Finance32: Dental School’s Missing Curriculum
Finance32: Dental School’s Missing Curriculum
Great clinical skills simply are not enough for dentists to achieve financial success. Let Buckingham Strategic Wealth's Practice Integration Advisors share what else you need to know to realize your lifetime goals and obtain financial peace of mind.
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Ramping Back Up with the Paycheck Protection Plan

Ramping Back Up with the Paycheck Protection Plan

4/10/2020 10:00:00 AM   |   Comments: 0   |   Views: 32

 Mike McAninch is a Practice Integration Advisor with Buckingham Strategic Wealth, where he specializes in helping dentists connect their money and their values to realize their most important financial goals.

We recently covered the following important topics arising from legislation – the CARES Act – in response to the health and economic emergency caused by the COVID-19 pandemic:

          - Near-term actions for you as an owner if your practice is closed
          - What your employees should know about the CARES Act

The third and final part of this series deals specifically with getting operations back to normal through the Paycheck Protection Plan (PPP). (The PPP is just one relief program in the CARES Act to help business owners; here’s a chart we put together that lists and compares them all.)

When you reopen your doors, revenues likely will take weeks to start flowing again. A key element of the CARES Act is to provide cash to small businesses when the health crisis is over and it’s time to get back to work. The PPP utilizes the SBA 7(a) loan administered by your local commercial bank. An important feature of the PPP loan is that portions of it may ultimately be forgiven if you follow the requirements specified in the CARES Act. The portion not forgiven will have a 10-year term at a 4% interest rate.

The amount of the loan is your average total monthly payroll cost incurred during the one-year period prior to the date of the loan, multiplied by 2.5 (in other words, about 10 weeks of payroll costs from last year).

Payroll costs consist of:

          - Salary, wage, commission or similar compensation
          - Payment for vacation, parental, family, medical or sick leave
          - Allowance for dismissal or separation (last paycheck provision)
          - Group health care benefit, including insurance premiums
          - Payment of any retirement benefit
          - State and local tax assessed on compensation
          - Earnings from self-employment not more than $100,000 (annualized)

You can use the loan proceeds to fund virtually any legitimate business purpose, but many will likely use the money for payroll, rent, debt service and utilities.

The CARES Act has a detailed set of calculations to determine the amount of debt forgiveness. The goal is to get small businesses back open and everyone back to work. Suffice it to say that you are rewarded for maintaining your staff at approximately the same level and hours as one year ago. Because of this complexity, I recommend you work with your accountant and local bank representative to ensure you maximize your benefit under this law.

Still have questions? Please reach out to any of Buckingham’s Practice Integration Advisors. We are here to help!

Also, please feel free to take a look at our video podcast series, Ask Buckingham, on a variety of investment questions related to current market conditions.

Important disclosures: The material provided is for general information and education purposes only and does not constitute investment, legal, or tax advice. Individuals should seek independent tax advice from a tax professional prior to implementing a new strategy. This information can change without notice as additional guidance becomes available.

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