Our episode today is brought to you by The Testing Psychologist Beginner Practice Mastermind Group. This is a group coaching experience just for folks who are about to launch their practices or have just launched their practices within the last few months. In this group, we talk about business basics, setting up your business, how to structure taxes, paperwork, marketing for beginner practice owners, measures, and setting up your schedule so that it’s efficient and won’t burn you outright from the get-go, and many other topics.
So if you’re a beginner practice owner and you would like the support of other psychologists who were in the exact same place, you can go to thetestingpsychologist.com/beginner [00:01:00] to get more information and book a pre-group call to see if you would be a good fit for the group.
All right. Our episode today is definitely a heavy business episode. I’ve got Jennie Schottmiller from Simple Profit to talk about finances during the time of COVID-19. Jennie is amazing. She is both licensed marriage and family therapist (LMFT) and a licensed Certified Public Accountant (CPA). She works in Pennsylvania.
In 2007, she actually left accounting to focus on her health and her family and became a marriage and family therapist in 2010. Soon after she opened, she realized that her therapist peers were struggling with accounting, taxes, budgeting, cash management, and so forth and she decided to start a business to merge her skills and help therapists with finances. So now she runs the thriving Simple Profit Facebook group and website: [00:02:00] simpleprofit.com where she offers free resources as well as educational courses to support therapists with their finances.
Jennie is here, and this episode is just packed with information. She’s a great guest. And she really walked through everything related to finances right now in a way that is so easy to understand.
We talk all about general finances during this time, financial mindset during this time, and how we might need to shift our mindset for the remainder of the year in terms of predicting income or financial projections. We talk a lot about the PPP loan: what to do if you got it, how to increase the likelihood that it will be forgiven, what you can spend it on, what you can’t spend it on. She does talk through how funds are still available and offers ideas on preferred lenders to go through for the higher likelihood of success in getting the loan. And then we talk about what to do if you didn’t get the PPP or choose not to [00:03:00] get it and how you might allocate some of your energy instead.
So, a fantastic episode. Stick around. I think you’re going to take a lot away from this one. Without further delay, here’s my conversation with Jennie Schottmiller from Simple Profit.
Hey, everybody. Welcome back to another episode of The Testing Psychologist podcast. I’m glad to be with you again today. And I think that this is going to be a good one. My guest today, Jennie Schottmiller, is going to talk with us all about finances during this crazy time. We’re going to talk a lot about PPP loans: what happens if you got them, what if you didn’t get them, just finances and private practice right now. So [00:04:00] super excited for that.
Jennie, welcome to the podcast.
Jennie: Thank you so much. Glad to be here.
Dr. Sharp: Thank you for coming on. A lot of people might know you from the Simple Profit brand that you’ve created on Facebook and on the internet. You have a Facebook group, Simple Profit for Mental Health Clinicians. This is your thing. So, I’m super excited to have you here today.
Jennie: Thank you.
Dr. Sharp: I always open and just ask why this is important to you. So, tell us why this is important. How did you end up here? Why finances? Why mental health?
Jennie: Well, I was a CPA before I became a therapist and it was a really important career change for me because, in addition to it fitting with some personal stuff that was going on, it also gave me the opportunity to be helpful. I feel like therapists, in general, make a difference in the world. And I was glad to have that opportunity.
I thought I left accounting completely behind when I changed careers. And I didn’t realize until I was a therapist in private practice that therapists didn’t have most of the time of business education like I did, and had a lot of basic as well as more complex questions. And so, out of a desire to help therapists that were in my circles, and now all types of mental health clinicians in private practice understand just basic accounting tax and financial analysis, I decided that I would do some education. And that then has turned into an entire business and a brand.
And one of the things I like about it, although I enjoy accounting and I have competence for accounting, what I really enjoy and what’s important about this to me is the helping part. When I’m helping mental health clinicians, it’s a little different than helping other businesses, other people. It’s a different part of my brain I get to use. And what I’ve found is mental health clinicians are incredibly appreciative when you help them because we are around the world to make a difference, and we don’t always expect the same thing back. So I have this role that I incredibly appreciate. I get to help people who help others and they really, really appreciate it.
Dr. Sharp: I love the way that you say that. That’s a good reflection of therapists and mental health folks as a whole, right? I’ve heard that from a number of therapist helpers, like people who build websites just for therapists and accountants for therapists. A number of people have said, therapists are just great to work with. They’re so nice and they just need help. I’m glad that y’all are out there to help us.
So, with that whole venture, you’ve done a lot with Simple Profit and we’ll link to all of your resources. I know you have courses, I mean, all kinds of stuff to help therapists with [00:07:00] finances in private practice, but I would love to chat with you and just dive into, first, we could talk about just financial mindset right now. Let me know if this is right or not, but I feel like there’s sort of a different financial mindset pre-COVID-19 and now we should maybe have a different mindset. I wonder what your thoughts are on that.
Jennie: I think we almost have to. This is so unprecedented and there is so much uncertainty. It impacts our ability to make business decisions. And a different mindset is absolutely called for. We can use some of the same types of approaches and tools that we might have used, but we’re going to use them, I think a little differently.
I think one of the most difficult parts of this pandemic is the uncertainty. So whether we’re talking about finances or future plans, whatever it is, the level of what I call free [00:08:00] floating uncertainty right now is so enormous. But what are you going to do with that?
We can acknowledge it. We can validate how it feels and all these wonderful things that we might do because we’re in the mental health field. But I’d like to talk about two things that you might be able to actually do to wrap your mindset around something and really solidify what your mindset is. And it’s not the same for everyone. We’re not all in the same situations. Someone might be having a testing private practice that they’re the sole support of their family. And that’s going to put them in a necessarily different type of situation than somebody who is working part-time and in the income isn’t necessary for their family. It’s extra. So it’s important to be able to have a way to think about the mindset that is going to fit your needs. There is not just one right way.
Now, if you come to a question about, can I deduct business meals? Well, [00:09:00] there’s one right way to do that. But when it comes to financial mindset, there is no one right way. And I’m really big on empowering clinicians and mental health professionals to think about you’re a business owner, put your business owner hat on and think about what’s important to you professionally as well as personally.
So I think the best place to start for this pandemic timeframe is with an assessment; just a financial assessment. Now that might sound like, I don’t know how to do a financial assessment. I know how to do a psychological assessment, but how do I do a financial assessment, Jennie?
Well, I’ll tell you, it’s not as hard as it might sound. It does not require purchasing any testing supplies whatsoever. You’re just going to pull up a spreadsheet or you’re going to get out a piece of paper and you’re going to write down what you think is going to happen. I don’t know what’s going to happen. You’re going to guess. You’re going to guess at what you think is going to happen and you are not writing this in [00:10:00] stone and it will change, but in order to ground yourself in the midst of a gigantic amount of uncertainty, let’s just make some reasonable predictions.
You know your area. You’re probably talking to other testing psychologists that are around you locally. You’re listening to this podcast. So you’re plugged into the community of testing psychologists. Take what you have heard from others and what you’re watching and what you believe is going to happen and say, do I think I’m going to be back working this summer? Do I think I’m going to be back in the fall? Then write out a little plan, because one of the unique things about your niche, in particular, is that you have pushed people off because you can’t see them and they likely still need that testing done. And they do not have other testing psychologists to go to right now.
Dr. Sharp: That’s right.
Jennie: For the most part, with the very limited chance that maybe there are some cases where [00:11:00] people have been able to do some virtual testing, for the most part, your field is shut down. So there’s no competition and there is a need that isn’t going away. So factor that in and say, okay, for myself, personal and professional, let’s combine them.
What do I think I can do if I go back in July? How much can I work? Am I going to be in a position that I can work extra the latter half of 2020 and compensate for what I wasn’t able to work mostly in the second quarter, or am I in a position where, because of family obligations, children, my own capacity as a professional, I’m really not going to be able to do that? I’m going to maybe be able to put in one extra client per month, but I’m not going to be able to make up for that.
So, if I map that out and I take into account those factors and other factors, what do I think might be my future situation? And we’re not talking about five years, we’re just talking about the [00:12:00] rest of 2020 because if we try to predict too far, the further into the future we predict the less accurate it’s going to be. But for the next year, for till the end of the year, I could probably put down some guesses that are probably not going to be wildly off depending on what happens.
And you’re going to know that when you do this, you are going to be able to revise it. You might want to update this every 30 days and say, where do I think I’m going to stand? And when you do that, when you make an assessment of what am I going to be able to bring in in the later half of 2020 if things go as I expect, now you have something to make some decisions off of because this can’t just affect our profession. It also affects what we pay ourselves, which also affects what we can pay for our own personal bills.
And if you know that you cannot make up for what you’ve lost later in the year, that’s going to affect what you’re going to [00:13:00] explain to your mortgage company that you can do right now. I need a forbearance or I’ve gotten a forbearance and maybe I want to make sure I’m pushing off far enough because it’s going to really take me another 18 months once I go back to really recover.
Well, you’re going to make some different plans than if someone says, you know what? I actually can make up for the second quarter in the latter half of the year because family situation-wise, I can work extra. I know that I’ve been contacting the people that I had originally planned to be seeing during this time, and I know they’re waiting. I know they’re going to be scheduling with me. I’m already actually having an estimated schedule for them.
That I think is important because if you don’t have that assessment piece, it’s kind of like flying blind. You don’t really know where to go from there.
Dr. Sharp: So true. Well, and you’re talking to the right crowd in terms of needing assessment data to guide our decision-making. I wonder, just for the folks who are asking, what does that [00:14:00] spreadsheet look like? What columns do you have? What headings? What are we tracking there?
Jennie: That’s a great question. It’s going to look just like a profit and loss. And I will explain what a profit and loss looks like, and then you get a two for one here because both are very important business tools. So the profit and loss, if you use QuickBooks or if you’ve maybe purchased one of my spreadsheets before, then you already have a sense of what it looks like. But basically, it’s revenues at the top and expenses listed below.
When you put together a profit and loss, usually you have the freedom to determine the categories of expenses that you want. You might put testing supplies in their own category because it’s a large expense for you and you really want to see how that’s fluctuating in relation to your revenue. And then you could put off as expenses in own category. Somebody else might want to put clinical supplies, testing supplies, and office expenses, all in one category.
The general rule is that you don’t want to have one or two or [00:15:00] three categories. You want to have enough detail that it has some meaning, but you don’t want to have 20 or 25 because you want this thing to look like it’s on one page and I can see it in digest it all together.
You’d do testing reports. I’ve read. I’m not a testing psychologist, but I’ve read. They’re a lot of pages. There is a lot of information to digest, but a financial profit and loss statement is much better read if it’s all on one page. You can look at it and you can just see the whole picture of it altogether in one cohesive picture.
So what does that look like? Revenue at the top, expenses down below, and a column for each month. When you have a column for each month, what happens is it allows you to see fluctuations for seasonal fluctuations, especially if you do school testing and not necessarily doing maybe as many in September, but then once people are in, October’s probably picking up, I’m guessing. [00:16:00] Later in the spring is all the people that are really been going all year in they’re finally catching up. And then the summer is those people that are like, well, we need this for next year. But your own practice probably has some seasonality to it based on what your niche within the niche is and the columns allow you the flexibility to see how that goes.
Do I buy all my testing supplies at the beginning of the year but my revenue isn’t all at the beginning of the year? How does all that look? So an assessment is really what I’m talking about is something kind of like a budget, but I’d like to call it a plan. It’s a plan, a guess, an estimate of future vision. And when you have that where your revenue is at the top and expenses below and column for each month, you can say, all right, when do I think I’m going back?
I want to be conservative here and I want to say, I’m not going to go back until September and I want to plan for September. And if it gets better, if I get to go back sooner, great, I will be happily surprised. Some people might want to take their assessment in a different way and say, I’m going to really think. I’m going to push myself. I’m going to [00:17:00] try to see if I can use social distancing and what’s happening in my state indicates that I’m going to have the ability to do this. I have been able to secure some additional space and I can create an environment where I’m going to be able to do this safely. I’m going to plan on the earliest time I’m going to go back and see how that looks.
It also gives you the flexibility then to revise it. You put it together and you say, Hmm, I don’t know. Maybe, this is a little too aggressive. Just change the numbers in June. And now you have a different total. So the totals go out to the right on your spreadsheet. And you can do this on paper. If you use QuickBooks, which I know a lot of clinicians in private practice do, you can go to your report section, go to profit and loss, select by month and run it and download it into a spreadsheet and then just tweak the numbers.
Dr. Sharp: I love it. Yeah, laying it out makes it so much easier because I think we just spin out, like what do I do next? What exactly do I [00:18:00] track? Trying to get it perfect. And yeah, just get those numbers. And if you don’t use QuickBooks, there were other accounting programs. In the very worst-case scenario, you can use your EHR. A lot of EHRs will track money in, maybe not money out. They don’t track expenses, but you can at least get a sense of what you’re bringing in. And then if you have an idea of your expenses, you can […]
Jennie: You can always put together a spreadsheet based on what you know. The fact is that accounting is just a recording of what’s happened in the past. And even if you don’t feel particularly business savvy, you saw those clients, you collected that revenue, you paid those bills and all you need to do is gather up where do I have that information and stick it on the spreadsheet and then be able to look at it.
The formatting of that spreadsheet or that report is very important for your ability to understand and digest the information, but the [00:19:00] inputs of the report, you should be able to find that it. Even if you haven’t done a very good job of tracking your financial income and expenses before, it’s there somewhere. We’re not all collecting cash from everyone and then spending cash on everything that we do. Nobody’s buying their testing supplies with cash at the corner market.
Dr. Sharp: Maybe that’s a business idea.
Jennie: There’s a financial record. You just have to find it. My guess is that the audience that is listening to this is probably fairly decent at tracking their financial information because you’re all about gathering data and interpreting it. And so, my guess is that probably most people have that information, but might not have thought about the format that they look at or use it for planning.
Dr. Sharp: Sure. So, let me dig in a little bit. Once we get the spreadsheet and we get those numbers, you said you might lean toward being a little more [00:20:00] conservative which I tend to do as well. The way my personality works, it’s nice for me to have the worst-case scenario just right in front of me. And then if it’s better, that’s great, but at least I know what the worst could be. Do you have a sense of, I’m trying to think how to ask this question, what kind of percentage that might be of our past income based on what you’re seeing so far, or do we just guess based on what we think we might do, whether we get back in the office or not?
Jennie: I think you guess based on what you think you might do. I imagine that a lot of people had to contact the people that you had scheduled and tell them something. For example, my eye doctor, they’d schedule me and then they’d say, okay, we’re going to move you out a month. When I call back, they’re like “We’re still not open. Let’s move you out another month.” Obviously, that’s a lot of work and you might not be doing that, but you have that.
If you have those conversations, you know your [00:21:00] clients, the type of people that you do testing for what their needs are and whether they can wait, and whether they are more of an urgent need for testing. For example, if you do testing related to the court system and you know my court system is closed down and my governor is saying, don’t even hold your breath because it’s going to be a while. Don’t count on that. I think you need to take into account all of that information because, for everyone different state, different clients are going to give you a different answer.
I think it’s also important to your point of your nature would be to be conservative. Have a plan that’s true to your nature. Some of us are pessimists, some of us are optimists, and we all think we’re realists. I like to describe a pessimist as someone that just wants to avert disappointment. It’s not that they’re overly negative. I mean, some are, but it’s really that they would [00:22:00] rather plan for the worst and be happily surprised. An optimist can very easily deal with disappointment because they’re like, I’ll be fine anyway. I just want to see what the optimistic picture looks. That’s what I want my mindset to be.
So if your plan is true to your own vision and the way that you look at things, it’s going to be something you’re going to be more satisfied with, because if it doesn’t work out, you at least like, well, I was being hopeful and that’s what I wanted. I wanted a hopeful plan or I was preparing for the worst so I could be happily surprised. And that’s exactly what my plan gave me. I really did plan for the worst.
So be true to yourself when you do this because it’s not going to look like everyone else’s. It’s going to be very unique to you, but ultimately this is a guess. And is actually just putting down on paper what you think is going to happen and looking at it and seeing what does that mean? What’s the number at the end of the year based on my guests. If you don’t write it down, [00:23:00] that’s a lot harder to guess, and it’s still guessed. Still just could be completely wrong, but when you’re looking at it on paper, at least it gives you something to look at and say, you know what, maybe I do need to call my landlord and say, it’s not looking like I’m going get to stay there. I’m really going to need some help. What can you do?
Dr. Sharp: Sure. You know, it’s funny, a lot of what you’re talking about it makes me think of, you know, when I work with my coaching clients, I can’t count how many times I’ve said most types of anxiety can be solved with math. And this is, I think a good example of that where we can get so spun out in our minds. When I say we, I mean me and many other people I know, can get so spun out. But then when you put those numbers down, at least you have quantified it a bit. It’s not abstract. It is hard data that may change, but at least you’ve got something to look at and plan for.[00:24:00] Jennie: Yeah, I think before the pandemic, I would say if you put your numbers down on paper, you know where you stand. During the pandemic, maybe it’s more that if I put my numbers down on paper, I think I know where I stand. That might be the best we can do right now.
Dr. Sharp: Right. It seems like with all the mindset shift that’s happening is just dealing with uncertainty a little bit better, or embracing uncertainty and just knowing we have to be a little more diligent or vigilant of finances each month to revise and change those projections and just keep ourselves honest.
Jennie: Yeah. I think this is going to have a big impact on our mindset after. Right now, there’s not much we can do other than deal with the uncertainty. Try to make the best decisions that we can. Adjust when we need to. But afterward, I think we’re all going to take a different attitude towards saving.
And some of your listeners might have been very good at saving and saved three months of business expenses in their business account at all times. And [00:25:00] others, perhaps not. And maybe that’s fine. Maybe that’s putting you in a pinch right now, but afterward, just like after the great depression people had their money in their mattresses, I think we’re all going to have the mindset that we need to be prepared to be out of business for 3 or 4 or 5 months because something can happen that can really throw us off especially if we are in a profession that requires being in person to do our work.
Dr. Sharp: That’s such a good point.
Jennie: But we don’t have to do that now. I say that I think that’s important to think about that for the future because I think that’s going to be a different kind of assessment that we’re going to need to do. And I want people to know that that’s out there, but right now you can’t do that. So I don’t want to put any pressure on anyone that you have to do that now because it doesn’t really help us if we beat ourselves up because we didn’t save enough before.
Dr. Sharp: Sure. Yeah, that doesn’t help at all. So one very practical question before we may be switch to [00:26:00] PPP information, when you threw that number out there, 3 to 4 months worth of business savings, is that a pretty typical recommendation?
Jennie: I think that’s pretty typical. 3 to 6 months is what they say for personal. Well, a lot of financial advisors say, have 3 to 6 months to saved her personal. A lot of people don’t do that. Many do. It depends on your circumstances, your financial values, your amount of privilege in life. There are a lot of factors that determine whether you do that personally, but from a business standpoint, it’s similar because it’s really like, well, how long? What if I got sick? What if I had a sick child? What if I had a sick parent?
3 to 6 months is about the amount of time that something could happen; a natural disaster, health-related crisis or family crisis that could take you out. And after that, you have to make tough decisions like, do I cancel my lease? Do I close up shop? Am I moving? But 3 to 6 months is a pretty [00:27:00] good amount of money worth of expenses to save.
And one of the great things about a clinical private practice is that it tends to be rapper lucrative and the expenses are rather low. We don’t need to… Your segment of the profession needs to buy testing supplies and sometimes equipment and things like that, but even then, our expense to income revenue ratio is really good compared to like say a gym who has to have loads and loads of very expensive equipment even to get one person to walk into the door and large rented space that’s very, very nice. We can get a very nice office for not that much money.
So because of that, when you’re paying yourself and you’re thinking about this, when we’re back in business, not right now, it’s not too hard to just set aside a little bit of money every month so that you can build up decent savings.
Dr. Sharp: Yeah, I love that. I can [00:28:00] already tell too, I mean, as long as I don’t scare you off this time, I’ve got to have you back during normal times because the way that you talk about practice finances just lines up so nicely with the way that I’ve looked at things and the way that I talk with people about it. And I think that we just have so much. There’s just so much around finances in our world[…]
Jennie: Well, I’d love to be back. That’d be great.
Dr. Sharp: Nice. So let’s talk a little bit about the, well, maybe not a little bit, let’s talk a lot about the PPP and other loans, other assistants, things that we need to be considering in our practices. At this point, you told me, but I think both rounds of the PPP are done. We know, but is there still money out there or is that whole thing finished or what?
Jennie: So far, there’s still money out there. What happened in the first round where it went out in less than two weeks, I think the money ran out was because so many large businesses took the money. [00:29:00] And they could because there’s a rule under the small business administration that if you are a large company, but you have all these different small satellites, that you can count each one as an individual small business. So all these small businesses said, that sounds great. And they basically vacuum sucked up all the money. And so it ran out really quickly.
When they stopped that, and they said, no, you know what? You guys can get access to so much other capital. You can raise money. You can borrow money. We really meant it that we’re trying to help small businesses that don’t have access to capital, that don’t have large reserves, or investors they can pull from. The money has lasted quite a bit longer in the second round. There is not a guarantee that there’s going to be another round for funding for the PPP loan, but they are talking about potentially having another round of funding simply because there are so many people who have applied and are stuck in a backlog of their banks [00:30:00] processing.
But for right now, the money is still out there. And I think that’s really important that if you had thought, you know what, I think I’m fine. My financial situation is, from a practice standpoint, I’m shut down, but financially, I think I’m going to be okay. And now we’re sitting here and it’s been another month and you’re thinking, Ooh, you know what? I think my state’s going to take a lot longer to open than I thought that they were. And you want to really reconsider applying for a PPP loan. I would do it now. I would do it when you’re listening to this. I would do it today. And I’ll give you a few tips. Does that sound good to give a few tips of what you want to do, what you need to pull together, how you would go about applying, and then how does it work?
Dr. Sharp: Yeah, and I would love to hear it. You may be ready to speak to this, but where to apply. A lot of people have run into trouble with their bigger banks. And so, where have found actually gets the process moving and finalized.
Jennie: There’s been a huge [00:31:00] variety of experiences, a lot of them negative, trying to go through banks. To their credit, banks did create a very large-scale process that they never had before. And that is not easy to do from a corporate standpoint. We can all point fingers and say, you messed it up, but if anyone asks one of us to go and create a process by which millions of people could come to you and get their application processed, we would be like, yeah, I don’t even know where to start.
Dr. Sharp: That’s a good perspective.
Jennie: So, give them credit that what they were trying to do was really difficult. But let me tell you a little bit about what it is, what it can do for you, where to apply and how it works. The idea here is that the PPP loan can cover about two months of your own pay, your employees’ pay, and your rent or utilities. Now, if you own a building, it could also cover the interest on your mortgage for your [00:32:00] building. It does not cover home office expenses.
The idea here is that we know that we shut down for more than eight weeks at this point. We’re already at that point. And that the impact of this is a lot larger than eight weeks. But the idea here is that if you give businesses two months’ worth of expenses and pay, they can better survive the pandemic as a whole. And the goal is that we want everyone to stay safe, healthy, and housed because if we don’t stay safe, healthy, and housed, the impact of the pandemic is even worse.
Now, obviously, if you get COVID-19, you’re not safe or healthy, but people can better protect themselves if they are financially secure. Whereas you might have a value system that you would not have taken, what might feel to you like a handout previously. [00:33:00] it is actually better for the economy as a whole because families who are not feeling overly financially stressed will still order takeout. They will still be buying the food that they need. They will still be possibly paying for the memberships for things that they know they’re going to go back to after. And those that kind of keep some spending going is good for the economy.
Regardless of what your political views are, how you think about how this whole thing has been handled, we want people to not completely stop spending. So, I encourage people not to just think of this as you’re getting money. You’re getting money so that you can also spend money. Not all of it. Not that you’re going to overspend, we’re all spending a little less, but just so that there can be things that are going because when you do order takeout, there is a delivery person and a restaurant owner that has a little bit of cash to pay towards their expenses. And so, that’s important.
Where to apply. Let me say [00:34:00] something about the type of business because most testing psychologists in private practice will either be a sole proprietor, an LLC, or an entity taxed as an S Corp. And if you are a sole proprietor or an LLC owner, you are considered self-employed. And we know that you’re self-employed because you pay self-employment tax and you file your taxes on a Schedule C. So when I say self employed, I mean you that fall on a schedule C.
If you are an S Corp owner or you were an employee of your business, you must pay yourself on the payroll. If you don’t pay yourself on payroll, then you don’t have any income, which to claim you need PPP loans from. So regardless of which one you are, you’re going to need certain documents. If you’re self-employed, you’re going to need your schedule C. And if you go to my website, which I’m sure you will link to this podcast, I have information on how to find that and how to create it. You do not have to file your whole taxes. Taxes are due July 15th. All you need is this one schedule.
A schedule is just a form. It’s two pages. And it is basically that profit and loss statement we talked [00:35:00] about for 2019. And you take it and you plop all the numbers into the schedule C, and that tells you your net earnings. As a self-employed person, you are taxed on your net earnings. That’s your income. It doesn’t matter what you’ve actually paid yourself.
You say, well, I made this much money, but I only take out $1,500 a month. It does not matter. Nobody cares what you pay yourself. You’re taxed on everything you earned. And the PPP loan is going to be based on your earnings. If you are an entity as an S Corp, or if you have employees, the PPP loan is going to be based on payroll. So you will need payroll reports.
Sometimes you’ll also need a bank statement. Everyone’s usually asking for a copy of your driver’s license, but that’s pretty much it. You need your financial information from 2019 including payroll if you have payroll. And you’re going to take that information, you’re going to place somewhere and you are going to apply. You can check your local bank, but I will tell you a lot of the large local banks have not processed small business loans very efficiently. [00:36:00] They’re lost in the vortex. So that’s really unfortunate.
On my website, I do have a list of banks that have been easier to work with or that work with non-customers. Some people don’t have a business account, and so their bank isn’t an option because they’re only helping their business clients. But BlueVine is one I particularly like in terms of the lack of problems I’ve heard from people who went through them. I don’t have any kind of investment or I’m not getting any kickbacks or anything from them, but I am in my group, every single day people are saying, I got it from this place. I got it from that place. And when they have a problem, they post about it.
And so BlueVine is just one I haven’t heard really any problems from except maybe just minor things here and there, little glitches, but compared to the other ones, not very many. And their process seems to be quick. Loans have been funded fairly quickly in a few days and the money has been deposited in a [00:37:00] few days. So that’s one that I’m recommending right now. It could change. We could run out of funds any day. There’s a lot of stuff that’s up in the air, but the basic there are three parts to this process.
And let me just acknowledge. This process is a little bit stressful. The hope is that at the end of it, it will have reduced your stress. It is not necessarily going to reduce your stress when you’re going through it, which is unfortunate, because we’re under a lot of stress already.
Just to understand what the process is, the first part is getting the loan. You’re going to take either your payroll or your net earnings if you’re self-employed, and you are going to get two and a half months of the average amount. So that means, whatever it was for 2019 in total divided by 12 if you’re in business all year, times two and a half. If you’re taking notes, write that down. If not, it’s all over my webpage.
So you get basically two and a half months. And the idea here is that you don’t add in your rent or utilities in terms of getting the loan. You’re just going to get two and a half [00:38:00] months. And two months is going to be for pay and half of the month is going to be for these other expenses, like a leased office space rent or utilities. And then that math is going to go completely away. That two and a half months thing, you’re not even going to use that for any other part of this process.
For some unknown reason, our government has decided to use different math for every single step of this process. I don’t know why. They did not consult me. I would just say that.
Dr. Sharp: They should have.
Jennie: They should have because I would’ve made it simple. It’s not simple. Okay. So once you get the loan, you get the money deposited in your account, now you’re going to need new math. And the new math for spending the loan is 75/25.
75% or more is going to go to you and your employees if you have them. That’s it. The bottom line, you do not get forgiveness if you do not spend 75% or more. This includes, if someone’s listening and got a loan that was too big because someone made an error and gave them way too much money, you have to still spend [00:39:00] 75% or more of it to get any of it forgiven. And that’s a weird situation to be in, but that is the main guiding rule of paying at 75% or more to yourself and your employees if you have them.
25% or less to your rent leased office space. I know some people are listening and they have a home office space and they don’t have a separate lease. Guess what? That’s wonderful for you that you don’t have very high expenses. It means that there is going to be a chunk of this loan that might not be forgiven and that’s okay. You’re not going to spend it. So, it’s going to be sitting in your account to pay it back later. That’s fine.
So, that’s it. For that step of spending it, you’re going to spend 75% or more for payroll costs and you’re going to spend 25 or less for these other two expenses.
Dr. Sharp: Hey Jennie, can I ask you real quick? So the 75% for payroll costs seems pretty straightforward. The 25%, I’ve heard, seen, read all kinds of stuff out there. Can that be used for anything [00:40:00] aside from rent?
Jennie: There are only three things that it can be used for that could be forgiven. It can be rent for a leased office space separate from your home, utilities; utilities include, for your leased office space, electricity, water, gas, and phone or internet.
Now, this is where it gets a little bit tricky because if you’re self-employed, utilities go on line 25 of your schedule C. What they’re saying so far is if they go look at your schedule C for 2019, and there’s zero on line 25, don’t ask us to give you utilities that you didn’t have in 2019. So that’s something to be thinking about if you’re drafting your schedule C right now because normally accounts would not always put phone and internet on the utility line, usually think of utilities of gas, water, and rent and phone, and you and internet might be [00:41:00] somewhere else on the form. So that’s that that’s tricky a little bit, but that utilities.
And then if you own your building, so if you have purchased a building, you lease from the building and so does everyone else that’s in your building, then the interest portion of your mortgage, there is a statement in the PP loan information that you can also use the PPP loan to pay off other long-term debt. So another loan that you might’ve had to start your private practice, but that will not be forgiven. So only those three things, the office rent, the utilities, and the mortgage interest if you own a building for your practice can be forgiven.
There are a lot of clinicians in private practice that those three things will not add up to 25%. But remember it’s 25% or less. You can spend more on the payroll costs and less on the rent. That’s okay. So do that. From a spending standpoint, I’ll talk about [00:42:00] forgiveness in a second, but the spending part, you could spend 100% on paying yourself. It’s 75% or more. So there’s a little bit of analysis to do. And again, when you put it down on a spreadsheet or paper, it’s a lot easier to work it out. What’s this number? What’s that number? What’s 75 was 25. How did these numbers fit together? It’s hard to do all that in your head.
Dr. Sharp: Sure. Let me ask you a very specific question that maybe others are dealing with. We found that with everyone doing telehealth, our internet at the office has been spottier, let’s just say. So, I’ve had to pay someone to come in and hardware internet jacks in our office so that we can speed up the internet. Would count?
Jennie: It will count. Now, we can’t say if, when you go to forgiveness step from a PPP loan bank that they don’t say, well, wait, this is new costs. The idea is generally that they’re covering [00:43:00] costs that existed before the pandemic. But to the extent that you had internet and your costs have simply increased, then there’s no reason under the rules that wouldn’t count. There’s a little bit of variability here in terms of how will the rules be exactly interpreted, but if I was your banker, I would count that as long as you had it before.
Dr. Sharp: Thanks, Jennie.
Jennie: You’re welcome.
Dr. Sharp: Okay. So that’s I think a great segue to this whole forgiveness issue which is, what’s going to get forgiven?
Jennie: It looks like a quagmire.
Dr. Sharp: Oh my gosh. Yeah. What kind of documentation are they looking for? Is it really going to happen? Let’s start there.
Jennie: That’s the main thing. Is it really going to happen? It’s going to happen because this is part of the law. And as much as this process has been difficult and a learning curve as we’re going through it, which is not how we want things to go, if we have the choice is that this is written to the law. It was passed by Congress. It is actually a law [00:44:00] that says, if you meet these rules, it will be forgiven. And if it doesn’t happen, everyone will be calling their Congressman because they voted it’s a law. And if the banks don’t do it, they’re violating the law.
So, there is some protection here even though that uncertainty, of course, I think we tend to be as a profession, a little bit more conservative when we account on something that seems really sketchy. So I want to point out that this is a law. That’s really important. The quagmire though is definitely unsettling to a lot of people.
A couple of things I think are important to think about in terms of forgiveness to help, not be so unsettled by it. One is that for the most part, if you have employees, you’re wanting to pay them anyway. And you have rent, you have a lease, you have a legal obligation. You’re probably going to pay those anyway. And this is just going to replace what would have come out of your pocket. So, to the extent that you might have any difficulty through the process, you were going to pay for that internet [00:45:00] no matter what. You had people. They have the ability to get on telehealth. They need the internet. As a business owner, even if it has to come out of your pocket, that was going to happen anyway.
Dr. Sharp: This is true.
Jennie: So when you get the money and you go spend it, well, all that happened was you didn’t spend your own money out of your own pocket.
To get forgiveness, there’s different math for self-employed than if there is an S Corp. So, there’s an S Corp. I’ll start with the easier one first, it’s simply, did you follow the formula? Did you pay 75% of more payroll costs? And did you only spend it for these other three types of expenses and that ended up to 25% or less? It’s pretty straightforward and it’s pretty simple.
If you’re self-employed, they add a little caveat and the caveat makes some sense even though it adds it’s more math and it’s a little bit irritating. They said, we’re only going to limit the part you pay yourself to eight weeks. And we’re not necessarily thinking about clinicians when they wrote these laws. They’re thinking about every single [00:46:00] type of business.
And so remember back in the beginning, I said this loan is two and a half months worth of average is because two is supposed to go to you and a half is supposed to go expenses. Well, a lot of self-employed businesses like Uber drivers do not have rented offices. They don’t have utilities. They don’t have any of those things. And they said, well, wait a second. We don’t want to give the Uber drivers two and a half months of pay when everyone else is getting two months of pay. And the intent of this law was two months of pay.
So, if you’re self-employed, then you’re just going to get eight weeks’ worth because I guess they don’t do math at the treasury. And they did not say two months. They said eight weeks. Well, if you look at a calendar, there are 4.33 weeks in a month. I’m like, I want to laugh at the ridiculousness of how detailed math is.
I can’t tell you how many times I’ve said Math things, like so much math. That is much math. And why would we even need to be talking about this? But there [00:47:00] are 4.33 weeks in a month. So when they calculate two months’ worth of expenses, it’s off 8.66 six weeks. So then self-employed is that you get eight weeks. Guess what? That’s a little less than 75% of your loan. Just a touch. So that means if you’re self-employed, you will be paying a little bit back where you have this little tiny loan, even if your rent adds up to 25%.
Dr. Sharp: Oh, my gosh. Okay.
Jennie: So if you’re self-employed, don’t worry if what I just said sounded like mush if you’re listening. Do not worry about that. The first time I say that it sounds like mush. The second time you read it, it’s like, Hmm, maybe I’m getting it. And then the third time or the fourth time, you’re like, okay, all right, I get it. I see how it works. You have to be exposed to something new that’s confusing like that several times, but just know if you’re self-employed, there’s this eight-week limitation and that’s going to cap a little bit of what can be forgiven, but that’s okay. It’s going to be very small.
And if you do have to pay [00:48:00] some money back, it’s probably either going to be a small amount or it’s going to be an amount you didn’t spend and it’s sitting in your bank account anyway, and it’s just going to go back. But it is helpful to predict what you think is going to be forgiven and then still use the 75/25 rule when you’re paying it out.
Dr. Sharp: Okay.
Jennie: The process for forgiveness is that 60 days after you get the loan, you can apply to your bank to have it forgiven. We do not know how long the banks are going to take to do it, but I think they have 60 or 90 days to actually process the forgiveness. And we don’t really have a form yet for forgiveness. I expect that very soon the treasury is going to issue a form that says, this is what information you’re going to ask.
But the things that we think that they’re going to ask for is they’re going to ask for your lease and they’re going to want to see that the lease was in place in operation, meaning you were actually paying on this lease before February 15th. They are trying to really cover expenses that you had before the pandemic. [00:49:00] So, they’re going to need your lease. They probably will need your bank statements showing that you paid the money out. If you have employees, or if you are employed, they’re going to want your payroll report. And they might need a profit and loss statement, we don’t know yet, for this time period just to show that you paid this money off.
They are not looking to see if you got other money or if you have other expenses. There is a certification that needs to be made to get this loan that says, I need it, but that is your own ethical determination of need. I just don’t worry that much about clinicians. There might be some people that didn’t really need it. They got it. I don’t think it’s the most of us, and I don’t really spend much time on it, but for yourself, you need to be thinking about, do I need this? If you need this, they have said, if your loan is under 2 million, which is going to be all of us, they’re not going to worry about it. You told us you need it. We are going off of your word that you need it.
Dr. Sharp: I see. Can I go back and ask a clarifying question real quick? With the eight-week time limit, I might be misunderstanding here, but are you saying that for S Corps, we actually have longer to use the funds from the loan?
Jennie: Yeah. And I see where the confusion is. There are 2 eight-week time periods. Again to further complicate things, there is an eight-week time period to spend the loan. So everyone has to spend it in eight weeks, no matter what type of business you get it. And there’s some confusion around this too that you have to spend it eight weeks from the disbursement date. Well, what’s the disbursement date? And then where’s that defined? I take the disbursement dates to mean the date it was sent to your bank. So it should be within a day or two of when you got the loan. Nobody’s should be like three weeks before they got the loan. It doesn’t take that much time to disperse funds.
So around the time he got the loan, I suggest spending it in [00:51:00] seven or seven and a half weeks so that you’re in that box. You have to spend it within eight weeks. This other eight-week thing is specifically just for the self-employed. So it doesn’t pertain to S Corp at all. They still have to spend their money in eight weeks, but they can give themselves more than 75% of the loan, or between them and their employees, they can spend more than 75% of the loan on payroll costs.
A self-employed person can give themselves more than 75% of the loan, but their forgiveness will be capped at 75%. So, let me use some numbers to help this make a little bit more sense, right?
Let’s say your loan is $10,000. I’m going to get my calculator and I’m going to do a little bit of math. Let’s say you got a loan and it was $10,000. 75% of that is $7,500. So whether you’re an S Corp, whether you’re self-employed, it doesn’t matter, you got a loan for [00:52:00] $10,000, you need to spend $7,500 or more within eight weeks. But if you’re self-employed, then they’re going to do this other little math where they’re going to go back and they’re going to get your schedule C income from 2019. They’re going to divide it by 52. They’re going to times x8, and that number is going to be just a little bit under $7,500. And then you’re going to have a little bit less that you’re going to not going to keep.
If some of this loan doesn’t get forgiven, it’s 1%. It’s payable over the… You don’t pay anything for six months and there are 18 more months to pay it back. And you’re going to pay that out of your business income. And when you do that, so either you’re going to have the cash on hand, you’re going to give it right back and you’re not going to end up with a loan at all to you’re going to pay it back over time. And that interest expense from this loan is going to be a business expense to you.
Dr. Sharp: I see. Thanks. That helps.
Jennie: It’s a lot of math probably to talk about in a podcast. And so I just want to [00:53:00] add for anyone listening that if they’re thoroughly confused, that you’re going to go to my website, I have a whole website just about forgiveness. You’re going to reach out to me if you want to. And what I do is I haven’t created a general spreadsheet for everyone to use because everyone’s circumstances are a little different, but I do meet with people and say, let’s just come up with a plan for you to help you figure out. And I do give a lot of guidance on my website and in my group to help people figure out how do I spend it and what do I think will be forgiven.
Dr. Sharp: Got you. Let me ask about one other situation that I’ve seen come up in the practices I’m working with and our Facebook group. A lot of our businesses, our employees are paid hourly and yet we’re not seeing as many clients these days, so we’re not able to use the funds from the PPP, use as much of the funds as we maybe should [00:54:00] or would have based on typical payroll. Does that make sense? Our employee hours are down because they’re not able to see folks in person right now. Is there any way around that or do we just use the funds to pay what we have to, and then it goes back and gets forgiven at the end of the day?
Jennie: So the important thing about this is that the PPP money is to keep people off unemployment. So if people are not seeing employees, what that means is you’re going to pay people even if they’re not fully working. You’re going to pay them for hours that they might not have actually worked. What I’ve seen come up for a lot of business owners is they’ll say, well, I’ve got one employee that’s doing a lot of extra stuff, and maybe they’re writing blogs and they’re really willing to work. I definitely want to pay them their full salary. And I have another employee that is saying, no, you know what? I don’t even think I have some people I could see, but I don’t really even want to, and not showing that work ethic that makes you want to pay them for work they’re not doing. So [00:55:00] that’s a dilemma that can come up as a business owner. But ultimately, if you get the PPP money, you’re going to pay it out whether you have your employees working or not.
So think about it from thinking about it like a restaurant. A restaurant can get this PPP money. They might be doing takeout but they don’t need the busser. They only need one cook. Their waitresses they don’t need. They got 2 delivery people. Maybe waiters have become delivery people, but a lot of their people aren’t working at all. And the idea is to pay all your employees. Keep them as employees. Keep them paid.
So what some people will have done is they’ve said, well, I went back to January, February and saw what my employees were making on average. And I’m going to pay them for these eight weeks their average pay that they would have earned if we weren’t in a pandemic. And what that’s going to do for our economy, for your business in particular is that’s going to keep everything afloat.
For eight more weeks, people are going to be able to buy their groceries, pay their rent, cover what they need to [00:56:00] cover, and pay their bills and stay your employees so that hopefully, especially if you are getting some money coming in right now, then that money that’s coming in in the eight weeks that you’re paying using the PPP money is going to accumulate in your account. And then after the eight weeks, you’re going to have a little bit of cash reserves built up to help keep you afloat a little bit after.
And that’s one thing that a lot of people don’t think about when they are considering that this PPP loan sounds really risky. You’re didn’t give me money. And then who knows if you’re going to forgive it. I’d rather know up front that you’re going to forgive it, but it’s really important in terms of accountability. And as clinicians, I think we can understand that there’s an importance to accountability. If they gave money out to businesses and they didn’t ask for any accountability, no forgiveness process, we’ll just give it, use it. Assume you did a good job, that there would be a lot of risk for abuse and fraud in that.
And so, by having accountability, all that means is we’re not going to have any trouble being accountable. [00:57:00] We got legitimate businesses. We have legitimate expenses and we’re perfectly able to account for this money. But when these eight weeks are happening, we’re using other people’s money to pay our bills.
And if we do have money coming in, which I know a lot of testing psychologists don’t, but if you do, because you have a larger practice and you maybe offer more services than testing, that money’s going to accumulate in your account, you’re not going to be using it for these particular bills. And you’re going to be able to have some money set aside for after.
Dr. Sharp: Great. Thanks for walking through that. Yeah, I think that’s an important distinction that people should know about.
Jennie: Yeah. So do I talk a little bit about the, if you didn’t get it?
Dr. Sharp: Yeah. It seems like that’s less of a likelihood now with money still floating out there, but what’s that look like if you didn’t get it or haven’t gotten it yet?
Jennie: There are two things I thought of they think about on a daily basis that are relevant for people who maybe didn’t want the PPP loan, didn’t want to deal with the bureaucracy, or in a financial situation where they just didn’t really need it and so it didn’t make sense to get it. And one is that there’s just a lot of chatter about the PPP loan stuff. It probably could be a bit overwhelming and a lot of noise.
My thought for people who didn’t get the PPP loan is to hang in there. This is a very brief moment in time where we’re having this process and it’s going to go away. People are going to finish getting the loans. Some money is going to run out. We’re going to go through forgiveness and we’re not going to talk about it anymore.
But also if you didn’t get the PPP loan, or even if you did, thinking about right now, what else you can work on. There is a law for almost all of us. I’ve met some and talked to some clinicians who are doing rather well, not necessarily testing psychologists, who are doing pretty well from a [00:59:00] therapy standpoint. But most people are down 50%. And I think probably most testing psychologists are down 80% or 100% but what else could you work on? What could you be planning for? What marketing could you be putting together?
Updating your website, maybe also even re-engineering your business processes: setting up an accounting system or your own paperwork process that you use for onboarding new clients or your reporting templates, things that you never have time for. I think this is a good time while you’re home and not working as much to just re-engineer some things so that when you go back, you’re feeling like I’m ready. I’m really, really ready to go back. Also, if you have the cash flow, now is a great time to do your CEs.
Dr. Sharp: That’s a great point.
Jennie: It’s a really great time to sign up for some online CEs, schedule a little bit of time for yourself, and just to help [01:00:00] us feel a little more productive if we’re not feeling very productive. If your business is 100% out as a testing psychologist, maybe the first few weeks were relaxing and at some point, you might get antsy. But thinking about it from a clinical standpoint, there are some things that we can do to just keep things going and feel like we got something accomplished that then if you’re busier later in the year, you might not have time for.
Dr. Sharp: Yeah, good point.
Jennie: And then also just to like… There’s a little bit of a scarcity mindset that comes with these PPP loans. I don’t overly focus on a scarcity mindset. I think we’re in a very traumatic type of situation here and people’s livelihoods are on the line and we have such great family needs for a lot of us that I’m not really worried about people having a scarcity mindset, but I think it can be a little bit hard if you’re not in one of these positions where you need one or want a loan to be impacted by it [01:01:00] anyway, impacted by all the talk of, I’m so worried.
I’m so scared. And maybe you’re not in that kind of position to just be thinking about your own mindset and what works for you. And what’s going to help you get through this if your situation is different from a lot of what you’re seeing in different groups on social media and a lot of the news.
Dr. Sharp: Right. God bless Facebook groups, but there are times when they can just devolve into these cyclones of negativity. And I think that’s such a good point especially as we’re spending more time online now than usual, to be mindful that then we don’t read through all 127 comments on that thread about how we don’t have any clients right now. Maybe you just step away for a little bit and focus on some of these other things that are more fulfilling.
Jennie: Right. And there’s a lot of people that will be [01:02:00] in that thread of not having any clients that really need to be in that thread, that really needs to be hearing from other people on the position to really be talking through what’s going on, what they’re going through and what they’re dealing with, and we’ll really benefit from that very long thread about that had a lot of negativity in it. And there are other people that are like, it’s just going to bring you down and it might be a good time to read up on something else or focus in a different group if it’s not your reality.
Dr. Sharp: Yes. Well said. These are great ideas. I like where you took that. I guess I was kind of prepared for more like financial stuff of what do you do if you didn’t get it, but I like this side better, honestly.
Jennie: Yeah. Well, if you needed it and didn’t get it, it is something. Go apply at BlueVine because if money is still available when you’re listening to this podcast, depending on when you’re listening, then if you need it, I want to help people who need it to actually get it, but go back to that financial mindset we talked about at the [01:03:00] beginning and make an assessment. Where do I stand? If I know where I stand, I’m going to be in a better position to make decisions.
Dr. Sharp: Yes. I love it. This is action-packed, Jennie. I feel like I should’ve been taking notes more than I was, and hopefully, if you were listening to this episode, you were in a place where you could take notes and if not go back and listen again. I feel like there’s a ton of great information that you gave us. A lot of resources as well. The show notes, I think we’ll be, fairly comprehensive here. So we’ll link to all the things that you mentioned. If people want to reach out to you, how can they do that?
Jennie: So a couple of ways to reach me is, joining my Facebook group, which is Simple Profit for Mental Health clinicians. I also have a Facebook group just for PPP forgiveness. So that’s Simple Profit for PPP forgiveness, which you can find on Facebook. You can email me at firstname.lastname@example.org and you can go to my website, which is simpleprofit.com.
Dr. Sharp: Okay, fantastic. We’ll put all those in there. I’m guessing that people might reach out. There are a lot of questions floating around out there.
Awesome. Well, Jennie, it was great to chat with you. After seeing you online for so long, I’m just glad that we could talk in person. I really appreciate your time.
Jennie: Thank you so much for having me.
Dr. Sharp: Okay, y’all. There you have it. That is my conversation with Jennie Schottmiller from Simple Profit. I’m guessing you were taking notes furiously during that podcast, and if not, there is an extensive list of resources in the show notes. So definitely go check those out for any of the resources that Jennie mentioned during her interview.
If you’re interested in a group coaching experience just for beginner practice psychologists who are just launching their practices, I have that solution for you. The beginner practice mastermind will be starting soon. This is a group coaching experience just for psychologists who are launching their testing practices. You can go [01:05:00] to thetestingpsychologist.com/beginner and get more information and book a pre-group call to see if it’s a good fit. I hope to see you there.
All right, y’all stay tuned. I have some great interviews coming up. I hope that all of you are hanging in there. I know that many folks are returning to in-person testing in some form or fashion. Many are not. We’re just all over the place and doing our best. So take care. I will talk to you next time.