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jchang926
Level 3

How should I record if the PPP loan was fully forgiven?

If I do record it as "other income" would I have to remove the initial entry where I categorized the loan as "short term liability"?
Solved
Best answer December 09, 2020

Best Answers
Jen_D
Moderator

How should I record if the PPP loan was fully forgiven?

Thanks for posting again in this thread, jchang926,

 

Yes, that's right. Forgiveness of PPP loan proceeds should be recorded as "Other Income" in QBO. Create a new income account to track the funds, here's how:

 

  1. In your QuickBooks account, go to the Accounting tab.
  2. Choose Chart of Accounts then click New.
  3. Pick Other Income as the Account Type.
  4. For the Detail Type, pick Other Miscellaneous Income.
  5. Once done, press Save and Close.

 

Use this account when you record the forgiven loan in QuickBooks.

 

If you have any other questions, please tag me here. I'll be more than happy to share some more information to help you. Have a nice day!

View solution in original post

46 Comments
CharleneMae_F
QuickBooks Team

How should I record if the PPP loan was fully forgiven?

I’m here to ensure this loan will properly be recorded, jchang926.

 

In QuickBooks Online, you can set up the PPP loan as a short term liability if you know it would be forgiven. This way, you'll be able to record the loan and its payments. 

 

Here's how:

  1. Select the Accounting menu, then choose Chart of Accounts.
  2. Click New to create an account.
  3. Choose Long Term Liabilities from the Account Type dropdown.
  4. From the Detail Type dropdown, select Notes Payable.
  5. Provide a name like “PPP loan.”
  6. Choose when you want to start tracking the money from the dropdown.
  7. Enter the full loan amount as a negative and then Save and close.

 

Once done, you’ll want to record the money by creating a journal entry. I’ll show you how:

  1. Click the + New button.
  2. Select Journal entry.
  3. Select the liability account you just created from the Account dropdown.
  4. Enter the loan amount in the Credits column.
  5. Select your bank account from the Account dropdown.
  6. Enter the same loan amount in the Debits column.
  7. Press Save and close.

 

For more detailed information about the process, I suggest checking this article: Set up a Loan in QuickBooks Online. It also includes a guide on how to pay back the loan and enter them into the system.

 

Additionally, I'm adding this article which gives details about the things that you need to know about the Paycheck Protection Program (PPP): Paycheck Protection Program (PPP) Loan Forgiveness.

 

Get in touch with us if you need further assistance. Our help will be sent on time.

jchang926
Level 3

How should I record if the PPP loan was fully forgiven?

Thank you. Since we don't have to pay for it, what happens next?

Rose-A
Moderator

How should I record if the PPP loan was fully forgiven?

I appreciate you getting back to us, jchang926.

 

Borrowers and lenders may rely on the information provided in this article: Paycheck Protection Program loan forgiveness. However, if you still need more information about the loan that was being fully forgiven, I'd suggest visiting the SBA and Treasury's website.
 

Paycheck Protection Program.

U.S. DEPARTMENT OF THE TREASURY.

 

The pointers above provide detailed guidance about this program as well as rules on how to handle forgiven loans. They'll be able to answer your questions with complete and accurate information.

 

To know what are the details included in the PPP report, check out this write-up: Understanding your Cash compensation report for PPP Loan Forgiveness.

 

If you have any other QuickBooks concerns, please let me know. I'd love to help. Happy Holidays!

jchang926
Level 3

How should I record if the PPP loan was fully forgiven?

Thank you, but what I'm asking is that I previously recorded the loan as a liability and all of the above, but now that we have the notice that our loan is forgiven, how do I record that?  Would it now be recorded and categorize as "other income"? It wouldn't be a liability anymore, correct?

Jen_D
Moderator

How should I record if the PPP loan was fully forgiven?

Thanks for posting again in this thread, jchang926,

 

Yes, that's right. Forgiveness of PPP loan proceeds should be recorded as "Other Income" in QBO. Create a new income account to track the funds, here's how:

 

  1. In your QuickBooks account, go to the Accounting tab.
  2. Choose Chart of Accounts then click New.
  3. Pick Other Income as the Account Type.
  4. For the Detail Type, pick Other Miscellaneous Income.
  5. Once done, press Save and Close.

 

Use this account when you record the forgiven loan in QuickBooks.

 

If you have any other questions, please tag me here. I'll be more than happy to share some more information to help you. Have a nice day!

View solution in original post

chuckK
Level 3

How should I record if the PPP loan was fully forgiven?

hi - may i ask, if you received the ppp loan through quickbooks, did you apply for the forgiveness through them as well? if not, how may i ask, did you apply? thanks!

Rubielyn_J
QuickBooks Team

How should I record if the PPP loan was fully forgiven?

Let me provide information about your PPP loan application, @chuckK.

 

You can send this through QuickBooks Capital. This is a service offered by Intuit Financing Inc. that renders business loans to eligible QuickBooks customers. 

 

If you wish to apply outside QuickBooks, you can send it through an approved SBA Paycheck Protection Program lender. 

 

If you're applying for a PPP loan within QuickBooks, make sure to have the following informations: 

  • Bank routing and account number
  • Social Security Number fo the person(s) applying
  • Information we import into QuickBooks Capital
  • Average monthly payroll expenses

Once you've gathered all the right information, you can start your application. Here's how: 

  1. Choose Capital, and then select the Tell me more button on the Federal Relief Funds box. 
  2. Fill in the necessary information and then click Next.
  3. On the Tell us about your business page, confirm all the information and then choose Next.
  4. Enter your Social Security number and Date of birth and click Next.
  5. Fill in the information of your bank routing and account numbers and then select Next.
  6. Review all the data and check the boxes to confirm and click Accept and submit.
  7. Check again the informations in the application and click the Confirm button.
  8. Review the data from our lender partner and select the boxes. 
  9. Answer the two questions and click Confirm and accept.
  10. Once done, select the Review and sign button.

You might want to check out this article to learn how to track your PPP loan: Track how you use your Paycheck Protection Program loan.

 

Keep in touch if you need any more assistance with this. I've always got your back. Have a great day.

smouton
Level 1

How should I record if the PPP loan was fully forgiven?

What should you use on the tax-line mapping?

SashaMC
Moderator

How should I record if the PPP loan was fully forgiven?

Welcome to the QuickBooks Community, smouton. It will be my pleasure to assist you here! With QuickBooks, this will allow you to map your client's accounts, forward the data to ProConnect Tax Online and give you the ability to edit your tax mappings after you review them. I recommend that you review this article to understand better how to link your client accounts to export to Intuit Tax Online. To edit your tax mapping, follow these steps below:

  1. Choose Finish Review to display the drop-down menu.
  2. Click Review Again.
  3. Select Assign tax line and Edit tax line to make any adjustment.
  4. When completed, hit Finish Review, then Freeze workspace.

If you need clarification about assigning a tax line, I highly recommend that you contact an accountant to see what is the best fit for your business. If you don't know you have an accountant, no worries! QuickBooks provides a ProAdvisor service where you can connect with experts based on your location. Many offer a free consultation. Here's how to contact an expert:

  1. Go to https://quickbooks.intuit.com/find-an-accountant/.
  2. In the Find an expert in section, choose what you're looking for, then use your search field to enter a City or ZIP code.
  3. Select Search.
  4. Browse through the results and select one that works best for your business. You can click on each profile to get more information about their service.

Please don't hesitate to let me know if you have any other questions. I'm just a post away. Have a wonderful day!

 

ty13
Level 1

How should I record if the PPP loan was fully forgiven?

how to set it tax exempt and remove from income

dws54
Level 1

How should I record if the PPP loan was fully forgiven?

Although this will show as Other Income on the PnL, be sure not to include it in taxable income. The forgiven PPP loan is nontaxable. 

GLRussell
Level 2

How should I record if the PPP loan was fully forgiven?

Hi,

I believe this is incorrect since IRS does not recognize the PPP loan forgiveness amount as income per the December ruling.

tennise99
Level 1

How should I record if the PPP loan was fully forgiven?

Thank you, Are we allowed to fully deduct the rent and utility expenses reported to qualify for the ppp loan?  my loan has been forgiven.  thank you again for your help. Tennise

Rubielyn_J
QuickBooks Team

How should I record if the PPP loan was fully forgiven?

I appreciate your time posting here in the Community, @tennise99.

 

I'm also happy to know that your loan has been forgiven. To know if you can fully deduct the rent and utility expenses, I suggest contacting the PPP support team. They can provide the necessary information about the PPP loan. 

 

You can contact them by going to the PPP Center area of your product and selecting Live Chat

 

I've added this link to guide you with the latest PPP loan information: https://quickbooks.intuit.com/small-business/coronavirus/paycheck-protection-program/.

 

Know that you're always welcome to post again here if you have other concerns. I'd be glad to lend a helping hand. Stay safe.

GLRussell
Level 2

How should I record if the PPP loan was fully forgiven?

The PPP forgiveness amount is not to be included as any type of income.  

GLRussell
Level 2

How should I record if the PPP loan was fully forgiven?

But if you record it under Other Income, then it will be taxable.  Correct?  

Retc
Level 1

How should I record if the PPP loan was fully forgiven?

I would create an equity account and then do a journal entry posting to the liability acct and the equity acct. That way it will not be sitting in an income account. My ppp loan is not yet forgiven but that's my plan. 

robinz46
Level 3

How should I record if the PPP loan was fully forgiven?

Hi.  Could you please explain the year end journal entries for the expenses paid by PPP loan that has not yet been forgiven.  My loan should be completely forgiven but I don't know about that status yet.  I'm caught between tax years 

Thank you

sunnyskysolstice
Level 1

How should I record if the PPP loan was fully forgiven?

If we record loan forgiveness as other income, is it considered taxable income?

sunnyskysolstice
Level 1

How should I record if the PPP loan was fully forgiven?

Thanks Jen_D! If loan forgiveness is recorded as other income, is it considered taxable income?

Tori B
QuickBooks Team

How should I record if the PPP loan was fully forgiven?

Hey there, @sunnyskysolstice.

 

Thanks for following up with us. I'm happy to provide additional insight into your other income account for the PPP forgiveness loan. 

 

I recommend reaching out to your accountant as they would know if the account can be considered taxable or not when using it for these reasons. You can check out Track how to use your PPP loan for more information about using the PPP loan. 

 

However, if you don't have an accountant, don't sweat. You can find one here in our Resource Center

 

Please let me know if you have further questions or concerns. You can always reach out to the Community any time you need a helping hand. Take care! 

A User 2
Level 1

How should I record if the PPP loan was fully forgiven?

Can you please show the next step as well?  I had a PPP loan that was forgiven, I had it listed as a Short Term Loan  and I created the account for Other Income as you noted but I am unclear on how to record the next step. Do I make a credit? It wasn't a deposit. Unsure how to link it to the original Short Term Loan. The loan was just forgiven I did not receive cash to repay it. 

IamjuViel
QuickBooks Team

How should I record if the PPP loan was fully forgiven?

Hello there, @A User 2.

 

When recording your forgiven PPP loan proceeds, it should be recorded as "Other Income". I can you on how to do it.

  1. Go to the Accounting tab.
  2. Choose the Chart of Accounts tab.
  3. Click New.
  4. Pick Other Income as the Account Type.
  5. For the Detail Type, pick Other Miscellaneous Income.
  6. Once done, press Save and Close.

Once completed, you can create a bank deposit to record the PPP loan. You can refer to the screenshot below:

 

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Also, I'd recommend consulting with an accountant so you'd be guided in tracking your PPP loan.

 

Feel free to leave a comment below if you have other questions or concerns.  I'm always here to help.

PremierAccounting1
Level 1

How should I record if the PPP loan was fully forgiven?

I recorded the PPP as a liability and then posted forgiveness to Other Income.  I will do am adjusting journal entry to debit Other Income and crediting an equity account, and then retained earnings after the new year.  Ultimately this is what will happen but we bypass the tax.

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