You can set up a separate fund as a separate account under your checking account and deposit the PPP funds there.  You can then pay payroll out of there as well.

This is VERY helpful. Thank you for suggesting this. 

My CPA recommended the same and I told him "no way" as changing banks/accounts  for payroll in QB is a nightmare....I have done it and do not wish to do through that again.

He suggested I still setup another account and do transfers for payroll, rent, etc. into my main account but earmark each transfer for a specific transaction and amount  which occurs on same day so that it can easily be tracked and proven as to how the funds were spent.

This makes a lot of sense.  Thanks for the suggestion!

Setup a bank account or sub account. Record all expenses as Other Expenses- Wages, Utilities, Health Insurance, etc. As the checks are written post against the Other Expenses. Also 1 check 1 expense for ease of having the loan forgiven later. When all funds are exhausted and forgiven then you would post credits to the Other expenses and debit the PPP Loan. The expenses used for this loan will not be company expenses.

Hi,

We received our PPP loan directly into our bank business checking. I then transferred it to our bank payroll checking in order to keep track of it. When the two transactions appeared in QB, I first accepted the deposit into the business checking, using the new "Other Liability" I created "PPP Loan Received From Bank" as the Category (that was the only way I could figure so it wouldn't appear as income) and then accepted the second transaction of transferring it to the payroll checking. I do not have a version that has class tracking, so I am wondering how to track. We are only using the loan for payroll costs. I see the loan amount in my Other Liability account, but I am not sure how to track from here. Thanks for any suggestions. 

Any update as to when the QB feature for setting up the PPP loan will be ready?

Happy to see you here in the QuickBooks Community,sharonalee! The best way to set up the PPP loan is by setting up a liability. Here's how:

• Select the Gear Icon at the top right corner
• Under Your Company, select Chart of Accounts.
• On the right, click New. 
• Select Other Current Liabilities (If you know it will be forgiven) 
• Choose a detail type, then select Next. 
• Name the account. 
• Leave the Unpaid Balance blank, then select Save. 

Once this has been set up, you'll need to create a Journal Entry to apply the loan to the correct assets account.

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

Once these steps are completed, your PPP should be set up and recorded. Also, this tutorial details how to track the PPP loan in QuickBooks Online as well. If needed, you could reach out to one of our Pro-Advisor. There offer a free consultation. Simply enter your zip code, and you will be able to view accountants around your area. If there's anything else, feel free to post your questions and concerns below.

When funds are transfer from PPP into Operating account make a Other Expense account called PPP Payroll or utilities or Health Insurance. Then reports will be easy to pull for the bank to forgive the loan. Then after the loan is forgiven then a GL would be crediting the Other Expense accounts and debiting the PPP Loan in current Liability or Long Term where ever you original posted it.

It won't matter if you get it forgiven before the end of the year. 

I used the same operating account but set up a GL Sub account for the PPP Loan proceeds. I set up a Short term liability account as well to offset the sub account deposit. No need to open a new bank account.

I created  the other Liability in the first step and then went to new journal entry and entered the amount.  The question I have is for the second part.

• Select +New: DONE
• Under the Other column, choose Journal Entry. : DONE
• For the first line under the Account column, select your new liability account. DONE
• Enter the amount of the loan you're applying to the asset under the Credits column. DONE
• For the second line, select the appropriate asset account under the Account column. Not sure what the appropriate account would be?
• Under the Debits column, enter the amount of the loan you're applying to the asset. 

I created  the other Liability in the first step and then went to new journal entry and entered the amount.  The question I have is for the second part.

• Select +New: DONE
• Under the Other column, choose Journal Entry. : DONE
• For the first line under the Account column, select your new liability account. DONE
• Enter the amount of the loan you're applying to the asset under the Credits column. DONE
• For the second line, select the appropriate asset account under the Account column. Not sure what the appropriate account would be?
• Under the Debits column, enter the amount of the loan you're applying to the asset. 

@jabosler  I think they are instructing you to debit the account you're depositing the loan money into--for us it was our checking account. I went about this in a different way and went to the Transfer Funds window in the Banking tab and transferred the amount of the loan from the PPP Loan liability account I created into our checking account.  This increased our checking account in QB by the amount of the loan and decreased the amount in the PPP Loan account by the amount of the loan.  

This is how we set ours up. We will do payroll from this sub-account only for the next 8 week period. We do not anticipate having to pay back any portion of ours because our average payroll expenses are higher now, than for the period which they calculated our loan amount. We hired 2 new employees in the last quarter of last year. We will actually fall a little short. But hopefully work will pick up in a few weeks and we’ll be able to make up for the losses. 

The asset account would be the bank account that the PPP was deposited to. The way we did ours, was to set up a sub-account for our company checking account in QuickBooks. That way, as you write checks, you can keep track of what is left of the PPP money by writing checks from the sub-account. It's still the same bank account we always use; no need to actually open a new account with your bank, just create a sub-account in QuickBooks for the amount you received.

I found theYouTube video link extremely helpful.  They offer 3 variations of logging the loan:  Traditional Method, Class Method and Alternate Method.  I went with the Alternate Method and created a category labeled PPP Expenses, under which are sub categories: Payroll, Utilities, etc.

I just started logging today and have already come across a snag in my chosen method...how to log payroll if submitted as a direct deposit, not a physical check, under PPP Expense: Payroll. 

Ideas for Tracking Your PPP Expenses/Loans in QuickBooks Pro

file:///P:/_000%20TAX%20FORMS/2020%20Info/PPP%20Loan%20Package%202020/Ideas%20for%20Tracking%20Your%20PPP%20Expenses_Loans%20in%20QuickBooks%20Pro_Premier%20-%20YouTube.html

Thanks for the info. I'm creating a Long Term Liability for the PPP loan.  The money came into our business checking account so when I make the deposit, debit banking and credit the PPP loan liability account how will this work when I reconcile my bank account?  Also do you recommend every two weeks when I process payroll that I do GJE's for the wages plus taxes and all that?  Just trying to do this the right way. Thank you.

Hi there, @marykcali.

When reconciling, you can select the journal entry that you've made in the Reconciliation window. Then, finish the reconciliation as usual.

For your second concern, it will depend on your payment schedule. If you want to record them when you process payroll, then you can make a GJE every two weeks. However, we strongly recommend reaching out to your accountant for further advice.

You'll also want to use this article as an additional guide for tracking loans: Manually track loans in QuickBooks Desktop (QBDT).

In addition, I've provided an article that will help you in reconciling your account in QBDT. This will make sure that your real-life bank and credit card statements are matched. Here it is: Reconcile an account in QBDT.

Don't hesitate to tag my name in the comment section below if you have other concerns or questions. I'm always ready to help.

I dont understand this.  We had to furlough employees at the end of April because we heard NOTHING about our PPP application and we had no more money to pay as our business was closed by our governor and ruled non essential. 

We just received the PPP this past Monday May 5, everybody has applied for unemployment and we are still closed by government order.  It states we have to spend the funds within 8 weeks or the unspent portion will not be forgiven.  IT also says that we have until June 30th to re-employ the full staff.  The dilema is as folllows:

1. The application asked for the figures for 2019 in which we had 3-5 more employees than we do now.

2. If we employee the employees now, they will be getting paid funds through the PPP but not working as our business is closed by the governor until May 15 (probably to be extended as the numbers are still climbing at a rate of about 800-1000 a day). 

3.  If we use the funds to reemploy them now, then within 2 months time, we will be out of money again as no income is being generated.  Then they will face unemployment and this whole mess again and will not have the extended unemployment benefit amount and we won't be able to continue their health insurance.

4. If we don't use the funds within 8 weeks, we are penalized, if we do use the funds within the next 8 weeks, we have no money to continue business. 

5. It says employees laid off by April 26 as long as rehired by June 30th then the loan could still be forgiven....

Its all very contradictory and I don't know what we are supposed to do!

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@john-pero wrote:

Deposit

Debit banking

Credit PPP Loan or whatever you want to call it as a liability. If you can 110% guarantee that it will ALL be forgiven set it up as a short-term liability since the life of the loan is only 8 weeks, If you anticipate that even a portion may not be forgiven (maybe not rehiring enough Full Time Equivalents by June 30) set it up as long term as it has a 2 year repayment plan.

 

Oh, and record it under the name of your bank you received it from, You are dealing with paying back or being forgiven by your local bank, not the SBA. The funds are not coming directly to you from SBA but through your bank.

 

AND A BIG CAUTION to anyone that has already applied at another bank DO NOT GO THROUGH ANY STEOS OF APPLYING THROUGH INTUIT WITH QUICKBOOKS AS THE BANKER since a duplicate application will void all of your applications and you will be left high and dry. (Hate to shout but it is true)

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You did not answer the question she asked....

@cfoster73 

1. There are two date ranges to choose from for the comparison and neither are same as you used in your application. 

2. You have the next 8 weeks to pay out enough to equal 75% of your loan. It can all be in a sngle week but overtime will kill. You can pay your employees to sit at home on their behinds with your doors still closed. If they refuse to go off of unemployment they have to be reported for refusing to return and wi jeopardize any continuing unemployment.

3-4. This is "free money" if used properly. Your only cost is employer side taxes (unfortunately, ppp is not 100% of true payroll cost)

5. You have to attempt to rehire same employees that were laid off. If you cannot pay enough workers by end of June you end up paying back the loan. And as I said, SBA says you must rehire anyone you did lay off

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@julie cooper wrote:

The expenses used for this loan will not be company expenses.

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I respectfully disagree.  All funds spent from THE PPP loan are in fact legitimate, deductible expenses and should not be treated differently. What will be different is the forgiveness of any outstanding loan. This will be, I am fairly certain, treated as non taxable income.

We already know that the fmla leave pay credits are to be considered income and the payroll that creates those credits as expense. This is no different. 

The expenses are not tax deductible. The IRS is quite clear about it.