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The Paycheck Protection Program: What It Means for Self-Employment

The Paycheck Protection Program was introduced to support small businesses with much-needed cash during the COVID-19 crisis, specifically geared to help businesses keep their employees employed. The SBA will forgive loans under the PPP if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.

Business owners may have several questions around the PPP loan and we are here to help break down some of the commonly asked questions specifically for those who are self-employed.

Do all small businesses qualify for the Paycheck Protection Program?


This category includes:

  • Sole proprietors that report income and pay taxes on a Schedule C in their tax return.
  • Independent contractors that collect 1099-MISC forms.
  • Gig economy workers that take on-call jobs provided by companies like Uber, Instacart, etc.

Your business must have been operational as of February 15, 2020. If your business was established after that date, unfortunately, you will not be eligible for the payment protection program.

What if I don’t use a payroll service?

Many of our customers own a business and do not give themselves a salary through a payroll service. And that’s okay. You are most likely still eligible for the Paycheck Protection Program. The exception is businesses that are structured as a C Corporation or S Corporation must use payroll to pay their owners. This is because the corporation is taxed separately from the individual. If you own a corporation and have not been paying yourself through a salary (through payroll), you will not have a salary covered through the PPP. The reason for this is that distributions or dividends from a corporation are not considered to be a salary of self-employment income. Please note that payments made to contractors are not considered payroll and are not eligible under the PPP.

What if I am a sole proprietor?

If your business entity is a sole proprietorship and/or you have not “formally” informed the IRS, this means that your business income will be reported on a Schedule C within your tax return. Please keep in mind, as stated above, that your business must have been established before February 15, 2020.

If you are a sole proprietor, your salary will be determined by your net profit. If you filed your 2019 taxes already, you can find this information reported on line 31 of your Schedule C. If you have not yet filed your 2019 taxes but do have bookkeeping done through 2019, you can find this on your Income Statement under the Net Profit line. If you need help with your bookkeeping for 2019, or if you need assistance with filing your 2019 taxes, Xendoo can help. Please book a no-cost consultation with our team and we can help you with the next steps.

The Payment Protection Program loan will ask you to provide your monthly average payroll expense. This will be your annual net profit divided by 12. According to the PPP terms, if your annual net profit is over $100,000, you may only claim up to $100,000 divided by 12.

PPP for sole proprietors who are married?

If you run a sole proprietorship informally with your significant other, you will apply to the PPP just once. In this case, your significant other will not be considered to have a salary through the business, unless he or she was paid as a contractor before February 15, 2020.

The only case where you need to apply separately for PPP is if you own more than one sole proprietorship – only if those sole proprietorships have separate EINs.

Generally speaking, the rule of thumb is that you can apply separately for as many businesses you own that have separate EINs or separate tax reporting. You can apply for the PPP once with your SSN as a sole proprietor, then separately for any other businesses you own using their respective EINs.

Payment Protection Program for independent contractors?

By default, you are considered to be a sole proprietor in the eyes of the IRS if you work as an independent contractor. If this is the case for you, your freelance income gets reported annually on a Schedule C within your tax return.

The easiest way to determine your salary is to look at the net profit listed on your Schedule C. If you already filed your 2019 taxes, you can find this reported on line 31 of the Schedule C. If you have not filed your 2019 taxes but have your bookkeeping complete for 2019, you can find this in your Income Statement under the Net Profit line.

If you do not have either of the above, the next best thing to do would be to add all of your 1099-MISC income together. You can find your monthly average by dividing that amount by 12. Similar to sole proprietors, if your annual net profit is over $100,000, you can claim only up to $100,000 divided by 12, as per the terms of the PPP loan.

How do I show proof of income?

The PPP loan must be submitted by an SBA-approved lender and that lender will request documents related to wage, commission, income, and/or net earnings from self-employment that you have received.

We’re breaking down what you’ll need to submit based on the type of individual you are:

  • Sole proprietorships: submit schedules from their 2019 tax returns filed (or to be filed) showing income and expenses from the sole proprietorship
  • Independent contractors: submit schedules from their 2019 tax return filed (or to be filed) as well as Form 1099-MISC from 2019.
  • Self-employed individuals submit 2019 payroll tax filings reported to the Internal Revenue Service.

Can PPP funding be used on other things like rent, mortgage, and utilities?

Yes, however, there are specific parameters in which the funding must be used. The PPP can cover office lease, rent, mortgage interest, provided that you had it before February 15, 2020. For those that have a home office, you can claim a portion of those expenses. It is recommended that you collect any paid invoices, statements, lease agreements, or canceled checks to prove that you had these expenses.

Please keep in mind that if you want to have your loan fully forgiven, you must spend 75% of your loan funds on payroll costs. The remaining 25% can be spent on rent, mortgage interest, and utilities.

How do I apply for a PPP loan?

The application must be done through an SBA-backed lender. You can click here to find an SBA-backed lender on If you’d like to review the PPP application form, you can find it here.

The application opened on April 3rd. Independent contractors and self-employed individuals can start applying on April 10th.

It is recommended to apply early as there is a funding cap for this program. Applications are being accepted until June 30th.


This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.


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64 replies
    ROBERT WEBB says:

    I am a sole proprietor with payroll. My employees have been collecting unemployment since the end of November. I normally rehire them back on April 1st each year but due to Covid-19 they are continuing to collect unemployment. Am I eligible for any loan relief for any other expenses ?

  2. Blake
    Blake says:

    Hi Robert, thanks for your comment! According to the loan information on, the loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent and utilities, but at least 75% of the forgiven amount must have been used on payroll. Additionally, all employees must be kept on the payroll for eight weeks. In your specific case, since your employees were not on the payroll as of the date of disaster, I’m not sure if this would apply. Our best recommendation would be to consult with a SBA-approved lender which you can find on if you don’t have a relationship with one already. If you’re a current customer of ours, please contact and we can help put you in touch with our reference. Thanks for stopping by!

  3. Rebecca Travaglianti
    Rebecca Travaglianti says:

    I am a sole proprietor and have no other employees, just independent contractors that I give 1099’s. (They will apply for their own PPP loan.) Since the definition of payroll expenses for my business according to the PPP loan is “net earnings”, will I still need to provide proof that I used 75% for payroll? If so, what type of proof will I need, other than that the loan proceeds were deposited into my personal account?

  4. Lisa Cooper
    Lisa Cooper says:

    I am self-employed with LLC and reported net loss in line 31 of Schedule C in 2019 taxes. My profits have looked much different (improved) in the start of 2020 prior to COVID. Can I submit documentation from 2020 instead?

  5. Eva
    Eva says:

    I use 1099 employees and pay them consistently throughout the year. Can I include them as employees on my Paycheck protection application and keep paying them a salary?

  6. Lilly
    Lilly says:

    I am a sole proprietor without employees. Of course I don’t write myself a paycheck, how will I show proof for loan forgiveness?

  7. Jack
    Jack says:

    Hello, I am a sole proprietor. I made over the 100,000 in payroll in 2019. I have not completed my tax returns though. What documents should I submit? Thanks,

  8. Barry willis
    Barry willis says:

    So if a sole proprietor owns a hair salon and is the only worker and lossed money last year she gets nothing? PPP program does nothing for business that can barely hold on to reopen . Is that correct ? I just want to be sure before I waste any more time

  9. Nina
    Nina says:

    Hi Rebecca, thanks for stopping by and leaving a comment! It’s a great question. Our understanding is that in order for the loan to be fully forgiven, at least 75% of funds must be used on payroll. We are keeping an eye out for any new information regarding this & will certainly publish as we learn more. If you’re applying for this loan through a local SBA-approved lender, you might want to run this question by them to see if they have any additional insight. We wish you the best and thank you for your comment!

  10. Nina
    Nina says:

    Hi Lilly, thanks for stopping by! Great question. For sole proprietors, your salary will be your 2019 net profit. If you have a 2019 tax return, this is reported on line 31 – Schedule C. If you don’t have your 2019 tax return, you can find this on your income statement. If you need catch-up bookkeeping services or help with tax filing, please schedule a no-cost consultation with our team. We are here to help.

  11. Nina
    Nina says:

    Hi Jack, thanks for stopping by & thank you for your question! We’d be happy to help as much as possible. If you do not have your 2019 tax return, you should be able to find your 2019 net profit on your 2019 income statement. The Xendoo team is here to help with tax prep and filling in addition to catch-up bookkeeping services. We’d love to help your business during this time. Feel free to book a no-cost consultation with us at your convenience.

  12. Nina
    Nina says:

    Hi Lisa, thanks for stopping by! This is a great question. While we can’t advise on the specifics of this, I’d certainly recommend posing this question to the SBA-approved local lender you’re applying through. If you are in need of any catch-up bookkeeping services to help get your financials in order to apply, please don’t hesitate to get in touch with us & we would be more than happy to help! Wishing you all the best!

  13. Nina
    Nina says:

    Hi Eva, thanks for your question! I’m not sure I have full information to properly advise on this, however, what I can tell you is that in order to be eligible for PPP, you must be able to prove you were paying payroll (salary) to your employees. If you’d like, shoot an email to and we will do our best to assist you. I might also recommend contacting the local lender you will be applying through to have them further clarify based on your specific situation. I hope this helps! Also, remember to apply for the Economic Injury Disaster Loan on if you haven’t already done so. Thanks for stopping by!

  14. cindi gannon
    cindi gannon says:

    hi! I am a free lance photographer who just started my business in jan 2019. My taxes are not done yet. Most of my work was via venmo and I have one 1099MISC. What can I provide for payroll documents? thanks

  15. Nancy
    Nancy says:

    Hi Nina,
    I understand how to apply and calculate my employee’s payroll costs as well as mine as a sole proprietor (line 32-schedule C). However, since I do not write myself a paycheck, how will I “prove” that 75 % of the loan went to payroll? Do I need to write myself a check specified as payroll during this eight-week period? I usually just keep it in the business since it is a sole proprietorship. Any help would be most welcome.

  16. Shelly
    Shelly says:

    Hi, I am self employed and the only employee of my business which is registered as a PLLC. I have not done my 2019 taxes yet but have my net income available. The bank is asking for a form 1040c. Is there any other way to show my income?

  17. Asseret
    Asseret says:

    Hello, my mother is a sole proprietor (pays a self-employed tax) and has an employee. Does that count as two employees for the PPP application?

  18. Kim Johns
    Kim Johns says:

    For a sole proprietor, I haven’t run across any guidance to determine if depreciation can be added back to Schedule C line 31 to determine average monthly payroll. Any idea?

  19. Matt
    Matt says:

    Did you ever get an answer to this ?

    I’m on your exact position as well & was hoping they answered you.

    If you don’t mind , if you’ve found an answer to this please forward me what you’ve found.

    Greatly appreciated

    One business owner to another


  20. JD
    JD says:

    My small company is an S corporation so I do pay myself through a payroll company. I had to lay off all my employees with the exception of myself and a 1099 contracted employee. Can I apply for the Payroll protection for myself and my contracted employee?

  21. Nina
    Nina says:

    Hi Cindi, thanks for your question. We recently published this article outlining what you need for your PPP application based on your business entity. Check it out! We hope this helps.

  22. Nina
    Nina says:

    Hi Nancy, thank you for your question! It’s a great one. While I cannot offer specific guidance on this, we have seen many recommendations online for all businesses to transfer the PPP funds to separate (new) bank account so you can easily track all activity on those funds from that specific account. This will make it just a bit easier to track how those funds were utilized. I would also recommend reviewing with your local lender as they may be able to offer more specific guidance. Thanks for stopping by!

  23. Fred
    Fred says:

    I am still currently employed and receiving payments weekly for my service as an Independent Contractor. Should I apply for PPP after I loose the work or while I am still getting paid? I think that after I loose the work then I would apply for unemployment? This is a bit confusing.

  24. Christian Nelson
    Christian Nelson says:

    Hello I am a Independent Contractor (Real Estate Agent) with no employees and I have not formed an LLC, S-Corp etc… o file a personal income return. I do have my Schedule C for 2019 to apply for the PPP, but my question is how would I document the 75% towards Payroll needed for Forgiveness? I have looked everywhere and spoken to numerous lenders and no one seems to have a definitive answer.

  25. Rachel
    Rachel says:

    I am the owner of an S-Corp with 0 employees. I have been running the business myself for 14 months and have not taken any money. As I do not meet PPP without a payroll, is there any funding available for my business?

  26. Nina
    Nina says:

    Hi Matt, thanks for chiming in here! We are working on new content including key highlights around forgiveness guidelines as we are learning more and want to share back with all of you. We also did provide Nancy with brief information below. I will share the latest article we publish with you both here in the comments shortly. Thank you for stopping by! We are here for all small business owners.

  27. Nina
    Nina says:

    Hi Christian, thank you for stopping by! It’s a great question. We are publishing new content including a loan forgiveness guide which will reference the information we’ve learned so far. We know this is a top question for many business owners who have been approved for PPP. I will link the resource for you in the comments section as soon as it’s available. Thank you for your inquiry!

  28. Nina
    Nina says:

    Hi Fred, thanks for your question! It is a bit confusing – you are not alone! As of Thursday 4/16, the SBA announced they are no longer accepting applications for PPP. We are hopeful that additional funding will be provided and the application process will be re-opened. We will keep everyone posted! Thank you for stopping by and wishing you all of the best during this time!

  29. Bethany May
    Bethany May says:

    My husband and I are partners for an LLC- we are very small and only have 4 employees. The business has been in existence for almost 15 years, but we purchased on December 3, 2019 from the previous owner, who retired. Since the last owner would have made the majority of net profit for 2019, do I use the amount he made for 2019 for the business? We had less than one month where we owned in 2019. Also, the original owner had a lot more employees in 2019 than we currently try have and he had high turnover. We downsized when we purchased the business and had 3 to 4 employees during feb 1 till now. Do we qualify for the ppp loan and if so, can we pay ourselves or no? If we do, do we use net profits from 2019 or only in the time we have owned it and what documentation would we use to prove our net profit since we don’t have the schedule c for 2019 for the business? What about the amount of employees? Will that hurt us since he had 8 last year at this time and we only have 4 now?

  30. Amy
    Amy says:

    My husband, a sole proprietor with no employees, submitted his loan application using his 2019 Tax return that includes Schedule C. So are you saying that the same documentation is used when applying for the loan forgiveness at the end of the 8 weeks following the actual funding of the PPP loan?

  31. Kp
    Kp says:

    I have received a PPP funding but won’t be able to re employ 2 of my employees because they have other jobs. Does it h e to be the same employees that I make payroll to.

  32. Thuy
    Thuy says:

    Hi! 0n the wells fargo application, there is a question whether you have another business so if I owe 1 as a sole proprietor and I have 45% at another store which was S-corp, do I say yes or no and if yes then the questions:
    Sales Of the Affiliate Business:
    Size Standard:
    NAICS Code:
    How do I answer these questions? Please advise!

  33. Tim
    Tim says:

    I am a self employed person with two employees I am bringing back now that I am getting my PPP loan. Can I add more employees to my payroll to keep up with the heavy work load and can I pay myself a weekly payment along with my employees?

  34. myken nunes
    myken nunes says:

    I have an LLC with all independent contractors and I have never paid myself since it is a new business started in 2018. Am I eligible for the PPP. I do have a schedule c for 2019 that shows a loss . Looking for any kind of help!
    thank you!

  35. Rob
    Rob says:

    I have gotten the PPP money and want to use it just for my employees and the other expenses , I don’t want to take paycheck for myself during the 8 weeks , will that cause a problem with one less person showing on the payroll report at the end of the 8 weeks even those it the owner of the company (s corp)

  36. Nina
    Nina says:

    Hi Rachel, thanks for stopping by! S Corps are eligible for PPP and will use their 2019 net profit (max $100,000) as their salary. You can find this on your 2019 tax return, reported on your Schedule C – line 31. If you don’t have your 2019 tax return, you can find this on your 2019 income statement. If you’re in need of tax filing, we’d love to help! You can read more on what’s needed for your PPP application here.

  37. Nina
    Nina says:

    Hi Kp, thanks for stopping by! Our understanding is that you must maintain the number of employees and the average salary. I recommend confirming with the lender you’ve received the funds from, as they will be specifically approving your forgiveness application. I hope this helps. We wish you the very best!

  38. Melissa Azabache
    Melissa Azabache says:

    So how do I prove I used the PPP for payroll in 8 weeks if I’m a sole proprietor with no formal payroll? Do I write myself a check from the business account?

  39. Matt
    Matt says:

    I’m a sole proprietor and wish to pay myself and have it count towards the forgiven amount. However, when I applied I did not realize I could do this, and only listed my other employees, reducing my total loan amount. Am I still able to pay myself and potentially have it forgiven?

  40. Blake
    Blake says:

    The only requirement is that at least 75% of the loan be used for payroll. It does not specify which employees would get the funds. Thank you for the comment.

  41. Blake
    Blake says:

    You will need to prove your expenses for utilities, rent, and mortgage interest. However, for the owner compensation replacement, you just need to provide your 2019 Schedule C to be able to claim the eight weeks of net profit for forgiveness.

  42. Matt
    Matt says:

    The 2019 schedule C gets the amount determined, but how do we show we used it for income over the next 10 weeks? A transfer from a business account to a personal one?

    Basically, when they come to ask how we used the $ in order to be approved for forgiveness, what documentation is required?

  43. Milla Filippova
    Milla Filippova says:

    I have an S corporation, and filed the 2019 taxes where the schedule K-1 shows loss in profit. Am I still eligible for PPP loan? * A month ago I applied to SBA for PPR loan, sent all my tax docs to them, and they recently sent me the attestation form and promissory note to sign so “so we can approve your loan”.
    I am confused: 0 or loss in profit – does it make you ineligible for PPP loan?

  44. Fue Vang
    Fue Vang says:

    I believe I’m at the last step for my PPP Loan. I just need to sign it now but I have a question. I’m selfemployed/sole proprietor. I have no employees and all business of operations is handled by only me. 75% of the loan can only be used for payroll. Could that 75% just go to payroll but for just me? I’m confused and can’t find this answer online at all.

  45. Fue Vang
    Fue Vang says:

    Amy, that’s what what is sounds like exactly. Seems like we’re using our information we submitted to get approval for the PPP loan and using that as our forgiveness proof?

  46. James Considine
    James Considine says:

    I am a single member llc – was just starting in late 2019 and showed a loss on my schedule C – made 11k/mo beginning in 2020 – I got a ppp for 27k – should I not have received one at all? Is there any part that would be forgiven?

  47. Roan
    Roan says:

    I am a single member LLC with No Employees and received a PPP Loan. I jumped on the application early and the online process was tied up for many days until I received the loan a April 16th. The loan app was very vague and confusing (especially the Payroll Part) so I included my insurance premiums in addition to my Schedule C Net Profit. After I received the loan, I found that only my Sched C should have been used. How did I get the insurance premiums approved and what should I do now?

  48. Babu
    Babu says:

    we have an SCORP (my wife and I are 50% equal owners). less than one-year SCORP . I am an independent contractor and my wife manages all the administration. We filed our 2019 returns, I don’t have a schedule C, but 1120-S form (Jun 1 through Dec 2019).

    We did not have our payrolls run separately. I am I eligible for PPP?, how much should we calculate as payroll cost for both my wife and I. kindly help. should I calculate an average of 12 months revenue and multiply by 2.5 .100K max person or (100K max for combined husband and wife).

    kindly let me know

  49. Mike
    Mike says:

    I am a Realtor and organizedan S-Corp. I am the only employee. I payed myself using Form 941 Quarterly tax returns, and have a W-2 for the year. Does this qualify as payroll expenses for PPP loan?

  50. James
    James says:

    I believe I made a mistake when I applied for the PPP. I am a sole proprietor and counted myself (owner) as an employee which increased my loan based on my full net profit of rather than the $100,000 cap as a sole proprietor with no employees. Should I address this when I apply for forgiveness or return the full amount before the 18th.

  51. Shelley Lapkoff
    Shelley Lapkoff says:

    Hi! I’m an owner of an S corporation. For years now, I take $2,000/month for my home office. Is that be forgivable expense under the PPP?

  52. Nina
    Nina says:

    Hi Thuy, thanks for stopping by! While we can’t advise on this specifically, we’d love to help with your accounting needs to help keep you prepped should something arise in the future!

  53. Nina
    Nina says:

    Hi Myken, thanks for stopping by! If you’re still in need of support, please feel free to reach out to our team and we will do our best to provide guidance or set up a consultation. Wishing you the best!

  54. Nina
    Nina says:

    Hi Rob, thanks for stopping by! This is a great question and so much information has been updated over the last few months as it relates to PPP. Feel free to schedule a consultation with our team if we can help with any of your bookkeeping and accounting needs.

  55. Nina
    Nina says:

    Hi Milla, thanks for stopping by! If you’re still in need of assistance, we’d love to help as much as possible. Please feel free to book a consultation with our team if we can help with any of your bookkeeping and accounting needs.

  56. Nina
    Nina says:

    Hi Fue, thanks for stopping by! It’s a good question. If you’re still in need of assistance here, please feel free to reach out to our team. We’d love to help as much as possible and we do offer accounting consultations if this would be of help to you!

  57. Nina
    Nina says:

    Hi James, thanks for stopping by! While we can’t advise on this specifically with the information provided, we’d be happy to help with your bookkeeping & accounting needs if this is something you’re in the market for. We know there have been many questions around the PPP and hope you have been able to receive some clarity! All our best!

  58. Nina
    Nina says:

    Hi Roan, thanks for stopping by and what a great question! Xendoo can help with your bookkeeping and accounting needs – we help businesses, including single member LLCs, with their monthly bookkeeping and taxes too! While we can’t provide guidance on this specific question via this forum, we’d love to help with your bookkeeping if you’re in the market for that. Reach out and let us know! All our best!

  59. Nina
    Nina says:

    Hi Babu, thanks for stopping by. We’d love to help with your bookkeeping and accounting needs. We support many S Corp businesses with their bookkeeping and would love to support yours as well. Let’s connect if you’re in the market for a solution like ours, and we’ll certainly be happy to advise as best as possible on some of these more intricate questions.

  60. Nina
    Nina says:

    Hi Mike, thanks for your comment. We know there have been many questions over the last few months regarding PPP. We’d love to help provide guidance here and can also help with your bookkeeping and accounting. We support many S Corp businesses with this and would love to support yours as well. If you’re in the market for a solution like this, let’s connect! While we can’t advise on your specific questions here via this forum, we can certainly schedule a consultation and see how we can help.

  61. Nina
    Nina says:

    Hi James, thanks for your comment and question! Our apologies for not getting to this sooner but hope you found the guidance you were looking for. We know this was a challenging topic for all business owners to navigate. Let me know if you’d like to connect and set up a consultation. We support many sole proprietors with their bookkeeping and accounting, taxes too! Would love to work together and help take the stress of accounting off your plate.

  62. Nina
    Nina says:

    Hi Shelley, thanks for stopping by! While I can’t advise on this specific question via this forum, Xendoo would love to partner with you and help with all your bookkeeping and accounting needs. We have many S Corp businesses as customers and provide tax consultation, tax preparation and tax filing, along with monthly bookkeeping. If you’re managing your books on your own, we’d love to help take that off your to-do list!

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