Set up a private e-mail address for your customers to submit questions and our subject matter experts will get back to them within 24 hours. They have up to sixty days to approve or decline a request. 1. What ever is not forgiven will be taxable, but the good news is the expense will still be deductible. We’ve provided a useful spreadsheet below to do just this. This topic and related workbook have been updated in a current post here as of 8/18/2020.. By Tommy Greer. However, we are working on implementing an update very soon. Please contact Cray Kaiser for most recent information. The SBA recently released the PPP loan forgiveness application. Thank you Zack. You can use this to calculate an estimate of what you may be forgiven for. Hey there, usgroupie. For amounts that are not forgiven, then it's not income, it's a loan and the expense for which funds are used can be deducted. The maximum loan amount is based on a business’s average monthly payroll cost (931s and/or line 31 of Schedule C Form 1040). Coronavirus (COVID-19): Relief options and Additional Resources. The best way to set up the PPP is as a short term liability if you know it would be forgiven. Business Guide. Menu. The original post was how to book forgiveness and my response was intended to be two-fold. Probably one of the easiest ways to track your PPP expenses is to set up a separate bank account. This way, it won't throw off the balance. First, until forgiven, it is a loan and booked as loan. Congress is currently considering allowing the payroll and other qualifying expenses for the PPP loan (in full or part) to be forgiven to become normal deductible expenses that offset ordinary taxable income. While you all raise excellent questions, at this time we don't have that information yet. In this example, bring the following to your lender to apply for loan forgiveness: (A) PPP loan bank reconciliation Rev Proc. To properly account for the PPP loan, we suggest creating a “PPP Loan Payable” account on your trial balance to record the liability you assume upon receipt of your loan proceeds. Thank you for your time and patience, have a nice weekend. Once you've completed that, everything should be good to go. All Again, some loans or partial amounts will not be forgiven. This approach is consistent with the CARES Act specifying that the employer is not subject to tax on the forgiven amount of PPP loans, and also is consistent with the intent of IRS Notice 2020-31 of April 30, 2020, which says that no tax deduction is available for expenses that are paid with tax-exempt dollars. This loan will remain a payable until either the bank provides a notice of forgiveness or principal payments are made. It is not necessary to obtain the password to use these documents. Products, Track Here is a sample which shows the example of $57,000 in PPP funds received, and $33,748.92 spent-to-date. will not be deductible (as of IRS guidance for now) and therefore will add amounts to net income, which is taxable. will not be tax deductible (as expenses). Excel Spreadsheet Template for tracking PPP expenses 2. QuickBooks Guidance for tracking PPP expenses Paycheck Protection Program Overview. Welcome to the Community. Guide. Funding Programs. Our Paycheck Protection Program Expense Tracking Worksheet helps easily track your expenses. The QB P&L will not show regular spending vs. PPP spending, so keep a separate spreadsheet to track the PPP spending. Detailed records and open communication with lenders can help organizations meet the eligibility requirements for loan forgiveness. Simple is good for me. If you place the amount forgiven in "other income", you then adhere to this rule. Congress is currently considering allowing the payroll and other qualifying expenses for the PPP loan (in full or part) to be forgiven to become normal deductible expenses that offset ordinary taxable income. payroll, rents, etc. All bet are off if the AICPA is successful in it's challenge to the deductibility of the expense. CLICK HERE. After the 8 weeks the PPP bank balance is now $0.00. Update the spreadsheet each time a new expense is added to the PPP check. Offsetting the PPP-loan-forgiveness "other income" with the PPP-loan-expenses that qualify for the "forgiveness" allow both the income and expenses to offset each other so no tax implication on either side. It seems we need a clearer explanation of handling the QB accounting for PPP loan forgiveness. Loan Forgiveness Guidance. In QuickBooks desktop please set up an other current liability account and name it PPP loan. Assuming I received $30k PPP loan recorded as "short-time liability", eventually, $20k out of $30k can be forgiven, how do I write-off that loan? Forensic Accounting, Valuation and Litigation. We've collected together the most popular articles for year end tasks Companies that have received a PPP loan should be aware of the loan forgiveness requirements as they move forward with their loan. Once forgiven, then debit against the liability (loan amount) for the amount forgiven and book the credit to each of the expenses as the expense will no longer be deductible per IRS guidance. From what I have read, not only are you required to submit to the bank what the funds were used for and amounts, but you also have to prove that your business was actually impacted by Covid-19. If you're not sure how to create this liability, use this article to set up the loan in QuickBooks Online. We recently received PPP loan, but I'm wondering how to record PPP loan which can be forgiven. It is designed to take the guesswork out of tracking which expenses count toward your PPP loan forgiveness. The maximum loan amount is based on a business’s average monthly payroll cost (931s and/or line 31 of Schedule C Form 1040). Offsetting the PPP-loan-forgiveness "other income" with the PPP-loan-expenses that qualify for the "forgiveness" allow both the income and expenses to offset each other so no tax implication on either side. Q:  Since I have the loan entered in QB DT as a short term liability, when it is forgiven, how do we enter it so the loan balance becomes $0? Tracking expenses is an important part of maximizing PPP loan forgiveness. That is not currently the case, but if this passes, then the PPP forgiveness could not be included as ordinary income, but would have to be set up as a non-taxable "other income" and the expenses would be debits to profit/ordinary income, and would, then, reduce taxes. Congressional leaders state the intent of the CARES Act was that such expenses would be tax deductilble expenses. So, it really is contributing to income. It's not income. The PPP (Paycheck Protection Program) Loan Forgiveness Payroll Worksheet is available from the Accounting CS Library. Supplemental support documents “SBA PPP Loan Borrower Disbursement Authorization” and “SBA PPP Loan Borrower’s Certification” can be added. ... we are making available the excel spreadsheet template to assemble the SBA 147 Notes via our batch processing software. Excel Spreadsheet Template for tracking PPP expenses QuickBooks Guidance for tracking PPP expenses PPP Loan Forgiveness Fillable Application Paycheck Protection Program Overview. They deemed it as double-dipping. Record $20K as "Income"? no tax deduction is available for expenses that are paid with tax-exempt dollars. So when the loan is forgiven you would debit the loan and create a credit for the payroll expense. When the loan is forgiven, and we need to remove the debt from our books, is the credit to non-taxable income? For example, the PPP loan is $50,000, and $50,000 was spent on gross payroll not including employer taxes (employer share of SS and Medicare), and assuming other qualifications were met, the loan is 100% forgiven. If you have any additional concerns or questions, let me know.The Community and I will be here to assist. In the meantime, I suggest checking out the following article to get set up for PPP loan forgiveness. When you make the deposit you're going to expense it there. Thanks for stopping by the QuickBooks Community. PPP Loan Forgiveness Calculation Form. I just wanted to clarify the matter. Example: Deposit for $$$$$ from B of A for PPP loan? The … The company revenue should not be "inflated" by the other income (which is not really income). Prevents "double dipping" -- getting effectively a non-taxable grant, and still deducting from other taxable income the related, qualifying expenses that made the PPP loan forgivable. PPP Loan Forgiveness Instructions and Applications The U.S. Department of the Treasury provides instructions and applications for forgiveness … However, if you want to make a bank deposit for the money you receive from a loan, then no need to enter an opening balance. Agreed, Zack. I would set it up at the least, as a short term liability, "PPP Loan," and then use a Journal Entry if it becomes "income.". Guidance is sparse and we expect the administration and SBA to fill in the gaps over the next several weeks. CARES Act - Paycheck Protection Program Loan Forgiveness Spreadsheet. The conditions of the Paycheck Protection Program. salaries, payroll taxes, rents, etc.) Perform a bank reconciliation at the end of the 8th week and tie your general ledger account to the bank statement. If you applied for and received a Paycheck Protection Program (PPP) loan, you’re likely very aware of the uses, expectations, and tracking requirements needed to achieve loan forgiveness. Eligible borrowers able to receive 2.5are x themonthly payroll amount based Thank you for joining the thread, RB30. Open a separate bank account for your PPP loan. If you have any questions, I'm here to help you find an answer. Sign up for latest news & financial tips. The fact that I should enter the loan amount as negative threw me off - did I confuse myself without really having to? Additional Eligibility Criteria and Requirements for Certain Pledges of Loans for the Paycheck … Be sure to include details about the disbursements in the spreadsheet, so that you are tracking both how … It includes step-by-step instructions and an example to follow. The effect is that the qualifying expenses offset the loan forgiveness so that 1) the "other income" and 2) the associated expenses are BOTH tax neutral, consistent with CARES Act and the IRS Notice 2020-32 of April 30, 2020. Please read the instructions in the worksheet which indicate how to use the resources as intended. The remaining $10K reclassed to a long-term liability account. Setting up an efficient tracking system will allow for successful documentation. Co-branded PPP loan forgiveness calculator (In Excel) for your clients. That is not currently the case, but if this passes, then the PPP forgiveness could not be included as ordinary income, but would have to be set up as a, Track how you use your Paycheck Protection Program loan, QuickBooks Desktop Year End Prep and Resources, QuickBooks Accountant Year End Prep and Resources, QuickBooks Online Year End Prep and Resources, See At the same time, the expenses that are the qualifying expenses for the loan forgiveness (e.g., payroll at not less than 75% of the loan amount, rent and utilities not exceeding 25% of the PPP loan amount) are recorded as ordinary expenses. -- credit "Other Income" which then becomes taxable income, as it is adding to the overall income. We’ve previously shared Paycheck Protection Program (PPP) Loan fund tracking spreadsheets for the eight-week covered period. Any qualified borrower of a PPP loan of $50,000 or less may use SBA Form 3508S to apply for loan forgiveness and be exempted from any reductions in their loan forgiveness amount based on reductions in full-time equivalent (FTE) employees or reductions in employee salary or wages. First and foremost, forgiveness will be granted for the portion of the funds you utilize on expenses incurred during an eight-week period from the time the loan funds are received. It is not "income" until it is forgiven. Skip to main content. So it can be interred in Company register? “My approach is to have all of our clients who get … Local Assistance. When we record the forgiveness via journal entry are we crediting non-taxable income? Info About Acuity: We support companies that have 5-50 employees to supplement or … There's a helpful loan forgiveness calculator tool on our website, specifically designed for the PPP loan. The bad news is the liability will still need to be repaid. Our PPP Calculator, a powerful but easy to use Excel spreadsheet, accounts for every expense as you allocate your PPP funds, making it simple to determine your forgiveness amount, and report to your own financial institution. Offsetting the PPP-loan-forgiveness "other income" with the PPP-loan-expenses that qualify for the "forgiveness" allow both the income and expenses to offset each other so no tax implication on either side. The law says it is exempt from taxes. Enjoy the rest of your day! Sales & For the best chance of loan forgiveness, you need to track eligible expenses against your loan proceeds. 2020-51 provides that if a PPP loan recipient did not deduct expenses on their 2020 tax return and some or all of the loan that they were expecting to be forgiven is not forgiven, they may either deduct the expenses on an amended return for 2020 (or, for a partnership, an AAR) or deduct the expenses on their 2021 tax return. Yes, correct. PPP Spreadsheet. The SBA has partnered with a financial services technology provider to make available a secure platform (the PPP Forgiveness Platform) for lenders like VEDA to use to submit forgiveness decisions to the SBA. Let me know if you need additional information by commenting below. Download your free PPP Loan Forgiveness Spreadsheet for forgiveness amount calculation, PPP schedule and worksheet, and more to help you apply. That is between you and the lender, information on payroll you provide them, and the six months grace you've been given to apply for forgiveness, or make your first loan payment. CLICK HERE to download the Paycheck Protection Program Forgiveness Template (excel). It will be updated as rules and regulations change and has locked calculations to maintain the integrity of the formulas. We want to provide cost-effective access to the tools you need manage your PPP spending, but the reality is this spreadsheet will be a bit of a monster, and evolve over time as PPP guidance is released. Because of the complexity of the PPP forgiveness calculations, the spreadsheet will be a constant source of updates, revisions and improvements. Chris Macksey. Easy cheesy. Usually, QuickBooks let's you enter the full amount as a negative amount since it is the business liability. If forgiveness isn't granted, then the funds will be taxable income. what would the loan be If it which has been forgiven is not taxable? Sales Tax. So then  make a new vendor for the lender? Many businesses received those funds last week, so if funds were received on Friday, April 17, 2020, you should be tracking eligible expenses between April 17 and June 12, 2020. Connect with and learn from others in the QuickBooks Community. I've added these articles to help you track the PPP loan in QuickBooks Online: Track how you use your Paycheck Protection Program loan. Also, the employer and employee portion of OASDI and Medicare cannot be paid with PPP funds. Manual Spreadsheet. Interest, rent and “utilities” that are incurred during the … Auto-suggest helps you quickly narrow down your search results by suggesting possible matches as you type. That's it. Guidance is sparse and we expect the administration and SBA to fill in the gaps over the next several weeks. If its not forgiven, its a loan like any other loan. PLEASE NOTE: These spreadsheets are locked to maintain the integrity of the formulas. Since everything is taxable unless the IRC states it is not, it should be booked as "Other Income"; then the loan should be listed in the liability section for long term debt as it has a repayment period of greater than one-year. Let’s first review the terms of the PPP. into ... QuickBooks Online, QuickBooks Self-Employed, QuickBooks ProAdvisor Program, QuickBooks Online Accountant, QuickBooks Desktop Account, QuickBooks Payments, TSheets by QuickBooks, Other Intuit Services, QuickBooks Self-Employed, QuickBooks ProAdvisor Program, QuickBooks Online Accountant, QuickBooks Desktop Account, QuickBooks Payments, TSheets by QuickBooks, Other Intuit Services. Am I missing something here, or is the above a reasonable interpretation of how forgiven amounts of the PPP loan are to be accounted for? It’s been an intense couple of weeks. We are waiting on more guidance from the Treasury, and Congress. Accounting transactions when PPP or portion forgiven. The SBA said it is NOT income, so we need to enter as one would a grant. Most are stating that the proper approach when the loan or a portion of the loan is forgiven is to: -- debit the liability account (the PPP loan) and. I have a similar question. Nontaxable income? Yes, it's income and should be recorded as "Other Income" type in QBO. There are three PPP Loan Forgiveness Applications and corresponding instructions from the SBA. To apply for forgiveness, you'll have to submit a request to your lender. PPP - Loan Forgiveness Overview Revised May 29, 2020; PPP - FTE Employee Worksheet spreadsheet Revised May 27, 2020; PPP - Cost Tracking spreadsheet Revised May 21, 2020; PPP - Salary Forgiveness spreadsheet Revised May 21, 2020; For help with your specific situation, please reach out to our RINA CARES team at COVID@RINA.com. Prevents "double dipping" -- getting effectively a non-taxable grant, and still deducting from other taxable income the related, qualifying expenses that made the PPP loan forgivable. PPP loan accounting. We will amend and add to the template as information becomes available. What is the best way to set up in QB's online to record all information? Accounting for the PPP Forgiveness Spreadsheet. To track fund utilization using a spreadsheet, enter your loan proceeds balance and subtract each qualifying disbursement. However, once forgiven, it has to be removed from the balance sheet and put somewhere....I'm suggesting "other income" so that expenses shown are accurate, otherwise payroll expenses will be understated. Please note that this blog and the 24-week PPP loan forgiveness templates are based on laws effective in August 2020 and may not contain later amendments. Step-by-step guide to maximizing PPP loan forgiveness for self-employed and other Schedule C filers. For loans that are forgiven, the loan uses , i.e. The attached template should help – it is intended as a planning tool. With a Journal Entry? The next task for those who submitted loan applications for the Paycheck Protection Program (PPP) will be to determine how much of the loan will be forgiven. PPP Loan Forgiveness Calculation Form. Learning Center. In this case debiting the "loan" and crediting "other income" creates the $50,000 income that is then offset by the $50,000 gross payroll expense so all is good. I do realize it is income but is non taxable income so how do we record this? Federal Contracting. Created with Sketch. I'm always right here to help. 3. Again, this is what I have read, but not necessarily verified yet. The American Institute of CPAs (AICPA) has created a loan forgiveness calculator (excel spreadsheet download) for the Paycheck Protection Program (PPP) to … Book the expenses as usual until the loan is forgiven. Interest Rent and Utilities Paid in Arrears. The P&L for the year would then appear correct (although a P&L for any other period would still be weird). April 20, 2020. The attached template should help – it is intended as a planning tool. Waiting on more guidance from the Accounting CS Library this loan will remain payable! 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