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Accounting for PPP Loans and Forgiveness
Accounting for PPP Loans and Forgiveness
There has been lots of talk in the accounting and banking community regarding tracking the PPP Loan and PPP Forgiveness. We have seen some awesome, complicated and very detailed spreadsheets and procedures. There have been multiple changes to the program and we all feel like we are trying to hit a moving target. So while we are keeping a close eye on the changes that are being made, our goal is to keep things as simple as possible. There is a lot of generic advice that is aimed toward companies that do not have adequate bookkeeping procedures in place or have a very complicated payroll.
If you are an AdminBooks bookkeeping/payroll client you do have detailed bookkeeping procedures in place, we will be able to easily compile lists of transactions and amounts directly from your bookkeeping and payroll records.
Resources:
*If you need some guidance on implementing a workflow,
here is a link that was shared by Intuit for QBO users: Tracking the Use of your Clients Paycheck Protection Program Loan Funds
*Download the 'Loan Forgiveness Calculator' that was created by AICPA
*Download the AdminBooks PPP Loan Forgiveness Tracker Template
Explaining the AdminBooks procedure for tracking your PPP Loan:
If you are not an AdminBooks payroll client, we can give you advice on how to meet the requirements for forgiveness at $250/hour with a minimum charge of 1 hour.
1. When your loan is funded it will be classified as “PPP Loan” (other current liability) on your Balance Sheet, as the funds are a loan until it has been forgiven.
2. For our bookkeeping/payroll clients, we will be using an excel spreadsheet to track your forgiveness. We will need the date your loan was funded, the amount of full-time equivalent employees that you designated on your loan application and you will need to determine what % of payroll vs % of forgivable expenses. This spreadsheet will be available in your SmartVault portal with your Payroll Documents. It will help you to determine any amounts & changes you may need to make in your payroll requests during the payroll forgiveness period. see screenshot below
3. When you are ready to fill out your loan forgiveness documents, we will be happy to provide you with payroll reports. We will also be able to provide you with bank transactions for interest and utility payments. Make sure that you are keeping copies of statements/bills/documents that you will submit as part of your forgiveness. Make sure you keep copies of your loan forgiveness.
4. When you receive your loan forgiveness, please send us your documents. We will enter a journal entry moving the amount of loan forgiveness to “Other Income” and the payroll and forgivable expenses to “Other Expenses” as they will not be deductible on your tax return.
5. Any portion of the loan that is not forgiven will remain on your Balance Sheet and will need to be repaid per the terms of your loan.
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