What is Considered a Gross Receipt by the SBA?
When it comes to defining gross receipts, previously it was assumed this was meant on a cash basis, to reflect actual cash proceeds received into your business.
The current SBA instructions have generally defined gross receipts to include all revenue in whatever form received or accrued.
This follows the entity’s accounting method from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances.
Generally, receipts are considered “total income” (or in the case of a sole proprietorship, independent contractor, or self-employed individual “gross income”) plus “cost of goods sold,” and excludes net capital gains or losses as these terms are defined and reported on IRS tax return forms.
Gross receipts do not include the following:
• Taxes collected for and remitted to a taxing authority if included in gross or total income (such as sales or other taxes collected from customers and excluding taxes levied on the concern or its employees)
• Proceeds from transactions between a concern and its domestic or foreign affiliates
• Amounts collected for another by a travel agent, real estate agent, advertising agent, conference management service provider, freight forwarder or customs broker
• All other items, such as subcontractor costs, reimbursements for purchases a contractor makes at a customer's request, investment income, and employee-based costs such as payroll taxes, may not be excluded from gross receipt
• This also excludes any proceeds from the forgiveness of your First Draw PPP
View a detailed summary of PPP Updates.