I just received the $10000 EIDL grant as a deposit into my business checking account. How do I account for this $10000 deposit in quickbooks online?

deposit the funds and use other income as the source account for the deposit

Thank you

Hi

Sorry new here on quickbooks.

I have the same question.

Do I need to create a new tab for "other income". If so it is asking me details type, and my options are :

- Dividend income

- Interest earned

- Other investment income

- Other miscellaneous income

- Tax exempt interest

Thank you

I was told by an accountant to enter it as a long term liability (since we'll have to pay it back if we don't qualify for the loan forgiveness). 

The EIDL Advance is a grant and never has to be paid back. You can enter it as Other Income if you wish. The Loan offer that follows it, is indeed a loan dn should be tracked as a liability.

It's forgiveable and it's not taxable as income, so I do not believe "Other Income" account is accurate.  Please, can someone provide the proper type of account we should be using?  Thank you!

But the grant portion (advance) does not have to be paid back and IS NOT considered Income, so what is the correct account? I saw Equity Account somewhere?

Allow me to chime in, @MOROWE.

You can apply for loan forgiveness from your lender after the eight weeks following the disbursement of the loan. Depending on how you plan to use the PPP loan will determine how much forgiveness may be allowed. I've listed the reasons below:

• Payroll costs
• Mortgage interest payments on mortgages incurred in the ordinary course of business before February 15, 2020
• Rent payments under leases dated before February 15, 2020
• Utility payments for electricity, gas, water, transportation, telephone, or internet access under service agreements dated before February 15, 2020
• For certain employers identified in the statute, additional wages paid to tipped employees.

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. You can also check out this article for more information about loan forgiveness.

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

You are correct if talking about a PPP loan, but the person specifically inquired about their EIDL Advance/Grant which is automatically forgiven even if they are not eventually approved for the loan. The two programs are separate under the CARES Act. The advance is not a liability. 

This! Category to itemize the EIDL Advance / Grant is the question here. 

Is there an update from QB about this? Will the company be sending out an email to alert all customers of what the "fix" is and when it goes live?

I have read this discussion so far and I think I want to take a different tack, although I have not tried it in QBO yet. I also am getting a small EIDL grant. The grant is meant to pay certain expenses, but the grant is not taxable income. So I would not put it in as a income account. I plan to create a special miscellaneous expense account for the grant and enter it as a negative amount. It will show up on my P&L as a negative expense. This will make sure its not incorrectly counted as revenue.

I am just not quite sure how it will end up reflected in my Schedule C for 2020, but I plan to ultimately reduce my expenses by the amount of the grant. In other words the net schedule C expense should be your real expenses minus the grant.

For those with the PPP, you could take a similar approach. Enter the PPP as a loan and then create a negative expense account for the forgivable portion. As you apply expenses which can be forgiven, add a journal transaction between the loan balance and the negative expense account. Or its probably safer to wait until you actually get an acknowledgement from your bank of the amount forgiven.

If anyone disagrees with me, please let me know why and how you would do it.

Hello 

We have the same question. We received an "ACH Credit" from "SBAD Treas"; its listed as "*PMT* EIDG"  dose the "G" mean Grant?  and then a few week later we received another deposit. Since the money needs to be tracked in how it is being spent, We would like to know how to impute these funds correctly.  We will follow your thread.  We are currently using Quickbooks Desktop Pro 2019. 

Thanks for your time 

CK Electric 

Hey,

This document I found really clearly explains how to account for Grant Money. It is attached. I have also copied and pasted the most relevant stuff here, but the document is better to look at.

The Principle:
Grants and government income are usually paid in advance, before you delivered the service or
bought the item. If you are unable or unwilling to meet the grant conditions, you have to repay
all or part of the grant. This means that the grant should be treated as a liability (much like a
bank loan) until spent. Every time you buy something or pay someone from the grant, the
liability is reduced accordingly. This also means that only the part of the grant that you spent
counts as your income.

The Practice:
First Year:
1. Set up an Income account called available grants.
2. During the year, simply put all grant money you receive into this Income account.
3. Set up an Income account called unexpended grants(Income).
4. Set up a Liability account called unexpended grants (Liability).
5. At the end of the year, you need to:
- add up all amounts not yet spent ($$ unspent) from grants.
- work out the amount spent from grants (‘grants received’ - $$ unspent = $$ spent)
- Then make journal entries like this
a) Credit account: unexpended grants (liability); amount: Balance of ‘available grants’
Debit account: unexpended grants (income); amount: Balance of ‘available grants’.
(Note: this takes the grants you have received out of income and into a liability)
b) Credit account: unexpended grants (income); amount: $$ spent
Debit account: unexpended grants (liability); amount: $$ spent
(Note: this takes the expended grant money out of the liability and back into income)
Future Years:
A further journal entry is necessary at the end of the year, provided you have spent all of the
previous year’s unexpended grants (=$$ previous year)
c) Credit account: available grants; amount: $$ previous year
Debit account: unexpended grants (liability); amount: $$ previous year
(Note: this takes last year’s unspent grants out of liability and into income)
Financial Statements:
The grant section in your Income Statement will now look like this:
Available Grants: ‘available grants’ account
Less Grants unexpended: (‘unexpended grants (income)’ account)
Income from Grants: Total
You will also need a Note in your Financial Statements, saying this:
Grants are considered a liability until spent. Only the portion of grants expended is shown as
Income, with the unexpended balance shown as a liability.

Hey,

Yes the G means grant. As far as how to track how the money is directly spent the only way I know to do that is by using Classes.  Here is a link to an explantion of the process. https://altruic.com/blog/how-to-track-grant-funding-in-quickbooks-online

That is for Quick books online, but hopefully it translates to your type of quickbooks.

From my accountant: The best way to record the EIDL stimulus deposit would be to record the deposit and the income account it should go to would be "Nontaxable income - 2020 Economic Stimulus" under Other Income.

One must also be aware, that the grant may actually be taxable by the state.  Something to keep in mind. 

Yes, the EIDG is an existing program through the SBA prior to the EIDL. EIDG is the advance or grant and does not have to be repaid. It can awarded even if you do not qualify for the loan in an amount of between $1K and $10K. You will find out later if you have been approved for the EIDL and then you can accept (or not) accept the loan terms but either way, the EIDG portion is not a loan and does not have to be repaid. Other miscellaneous income could work to record this. Some people are making a heading of Non-taxable income and then they will see if their tax professional thinks it should be declared based on clarification of this issue and your year end tax situation.

     DavidH2, I like what you're doing here, especially since you file your taxes on a Schedule C.  Businesses who file their taxes on a business return and not on their individual return, like Form 1120-S, may have to adhere to standard GAAP accounting procedures.  It appears these grants should be booked as "Other Income - Non-taxable".  There is a section on the F1120-S that allows for showing a difference between "book" and "tax" items and this is where the non-taxable income is excluded from federal income tax, even though it shows up on the P&L as income.

     Note that deductions for expenses paid for by the grants are not allowed.  Specifically, this means you cannot deduct them without an offsetting "income" amount;  no double-dipping (free money and expense deductions).  Therefore, you can deduct these expenses if you also book the grant as Income or negative Expense. 

     I'm with you for not showing grants as income because I think there are some states/localities that might  tax "gross income" and these grants are supposed to be non-taxable.  For that reason, I prefer your method of keeping it entirely out of Income by booking it as a negative Expense.  You can put this negative number on your Schedule C as another "Other expenses" item.

Hello! 

 @DrLahni5

 Can you please share where you found information on being able to keep the EIDL advance even if you decide to decline the loan offer? This would be SO helpful!

---

@DrLahni5 wrote:

Yes, the EIDG is an existing program through the SBA prior to the EIDL. EIDG is the advance or grant and does not have to be repaid. It can awarded even if you do not qualify for the loan in an amount of between $1K and $10K. You will find out later if you have been approved for the EIDL and then you can accept (or not) accept the loan terms but either way, the EIDG portion is not a loan and does not have to be repaid. Other miscellaneous income could work to record this. Some people are making a heading of Non-taxable income and then they will see if their tax professional thinks it should be declared based on clarification of this issue and your year end tax situation.

---

Here is a link that may help you! https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/economic-injury-disaster-loan-... They have had a change of terminology, not using the EIDG but rather calling it the Emergency Advance but still, that advance is essentially a 'grant' since you do not have to repay and they extend it to applicant whether they are later approved or not. Good Luck. 

Update:  We did exactly what I said for the EIDL. We created an "Other Expenses" account called Negative Expenses and deposited the grant into it (as a negative number). I used the grant to pay part of 1 month of rent, so we created a journal entry to reflect this. Now my P&L shows rent being decreased by the amount of the grant (so that portion is no longer being used as an expense).

I think this solution works for someone doing cash accounting. If you are using accrual accounting, you would probably do something more complex.

We also received a PPP loan. Until the loan is forgiven, we are holding this as a long-term liability. The way the forgiveness rules are written today, I think we won't know how much can be forgiven until after December 31. This is because part of the forgiveness is based own owner's profit during the 24 week period and that gets determined by using 24/52 of full year profits, which can only be determined December 31. I think the forgiveness rules will be simplified for Schedule C filers some time between now and then. So until we get forgiveness it makes sense to hold the PPP as a loan on our books.

As a state-registered Registered Investment Advisor, we have to be able to produce accurate financial statements at any time during the year, so its important that our book are correct, at least with best-efforts at any time.

Some clarification, not just for you but for everyone in this thread:

The EIDLA never needs to be repaid and therefore is never considered part of the loan. It is essentially a Grant. If an EIDL is refinanced into a PPP loan, the Advance is deducted and therefore never included in the balance of either the EIDL or PPP. Therefore, the deposit from the SBA for "EIDG" or similar should never be recorded as a liability. 

The easiest method is to record the Grant as Other Income - Economic Stimulus/Disaster Relief (or something similar). It will need to be reviewed come tax time to determine if it is declared as taxable income (see below). 

About the EIDLA tax classification:

At this time, there is no official guidance on treatment of the EIDLA as taxable income. Some sources will say it should be presumed taxable business income (which is how I have recorded it until further guidance is available). Other sources will point to the General Welfare Exclusion which I believe will ultimately be applied by the IRS; see below. (I am not a licensed accountant or tax professional.)

"The IRS has consistently concluded that payments to individuals by government units, under legislatively provided social benefit programs, for the promotion of the general welfare, are not includible in a recipient’s gross income. The classic example of this type of payment is a government payment made to victims of a natural disaster.

To qualify under the GWE, payments must

• Be made from a government fund.
• Be for the promotion of the general welfare, based on individual or family need.
• Not be made as payment for services."

(Journal of Accountancy, 2006)

The PDF file is unable to be downloaded, can you upload it again?  thanks