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djfinley
Level 1

As a sole proprietor, how should I enter a EIDL. It is not a grant, should it be entered as taxable income as I will be paying expenses and myself from the loan?

 
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Best answer May 17, 2020

Best Answers
IamjuViel
QuickBooks Team

As a sole proprietor, how should I enter a EIDL. It is not a grant, should it be entered as taxable income as I will be paying expenses and myself from the loan?

Hello, @djfinley.

 

You can categorize the Economic Injury Disaster Loan (EIDL) as Personal Income in QuickBooks Self-Employed. Once you start paying the loan, the payment for the loan capital will be categorized as Business Loans. Then, assigned Schedule C: Interest for the interest paid.

Here's how:

  1. Go to the Transactions menu.
  2. Click the Add Transaction button.
  3. Enter the Loan details.
  4. Choose Personal in the Type column.
  5. From the Category column, select Income.
  6. Click the Save button.

As a sole proprietor, freelancer, consultant, or independent contractor, you don't pay yourself a salary. Also, you can't deduct your salary as a business expense. Instead, your personal income from the business consists of the business profits, and those get added to your personal income tax return.

 

Also, I'd recommend consulting with an accountant so you'd be guided accurately in tracking your loans and grants.

 

Lastly, you can read through these articles for more insights about handling taxes and Covid-19 related loans:

Leave your comments below if you other questions about tracking your self-employed income and expenses. I'm always here to help.

View solution in original post

3 Comments 3
IamjuViel
QuickBooks Team

As a sole proprietor, how should I enter a EIDL. It is not a grant, should it be entered as taxable income as I will be paying expenses and myself from the loan?

Hello, @djfinley.

 

You can categorize the Economic Injury Disaster Loan (EIDL) as Personal Income in QuickBooks Self-Employed. Once you start paying the loan, the payment for the loan capital will be categorized as Business Loans. Then, assigned Schedule C: Interest for the interest paid.

Here's how:

  1. Go to the Transactions menu.
  2. Click the Add Transaction button.
  3. Enter the Loan details.
  4. Choose Personal in the Type column.
  5. From the Category column, select Income.
  6. Click the Save button.

As a sole proprietor, freelancer, consultant, or independent contractor, you don't pay yourself a salary. Also, you can't deduct your salary as a business expense. Instead, your personal income from the business consists of the business profits, and those get added to your personal income tax return.

 

Also, I'd recommend consulting with an accountant so you'd be guided accurately in tracking your loans and grants.

 

Lastly, you can read through these articles for more insights about handling taxes and Covid-19 related loans:

Leave your comments below if you other questions about tracking your self-employed income and expenses. I'm always here to help.

View solution in original post

ajcas
Level 1

As a sole proprietor, how should I enter a EIDL. It is not a grant, should it be entered as taxable income as I will be paying expenses and myself from the loan?

This information is incorrect. If you enter the EIDL Loan as income, you would have to pay taxes on it. And remember, it's a loan.  The best thing to do is to enter the loan in Quickbooks as a long term liability and from there, you can monitor your expenses, interests and payments. This is what my accountant advised. I hope it helps!

kcnya222
Level 1

As a sole proprietor, how should I enter a EIDL. It is not a grant, should it be entered as taxable income as I will be paying expenses and myself from the loan?

Thank you for this information but here's my situation. I just upgraded from QuickBooks Self-employed to Online Essentials, where I was able to use my personal account, track and separate business transaction from the personal. With Online version, I cannot do the same so I have chosen to just bring the balance of business transaction over and not link that account.  But I received the funds in that personal account. I am currently in the process of opening a business checking to deposit those funds but in the meantime how do i record the funds. Do i create a dummy account until i have the business checking? Also, someone stated your solution would Personal income) would cause the funds to be taxed, if that's the case could it be entered as owner's equity or is the solely for incorporated entities?


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