Can I Pay the Payroll Taxes Out of PPP Funds That We Get?

Let's assume your business receives funding from the Payroll Protection Program (PPP).  You give your employees paychecks to spend the money.  

But what about the payroll taxes? Can you pay them from the PPP funds?  Or, do you have to pay them from your regular business cash flow?  The answer is - it depends.

Our understanding of the payroll tax guidelines today is that you can pay the employee's paycheck withholding share of the taxes out of the PPP funds.  You can also pay the state unemployment insurance (SUI) out of the PPP funds.

However, you have to pay the employer's share of the FICA, Medicare, and FUTA taxes out of the business account, from your own cash. 

Click on the example below to enlarge it.