The state of North Carolina passed their state budget for 2022 and included two items that impact small business and small business owners:
PPP Loan Forgiveness not taxable at the state level.
Prior to this budget passing, owners of small businesses were required to add back as income (on their North Carolina state tax return) the amount of PPP Loan they reported as tax free income on their federal tax return. Under this new legislation, the state of North Carolina decided the PPP Loan forgiveness should not be taxable.
The only way to get the money refunded to small business owners is to amend their individual tax return and remove this amount from income. If you received a K-1 that indicated the add-back, the NCDOR is not requiring small businesses to amend their corporate tax returns. Simply amend the individual tax return.
North Carolina Business Recovery Grant.
This grant was enacted in December 2021 and expires on January 31, 2022.
Two types of grants will be available to an eligible business that suffered an economic loss of at least 20 percent during the pandemic:
- A hospitality grant will be available to an eligible arts, entertainment, and recreation business, as well as eligible accommodation and food service business such as a hotel, restaurant, and bar (NAICS codes 71 and 72).
- A reimbursement grant will be available to an eligible business not classified in NAICS Code 71 and 72 that did not receive funding from other relief programs including Paycheck Protection Program, COVID-19 Job Retention Grant, and EIDL Advance.
This application is only one page long and requires very little information. For those businesses using a POS system, you will need to run sales reports to determine if you had a sale decrease of 20% or more from March 1, 2020 through February 29, 2021 vs. the previous 12 months.
The NCDOR also requires that you breakout sales subject to sales tax vs. sales not subject to sales tax.
To apply for this grant, go to the NCDOR’s website at: Business Recovery Grant | NCDOR