Member Question & Answer - Payroll & Tips
Question: How to handle a lower payroll due to tips.
- Whether guaranteed payments to partners are included in the SBA PPP loan payroll costs?
- If we get a loan, to be forgiven, do we have to hit a payroll $ dollar target, or headcount target, or both?
Tips are included when calculating payroll costs. Section 1102 (36)(A)(vii)(I)(aa)(BB) of the CARES Act indicates that payroll costs includes "payment of cash tip or equivalent." The payroll cost is used to determine the maximum amount of the loan. As a payroll cost, it would be paid out as wages to the employee and would therefore be forgiven.