What counts as “payroll costs?”
- Salaries (up to $100,000* for any employee), wages, commissions or similar compensation, cash tips or equivalent, paid vacations, paid sick, parental and family medical leave
- Allowance for dismissal or separation
- Group health costs including insurance premiums
- Retirement benefits
- State and local payroll taxes
Any amounts that an eligible borrower has paid to an independent contractor or sole proprietor should be excluded from the eligible business’s payroll costs. However, an independent contractor or sole proprietor will itself be eligible for a loan under the PPP, if it satisfies the applicable requirements.
Rent does not count as “payroll costs” and should not be included in your loan calculations. However, proceeds from the loan can be used for working capital.
* The exclusion of compensation more than $100,000 annually applies only to cash compensation, not to non-cash benefits, including:
- employer contributions to defined-benefit or defined-contribution retirement plans;
- payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums; and
- payment of state and local taxes assessed on compensation of employees.