Paycheck Protection Program (PPP) Reports for Square Payroll Employers
This article is only for educational purposes and does not constitute legal, financial or tax advice. Make sure you consult a professional regarding your unique business needs.
The Paycheck Protection Program (PPP), a part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, provides loans to small businesses to help cover the costs of retaining employees during COVID-19. The money can be used for payroll, rent, mortgage interest, or utilities and will be forgiven if all employees are kept on payroll at their full rate for eight weeks. More information about the CARES Act can be found on Square’s Town Square blog.
Your business may be eligible for a loan through the PPP and the specific information needed for your application will be determined by your lender. This article includes an overview of the program and how to gather the information you may need on Square Payroll to apply for these loans.
Paycheck Protection Program Overview
Who can apply?
- Businesses with less than 500 employees. This includes sole proprietors, nonprofits, veterans organizations, tribal business concerns, independent contractors, and self-employed individuals.
- Businesses in certain industries with more than 500 employees may also qualify if they meet applicable SBA employee-based size standards.
- Businesses who were in operation on or before Feb 15, 2020
- Full time, part time, or seasonal businesses.
- There are few categories that may make you ineligible for the PPP loans and these should be discussed with your lender.
When can I apply?
- Early application is encouraged as there is a funding cap for this program.
- April 3: Sole proprietorships can start applying
- April 10: Independent contractors and self-employed individuals can start applying
- June 30: Applications close
Where can I apply?
- You can apply through any existing SBA lender, federally insured credit union, and participating Farm Credit System institution. Other regulated lenders may be added to the program after launch and we also suggest checking with your local bank.
- If you would like to apply for PPP funds through Square Capital, please see the Paycheck Protection Program Resource Page. Should you apply for and be approved for a PPP through Square Capital, Square Capital’s banking partner Celtic Bank will issue your loan and Square Capital will service your loan. For additional information, please see Paycheck Protection Program FAQ.
How much can I receive?
- The loan amount is based on up to 2.5 times your average monthly payroll costs.
- Loans are capped at $10 million per business.
What counts as payroll costs?
- Salary, wages, commission, or tips
Note: Compensation for employees earning over $100,000, wages for employees who reside outside the US, and income for independent contractors should not be included.
- Payment for vacation, parental, family, medical or sick leave
- Allowance for dismissal or separation
- Payment required for group health care benefits, including insurance premiums
- Payment of retirement benefits
- Payment of state or local tax assessed on the compensation of the employee
For a full list of costs that are included and excluded, visit the SBA.gov website.
What do I need to apply?
- You can preview the SBA PPP application form to see what information you’ll need to start preparing your application.
- Your lender will determine the specific requirements. We expect you will at least need to provide your lender with payroll documentation - see below for more information on how to generate custom reports and download historical tax filings on Square Payroll.
Reports for the PPP Application
The PPP loan application requires your average monthly payroll (AMP) costs and average number of employees. We have facilitated the process of calculating AMP by providing you with a PPP report through Square Payroll.
You may also need to provide your lender with other reports, which can often be referred to as payroll records, payroll register, payroll summaries, and other names - all which can be found on Square Payroll by creating a custom payroll report and downloading previously filed tax forms (see “Tax Filings for the PPP Application” below).
PPP and Custom Reports in Square Payroll
Custom reports can be created and downloaded by following these steps:
- Visit the History & Reports tab of your Square Payroll Dashboard.
- Click Payroll Reports.
- Select a date range (based on your lenders requested look back period), employee(s), and the report type:
- Paycheck Details: Shows all paychecks with pay dates in the selected period.
- Employee Totals: Shows the totals by employee for all paychecks with pay dates in the selected period.
- Company Totals: Shows the company pay and tax totals for all paychecks with pay dates in the selected period.
- Paycheck Protection Program - Regular: Provides average monthly payroll (AMP) costs and average number of employees. (AMP) will automatically be calculated based on your first pay date through Square Payroll:
- Full 2019 history: AMP is calculated based on payroll processed from January 1, 2019 - December 31, 2019 if you processed payroll before February 1, 2019
- Parital 2019 history: AMP is calculated using a rolling 12 months from the first pay date through Square Payroll. the first pay date through Square Payroll if you your first pay date is on or after February 1, 2019.
- New employer: AMP is calculated based on payroll from January 1, 2020 - February 29, 2020 if your first pay date in Square Payroll is between 1/1/20-2/15/20.
- Paycheck Protection Program - Seasonal: If you classify your business as seasonal, you can select this option. AMP is calculated based on payroll from March 1, 2019 - June 30, 2019.
- Paystubs: Shows all paystubs for payroll runs that were paid out in the selected date range.
- Click Download to download a spreadsheet (.csv) containing your requested details.
Note: PPP reports only appear on accounts that processed payroll through Square Payroll on or before February 15, 2020. Paycheck Detail, Employee Totals, and Company Totals reports only include payroll that was processed through Square Payroll. Runs will not appear in custom reports until the deadline to cancel the run has passed.
For more information, please see Square Payroll Reports.
Average monthly payroll calculation
You can find your average monthly payroll (AMP) costs by downloading a PPP report following the steps above. Alternatively, if you prefer, you can calculate AMP by following these steps:
- Step 1: Generate and download a company totals report following the steps above. The date range should reflect the information requested by your lender and be based on your business classification as a regular, seasonal, or new business.
Step 2: Add (+) together:
- Start with total “Earnings”
- If any of your employees earn over $100,000, subtract (-) cash compensation over $100,000 per employee
- If you’ve paid contractors, subtract (-) “Contractor hours” and/or “Contractor amount”
- Add (+) total “Employer Taxes”
- Subtract (-) ER Fed. Unemployment,
- Subtract (-) ER Soc. Security
- Subtract (-) ER Medicare
- Add (+) total “ER Benefits Contributions”
- Start with total “Earnings”
- Step 3: Divide (/) this number by number of months in the look back period to determine the average monthly payroll cost (e.g. if your look back period is 2019, divide your sum by 12). This should give you the average monthly payroll cost.
Step 4: Multiply (x) this number by 2.5 to determine the maximum PPP loan eligibility amount.
- If applicable, add the outstanding amount of an Economic Injury Disaster Loan (EIDL) made between Jan. 31, 2020 and April 3, 2020 less the amount of any “advance” under an EIDL COVID-19 loan (because it does not have to be repaid). This will help calculate the maximum amount you may be able to borrow.
For example, let’s say you’ve paid $200,000 in total compensation to employees in 2019, none of whom have an annual salary over $100,000. Additionally, you paid $15,000 in health insurance and $7,000 in state and local taxes. You have not taken out an EIDL loan. Your calculation would like like this:
- Step 1: Generate a company totals report
- Step 2: $200,000 + $15,000 + $7,000 = $222,000
- Step 3: $222,000 / 12 = $18,500
- Step 4: $18,500 x 2.5 = $46,250 max PPP loan eligibility amount
Number of employees
You can calculate the number of employees paid in February 2020 by downloading a “PPP Report” following the steps above. You can also view the totals paid per employee by downloading an “Employee Totals” Report.
Note: Form 941 reports the number of employees who received wages, tips, or other compensation during that quarter. The number reported on Form 941 is based on the number of employees for the pay period which includes the following dates: Mar. 12 (Quarter 1), June 12 (Quarter 2), Sept. 12 (Quarter 3), or Dec. 12 (Quarter 4). This number excludes off-cycle payments and therefore may not be applicable when calculating the number of employees reported on the PPP application.
Tax Filings for the PPP Application
Annual and quarterly tax forms that were filed by Square Payroll can be found by going to Payroll > Tax Forms in Square Dashboard. This includes tax filings such as Forms 941, 940, 944, W-2, W-3, and the applicable state tax forms. Learn more about tax filings and payments through Square Payroll.
Square Payroll prepares and files tax forms electronically. Completed tax forms are stored as PDF files and may not be formatted the same way as similar forms you may find online. They do, however, provide you with all the information we file with tax agencies on your behalf. If you need federal Forms 940 or 944 formatted exactly like the tax form, you can manually transfer the information from the PDF generated by Square Payroll. To facilitate this process, please see Transfer Data from Square Payroll Tax Form PDFs to IRS Paper Forms.