Desktop how to record the PPP Loan Forgiveness

I’m here to ensure this loan will properly be recorded, @sally412.

To record the loan we'll have to create a sub-account to the bank in the Chart of Accounts. Here's how:

1. Go to the Accountant menu, and then choose Chart of Accounts.
2. Click the Account drop-down arrow, and then select New.
3. Select the Bank radio button, and then click Continue.
4. Enter a name for the account, like “PPP Loan Funds”
5. Click Sub-account of and choose the bank account from the drop-down.
6. Select Save and Close.

Once done, create a new loan account in the Chart of Accounts. I'll guide you how:

1. In the Chart of Accounts, select the Account drop-down arrow.
2. Click New.
3. Select Other Account Types, then click Long Term Liability.
4. Click Continue.
5. Enter a name for the account.
6. Click Save and Close

Then, record the loan proceeds received:

1. Go to the Banking menu, and then select Make Deposits.
2. Change the Deposit To account to the new bank sub-account.
3. In the From Account column, choose the loan account created.
4. Enter the amount received in the Amount column.
5. Click Save and Close

For more information about PPP loan forgiveness, you can check this link: Paycheck Protection Program loan forgiveness.

Also, you can check these links if you have any more questions about the CARES Act:

• Paycheck Protection Program Information Sheet
• Coronavirus tax relief

Let me know if there's anything that I can help with. I'm always here to assist. Keep safe!

Hi, @sally412.

Hope you’re doing great. I wanted to see how everything is going about recording the Paycheck Protection Program (PPP) loan Forgiveness you had the other day. Was it resolved? Do you need any additional help or clarification? If you do, just let me know. I’d be happy to help you at any time.

Looking forward to your reply. Have a pleasant day ahead!

Hi Maybelle, 

I don't believe you understood  the question.   Original poster asked about how to record Forgiveness, not how to record the original loan.

You correctly explained how to post the loan proceeds which is the first step.

Perhaps take another look?   

I appreciate your opinion, @AirKevin.

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

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'm always here to help.

Hello AirKevin,

I see that you replied also.  Do you have a different way of recording the original loan and then recording the forgiveness part of the PPP?

I would appreciate all the help and opinions from everyone.

Thank you,

Thank you Maybelle_S,

This is very clear about how to post the loan in QB.  

Is this also showing how to record the forgivesness?

AirKevin seems to think different.  I like all the opinions because I want this done correctly.

Thank you,

Maybelle is giving a perfect explanation on the necessary steps to enter the original loan as a long term liability, which are pretty much the same as any loan.   Her links are describing how to apply for forgiveness, but I don't think she is answering the question you originally asked:   How to key in or enter that forgiveness in QB once you have received it.

The best information I have to enter forgiveness, (after entering the loan first, as Maybelle described):

Create a new account in QB chart of accounts:

"Other Income" category, perhaps called "Nontaxable PPP Forgiveness"

Journal entry:

Debit the loan account for the amount of forgiveness, (if not 100%).

Credit "Nontaxable PPP Forgiveness" for the same amount.

You should do this in the same tax year that you know forgiveness was assured.

I am open to other suggestions, and variations on this method with entities such as Partnerships and S-Corps.

I have the same question about how to record the forgiveness (not the receipt of the loan). I use Turbo Tax so don't want the forgiveness to show up as income due to the forgiveness.

Thanks for joining this thread, Rose.

I’d like to help you and get this addressed right away. We have a specialized team that best handles this kind of query. 

I’d recommend contacting our Paycheck Protection Program (PPP) Support team. There, they can effectively guide you on how to record your loan forgiveness. 

To reach out to them, click Learn more in the banner at the top of the program window. Then select the green Live Chat button in the PPP Center. 

Also, to stay updated on the latest news and information about PPP, visit our Microsite for reference: https://quickbooks.intuit.com/small-business/coronavirus/paycheck-protection-program/

Once you’re all set, you might want to check this article for reference in running your payroll efficiently: Get started with Payroll.

Let me know if you have other concerns or questions about QuickBooks, you’re always welcome to get back to me in this thread. Have a great day and keep well.

This is the first answer that actually addressed the issue. Thank You!

My concern with adding this as a non-taxable income is that when doing taxes next year, my balance sheet in turbo tax will not be in sync due to this income not being accounted for. It seems it would make more sense to roll this into an account similar to owner's capital. This way it is treated like a cash investment into the business as oppose to some sort of income. Thoughts on this?

Good point - but I don't think this is a problem.    The loan put money in the bank in the first place.   You are just changing the character of these funds from a "liability" to "non-taxable income".   It is the same money.   

When you classify the forgiveness as "non-taxable income", it will be in the equity section of your balance sheet just as if you classify it as "owner's capital".  The difference is that the forgiveness amount will be under "net income", not "owner's capital" which is proper accounting.  PPP loan forgiveness is considered income, as #AirKevin mentioned.

Your answer is wrong.  Forgiven PPE Loans are not taxable income on federal returns.  And are non taxable on most state returns.  https://taxfoundation.org/state-tax-forgiven-ppp-loans/

Hello

How do I register in QB online  the PPP loan once the SBA determines the loan is forgiven?

I'm here to help you with recording the forgiven PPP loan proceeds, Egirardello.

First, you'll have to create an account to track the loan proceeds. Here's how:

1. Click Accounting.
2. Go to the Chart of Accounts tab, then click New.
3. Under Account Type, select Other Income.
4. Under Detail Type, select Other Miscellaneous Income.
5. Enter the desired name in the Name field.
6. Click Save and Close.

Then, you'll have to record a bank deposit using the account created to record the PPP loan proceeds. 

If there's anything else that you need, don't hesitate to let us know. We're just one comment away. Take care!

Hi Kristine, 

It is not correct to record loan proceeds as income.   

As I described in my original post on this thread:   Loans are liabilities, so you need to a liability account to receive the proceeds.    The forgiveness, when granted, is nontaxable "income" even though no cash is received.    This amount goes into a new non-taxable income account, (perhaps named "PPP Loan Forgiveness") which immediately pays off the loan liability through a journal entry.   

Entering both transactions in a single income account leads to problems if the proceeds and forgiveness happen in different years (2020 and 2021), or if the loan isn't completely forgiven.   

As always, I am open to better ideas or a streamlined approach.  I think Intuit is working on that.

From April 27, 2020 post  

"As for recording the loan in QuickBooks, our Development Team is currently working on an update for the program that will allow you to record the loan forgiveness correctly."   

I thought PPP loan forgiveness was not considered income? 

Can someone explain how to record the PPP FORGIVENESS when the SBA sends you the letter it's been forgiven. I can't seem to find it. thanks

I'm here to ensure you're able to properly record your Paycheck Protection Program (PPP) Loan Forgiveness, rcoiteux.

I’d suggest reaching out to our PPP Support team. They'll be able to explain and show you the accurate way to record your loan forgiveness. 

To contact our support, please click on this link: PPP Support Team. Then, enter the needed details to proceed.

For more details about the loan that has been forgiven, please see these articles:

• Paycheck Protection Program.
• U.S. Department of the Treasury

Additionally, I've included these articles that'll help you keep track of your PPP loan:

• Track how you use your Paycheck Protection Program Loan
• Paycheck Protection Program Loan Forgiveness
• Prepare for Paycheck Protection Program Loan Forgiveness

Please come back and keep us posted on your progress in recording your PPP loan. I'm determined to get this resolved.

Worked perfectly for me AirKevin.  Thank you. 

The long term liability has disappeared from my balance sheet and the other income shows on my P&L.  

I might comment that when creating the "PPP Loan Forgiveness" other income account, I selected "not tax related" for tax line mapping.  If you are worried about this other income in your P&L, you could always do another journal entry to debit this PPP Loan Forgiveness account and credit another asset account or retained earnings.  Honestly though, I simply do the best bookkeeping that I can and let my CPA analyze & upload my data into their own tax software and make the needed adjustments and don't wring my hands over it from there. My tax liability ultimately is not derived from my QB bookkeeping.  I review the tax filing (1120S) before submission to IRS to ensure the items like the PPP loan forgiveness entries (if any) make sense.

This is a perfect example of a "non-answer" answer.  "I'm here to ensure you're able to properly record your PPP Loan" but you don't do anything of the sort.  Instead you send people off to another link and another team and links that talk about how to use the money, prepare to apply for forgiveness but talks nothing about how to do the actual recording.  QB has become very good at absolutely ignoring the real requests of their users and instead sending them on wild-goose chases or not answering the questions asked but instead trying to upsell services that no one requested in the first place.  I'm very disappointed with the way QB Support has changed how they handle real questions that are relevant and pressing.  The original question did not ask "I've received the money, how do I record it?" The answers given by the QB team are either describing how to record the deposit or simply saying "we can tell you how to get a loan and how to spend the money."  We already got the money, spent it, applied for forgiveness and received it! All without the help of QB.  If you don't know how to answer the question or simply are not going to read the actual question and answer it as asked, stop wasting people's time or gas-lighting them into thinking they need to be more dependent on you than they already are. 

I am so glad someone actually said teh truth. QB ha sNOT answered teh original questions which was "How do I enter the PPP FORGIVENESS"!

This is NOT THE ANSWER. The person asked HOW TO ENTER THE FORGIVENESS

Your step by step information on how to setup the accounts for receiving the PPP loan were spot on.  I followed your steps completely and the loan is set up in the two accounts.  I did get my application to forgive the loan, submitted it and in a week or so (back in April) my bank dropped the loan from my online banking accounts.  I have heard nothing more from the bank (no messages or letters actually saying the loan has been forgiven).  I am only assuming the loan was forgiven because it no longer shows up in my business accounts online.

Anyway, I tried to follow others on this site about how to enter the loan forgiveness but no one is as detailed for each step to get to the proper chart of accounts setup and actual input (like suggestions on what to name account).  Can you please give specific detailed instructions on how to set up the forgiveness account and how to enter the forgiveness into that account.  Thank you so much - this is all too confusing to me.