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Level 1

Is there a specific way I should setup the ppp loan deposited for our comany and how should i keep track of Payroll and Utility expenses used towards the loan?

 
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Best answer April 17, 2020

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QuickBooks Team

Is there a specific way I should setup the ppp loan deposited for our comany and how should i keep track of Payroll and Utility expenses used towards the loan?

Hello, Hinco. 

 

Thanks for stopping by the QuickBooks Community, I'm happy to show you how to set up and record the PPP loan. 

 

The following steps will get you going in the right direction. Start by crediting the loan as a liability and name it whatever you'd like. Set it up as a short-term liability if you know it'll be forgiven, as life of the loan is only 8 weeks. If you think for any reason it wont be forgiven, then you can set it up as long term liability, which has a 2 year repayment plan through 2020 and 2021.


Also, it is important to remember that you record it in the name of the bank you received it from because you're paying back or being forgiven by that bank, not the SBA.

 

This fact sheet from the IRS I'm attaching below will help keep track of the PPP and what you need to know about it. 

 

- IRS Paycheck Protection Program fact sheet 

 

If there's anything else you need, feel free to post here

 

Thank you and have a nice great weekend. 

View solution in original post

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QuickBooks Team

Is there a specific way I should setup the ppp loan deposited for our comany and how should i keep track of Payroll and Utility expenses used towards the loan?

Hello, Hinco. 

 

Thanks for stopping by the QuickBooks Community, I'm happy to show you how to set up and record the PPP loan. 

 

The following steps will get you going in the right direction. Start by crediting the loan as a liability and name it whatever you'd like. Set it up as a short-term liability if you know it'll be forgiven, as life of the loan is only 8 weeks. If you think for any reason it wont be forgiven, then you can set it up as long term liability, which has a 2 year repayment plan through 2020 and 2021.


Also, it is important to remember that you record it in the name of the bank you received it from because you're paying back or being forgiven by that bank, not the SBA.

 

This fact sheet from the IRS I'm attaching below will help keep track of the PPP and what you need to know about it. 

 

- IRS Paycheck Protection Program fact sheet 

 

If there's anything else you need, feel free to post here

 

Thank you and have a nice great weekend. 

View solution in original post

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Level 1

Is there a specific way I should setup the ppp loan deposited for our comany and how should i keep track of Payroll and Utility expenses used towards the loan?

Thank you for your help. I did set it up as a short-term loan liability.  How do I apply the expenses for payroll back to that loan when it is forgiven?

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QuickBooks Team

Is there a specific way I should setup the ppp loan deposited for our comany and how should i keep track of Payroll and Utility expenses used towards the loan?

Thanks for going through the steps above, @s47.

 

You'll want to create a journal entry to apply the expenses back to your payroll. Let me show you how in your QuickBooks Desktop (QBDT):

  1. Go to the Company menu
  2. Select Make General Journal Entries.
  3. Fill out the fields to create your journal entry. 
  4. Click Save & Close once done.

Furthermore, here's an article you can use for reference. This provides detailed information in creating a journal entry: Create a journal entry in QuickBooks Desktop.

 

I'd also recommend getting in touch with your accountant for guidance on what specific accounts to use. This way, we'll ensure the accuracy of your books.

 

Also, you might want to check this article that can guide you in accurately reconciling your accounts: Reconcile an account in QuickBooks Desktop.

 

I'm always around to help in case you have any other concerns. Have a great day!

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Level 2

Is there a specific way I should setup the ppp loan deposited for our comany and how should i keep track of Payroll and Utility expenses used towards the loan?

Good Morning,

In another post I discussed this but have been learning as I go.  I set up my PPP loan as a long term liability.  I then created a sub account to my regular bank checking account and put the amount of my loan there.  When I use any of the PPP loan I switch from the banking account to the sub account and the money is removed from that account and thus keeps track of all the expenses. You can visualize this by going into the check register.  At the top, change the bank account to the sub account and it will open up a screen that shows what has been applied to the sub account.  When you need to reconcile your bank statement, use the regular checking account as  all your regular checks are there as well as the checks applied to the sub account.  I didn't use the classes method some have used--too many headaches.  I also did not open a second checking account at the bank because I didn't want to order new checks or change my information on the accounts that I pay electronically. 

I spoke with my loan manager (Washington state) and he advised that the SBA is supposed to be coming out with new guidelines on April 27 regarding what expenses will be forgiven.  He states that it is hotly debated amongst the accountants and lawyers.  He did say that "right now" the expenses that WILL be forgiven are the employer portion of unemployment and L&I and employer contributions to medical and pension.  Federal taxes (SS,ME and withholding WILL NOT be forgiven. As for the 25% of the loan that goes to things other than payroll expense---it is unclear.  There are many sites that say that rent, utilities, mortgage interest, transportation, company phone etc MAY BE forgiven.  I pay these expenses by check and am applying them to the sub account.  IF they are forgiven, great.  But if they are not forgiven I just go back into the check register and switch them from the sub account to the regular checking account.  No big deal.  But I am keeping all those bills and check stubs together so that if it IS covered, I'm not scrambling for the paperwork.  We already keep all vehicle gas receipts to reconcile the company gas card so on the chance that they forgive gas expenses, we have them because the credit card statement does not say exactly what was purchased. 

My account manager thinks they will be using cash accounting and not accrual accounting.  My QB is set up as accrual so I will cross that bridge when I get to it. The manager said that our bank is working on a forgiveness worksheet and fact sheet regarding required documents  (like the loan application) Another post said they were going to run a payroll report covering the 8 weeks and hi-light those expenses applied to the loan.  That's actually what we used to calculate payroll expenses and fill out the loan worksheet when applying for the loan and it was accepted.  That said, I did create an XCEL spreadsheet that calculates all payroll expenses.

The account manager said that whatever you do, be sure that you have the back-up documentation for any expense you claim on your loan.  It would suck to find out something is forgiven and you lack the proof.

Hope this helps someone

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Level 2

Is there a specific way I should setup the ppp loan deposited for our comany and how should i keep track of Payroll and Utility expenses used towards the loan?

If I understand your message, you are writing checks using your sub checking account.  When you reconcile your main bank account, all sub checking account checks and main bank account checks will be in the main bank account.  Am I understanding that correctly?  Thanks

 

 

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Level 2

Is there a specific way I should setup the ppp loan deposited for our comany and how should i keep track of Payroll and Utility expenses used towards the loan?

TRAENWKAL,

Yes you have got it!!!!

 

Robin

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Level 1

Is there a specific way I should setup the ppp loan deposited for our comany and how should i keep track of Payroll and Utility expenses used towards the loan?

Hi,

 

I just received my PPP Loan from UMB bank.  In my chart of accounts, I created a new BANK account name just for the loan.   How DO I deposit it and make it a short term liability?  

 

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QuickBooks Team

Is there a specific way I should setup the ppp loan deposited for our comany and how should i keep track of Payroll and Utility expenses used towards the loan?

Hello there, @Rox62.

 

You'll want to go to the Banking menu and record the deposit from there. I'll show you how:

 

  1. Go to the Banking menu, then select Make Deposits.
  2. If the Payments to Deposit window opens, select Cancel.
  3. You'll be routed to Make Deposits window.
  4. In the Deposit To field, choose the account to deposit the loan into.
  5. Check the Date and enter an optional Memo.
  6. In the From Account column, select the Liability account you created in Step 1.
  7. In the Amount column, enter the loan amount.
  8. Click Save & Close.

 

To learn more information about recording and making deposits, please check this article: Record and make Bank Deposits in QuickBooks Desktop.

 

Also, I'd suggest running the Deposit Detail report. This lets you view all your deposits and their associated transactions within a particular period. Just go to Reports from the top menu. Then, choose this report from the Banking section.

 

Lastly, you can read any of our help articles you can find here in the Community. These articles might help be your guide for future reference. 

 

Leave a comment below if you have any other questions, I’m always here to help. Take care and have a great day!

Highlighted
Level 1

Is there a specific way I should setup the ppp loan deposited for our comany and how should i keep track of Payroll and Utility expenses used towards the loan?

I have set up my PPP loan as a short term liability. As I pay employees should I be charging the payroll against the PPP Loan?

I am thinking about future clarity and wonder if I should charge payroll expense in the usual way and offset the PPP "Loan" with a journal Debiting the ST PPP Loan and crediting "Other Income - PPP Loan" in an amount equal to the payroll expense bi-weekly.

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Level 1

Is there a specific way I should setup the ppp loan deposited for our comany and how should i keep track of Payroll and Utility expenses used towards the loan?

Can you provide more detail on what accounts should be used to create the general journal entry? 

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Level 1

Is there a specific way I should setup the ppp loan deposited for our comany and how should i keep track of Payroll and Utility expenses used towards the loan?

I like the idea of setting up a subaccount for the PPP. When I setup the subaccount to my "regular" checking account, what should the account type and detail type be?

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Level 1

Is there a specific way I should setup the ppp loan deposited for our comany and how should i keep track of Payroll and Utility expenses used towards the loan?

I'm confused (accounting is not my calling!).  I use QB Online.  Do I use a sub account here or not (see photo)?  How do I connect this PPP loan to my existing business checking account that is in QB already?  

 

Once I have it in my Chart of Accounts, how do I then record it since the funds are showing up on my register since my bank account is connected?  Who is the vendor (is that our business or the Bank?). What category do I put here?Screen Shot 2020-07-05 at 5.11.31 PM.png Screen Shot 2020-07-05 at 5.12.55 PM.png

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QuickBooks Team

Is there a specific way I should setup the ppp loan deposited for our comany and how should i keep track of Payroll and Utility expenses used towards the loan?

I'll share some steps on how you can set up the Paycheck Protection Program (PPP) loan, jayhox.

 

You can create a new bank account and make it a sub-account to the existing bank by following these steps:

 

  1. Go to Accounting > Chart of Accounts.
  2. Click New and select Bank from the Account Type drop-down.
  3. Enter the Name, Description and make sure to put a check mark from the Is sub-account box.
  4. Select your existing business checking account from the drop-down menu.
  5. Click Save and Close.

Then, add a new liability and name it whatever you'd like, so you'll know exactly what it is. 

 

Here's how:

 

  1. In the Chart of Accounts page, click New.
  2. Select Other Current Liabilities (If you know it will be forgiven) from the Account Type drop-down menu. Then, choose a Detail type.
  3. Enter the Name and Description. Leave the Unpaid Balance blank.
  4. Click Save and Close.

After creating the liability, you also need to create an asset account for the PPP Loan Forgiveness (Contra Account). Once done, record a Journal Entry to apply the loan to the proper asset accounts.

 

Here are the steps:

 

  1. Go to + New > Journal Entry.
  2. In the first line, select the new bank account and enter the amount of the loan in the Debits column.
  3. For the second line, choose the liability account and enter the amount in the Credits column. 
  4. Click Save and close.

Pay your bills and payroll as you normally would. Then, make a journal entry for the amount of the expense.

 

  1. In the Journal Entry page, select the asset account for the PPP Loan Forgiveness and enter the amount in the Credits column.
  2. For the second line, choose the liability account and enter the amount in the Debits field.

For the transaction that shows up in the Banking page, you'll want to match it to the one recorded in QuickBooks. I've got this article here: Categorize and match online bank transactions in QuickBooks Online.

 

To know more about the Paycheck Protection Program, you can check this article: What you need to know about the Paycheck Protection Program.

 

If there's anything else you need, please leave a comment below. I'm always around to help.

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