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Level 1

How I should record the PPP loan I recieved? I also try to figure out how to record the salary I pay to myself as a sole proprietor.

 
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QuickBooks Team

How I should record the PPP loan I recieved? I also try to figure out how to record the salary I pay to myself as a sole proprietor.

Hi there, qb-test.

 

I know that during these unprecedented it can be hard to know where to turn for help, rest assured, you came to the right place. I'm more than happy to show you how to record the loan you received. 

 

The best way to set up the Paycheck Protection Program loan is as a short term liability if you know that it'll be forgiven. Name it whatever you like, that way you'll know exactly what it is. Follow the steps below on how to set up a liability once you're signed into your QuickBooks Self Employed account. 

  1. Select the Gear Icon at the top
  2. Under Your Company, select Chart of Accounts
  3. On the right, click New
  4. Select Other Current Liabilities (If you know it'll be forgiven)
  5. Choose a detail type, then select Next
  6. Name the account
  7. Leave the Unpaid Balance blank, then select Save

Below are the steps used to to track exactly what the loan is used for, creating a Journal Entry to apply the loan to the proper asset account. Here's how:

  1. Select +New 
  2. Under the Other column, choose Journal Entry
  3. For the first line under the Account column, select your new liability account
  4. Enter the amount of the loan you're applying to the asset under the Credits column
  5. For the second line, select the appropriate asset account under the Account column
  6. Under the Debits column, enter the amount of the loan you're applying to the asset. 

When these steps are completed, you're all set up to account for the PPP loan correctly. As far as figuring out how to record your salary, I would suggest converting your pay into hourly wages. To do so, check out this article below, It has some involved math, but it's not too difficult to figure out. 

 

- Determine the hourly rate of a salary wage. 

 

If you have any other questions or concerns, you can post them below, and we'll get back to you as soon as possible. 

 

Thank you for your time and patience, have yourself a nice evening. 

 

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Level 2

How I should record the PPP loan I recieved? I also try to figure out how to record the salary I pay to myself as a sole proprietor.

Hi Nick,

 

Thanks for your response! I don't have "Chart of accounts" option. That's what I found on QBSE website "QuickBooks Self-Employed (QBSE) is specifically designed to track business income and expenses to help estimate taxes and file the Schedule C form at year end, and it doesn't have a chart of accounts." Are there other options to record the loan and to track the expenses? 

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QuickBooks Team

How I should record the PPP loan I recieved? I also try to figure out how to record the salary I pay to myself as a sole proprietor.

Let me share some information so you'd be able to track your PPP loan, @Aleena.

 

First, the steps shared by my colleague, @Nick_M is for recording PPP loans in QuickBooks Online. You can categorize it as a Personal Income in QuickBooks Self-Employed. When you start paying for the loan, the payment for the loan capital will be categorized as Business Loans.

 

Here's how:

  1. Go to the Transactions menu.
  2. Click the Add Transaction button.
  3. Enter the Loan details.
  4. Choose Personal in the Type column.
  5. From the Category column, select Income.
  6. Click the Save button.

As a sole proprietor, freelancer, consultant, or independent contractor, you don't pay yourself a salary. Also, you can't deduct your salary as a business expense. Instead, your personal income from the business consists of the business profits, and those get added to your personal income tax return.

 

I'd recommend consulting with an accountant so you'd be guided accurately in tracking your PPP loans.

 

Swing by here if you have other questions about tracking your self-employed income and expenses. I'm always here to help.

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Level 2

How I should record the PPP loan I recieved? I also try to figure out how to record the salary I pay to myself as a sole proprietor.

Thanks for your response! As PPP loan is supposed to be forgivable and it's not taxable, it can't be technically recorded as "income" I guess.

 

Also as a sole proprietor I'm going to spend the loan for payroll, that means I pay the salary to myself. That's how the idea of PPP loan for self employed people works in general, and that's how all calculations are made. That being said I can't really understand how to record my weekly payroll payments. 

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QuickBooks Team

How I should record the PPP loan I recieved? I also try to figure out how to record the salary I pay to myself as a sole proprietor.

Hi Aleena. Thanks for responding.  To record this you would use a Personal Withdrawal categorization. If you need anything else, feel free to hit the reply button below. Someone will always be here to help in the community. 

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Level 2

How I should record the PPP loan I recieved? I also try to figure out how to record the salary I pay to myself as a sole proprietor.

Thank you! That helps a lot. 

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QuickBooks Team

How I should record the PPP loan I recieved? I also try to figure out how to record the salary I pay to myself as a sole proprietor.

I'm glad it helped. Please don't hesitate to come back if you need anything else. We're always here to help. 

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