
by Feb. 15, 2020, to apply. A business that
wasn’t in business in 2019 but was in business
before Feb. 15, 2020, will compare
gross receipts from the second, third or
fourth quarter of 2020 to that first quarter
of 2020.
Some business owners that operate
on a fiscal basis have asked about using
noncalendar quarters. According to SBA
guidance, businesses that use a fiscal year
to file taxes may document a reduction
in gross receipts with income tax returns
only if their fiscal year contains all of the
second, third, and fourth quarters of the
calendar year i.e., have a fiscal year start
date of Feb. 1, March 1, or April 1.
Also note that for nonprofits and
veterans organizations, the term gross
receipts has the same definition as gross
receipts under section 6033 of the Internal
Revenue Code of 1986.
In addition, there is a simplified calculation
that allows the business to compare
annual revenue losses. If you were in
business for all four quarters of 2019 you
will be eligible to compare your annual
receipts from 2019 to 2020 to demonstrate
the 25 percent revenue reduction, and
you will provide annual tax return forms as
documentation.
For loans of up to $150,000 you can
simply certify your revenue loss when
you apply, but on or before you apply
for forgiveness you will have to produce
documentation of that revenue loss.
To document revenue loss, the SBA says
businesses may use one of the following:
• Quarterly financial statements. If the
financial statements are not audited, the
applicant must sign and date the first page
of the financial statement and initial all
other pages, attesting to their accuracy. If
the financial statements do not specifically
identify the line items that constitute
gross receipts, the applicant must annotate
which line items constitute gross receipts.
• Quarterly or monthly bank statements
showing deposits from the relevant quarters.
If it is not clear which deposits listed
on the bank statement constitute gross
receipts e.g., payments for purchases of
goods and services and which do not
e.g., capital infusions, the business must
annotate them.
• Annual IRS income tax filings required
if using an annual reference period. If
the entity has not yet filed a tax return for
2020, the applicant must fill out the return
forms, compute the relevant gross receipts
value and sign and date the return, attesting
that the values that enter into the gross
receipts computation are the same values
that will be filed on the entity’s tax return.
What are gross receipts?
The guidance from the SBA defines gross
receipts for for-profit businesses as follows:
All revenue in whatever form received
or accrued in accordance with the entity’s
accounting method from whatever
source, including from the sales of products
or services, interest, dividends, rents,
royalties, fees, or commissions, reduced by
returns and allowances. Generally, receipts
are considered total income or in the
case of a sole proprietorship, independent
contractor or self-employed individual
gross income plus “cost of goods sold,
and excludes net capital gains or losses as
these terms are defined and reported on
IRS tax return forms.
Gross receipts do not include the
following:
• Taxes collected for and remitted to a
taxing authority if included in gross or total
income such as sales or other taxes col- >>
/www.oceansiderealtypartners.com
/TCBusiness.com
