Step-by-step guide to maximizing PPP loan forgiveness for self-employed and other Schedule C filers. What ever is not forgiven will be taxable, but the good news is the expense will still be deductible. If you have any additional concerns or questions, let me know.The Community and I will be here to assist. If you have any other questions or concerns, feel free to post them down below. Info About Acuity: We support companies that have 5-50 employees to supplement or … It is not necessary to obtain the password to use these documents. The conditions of the Paycheck Protection Program. Our PPP Calculator, a powerful but easy to use Excel spreadsheet, accounts for every expense as you allocate your PPP funds, making it simple to determine your forgiveness amount, and report to your own financial institution. For the best chance of loan forgiveness, you need to track eligible expenses against your loan proceeds. The payroll expenses which were used for loan forgiveness should not appear on the Schedule C. I have not played around with this yet, but I would suggest using the forgiveness amount as a negative expense in each expense category which is going to be forgiven. Guidance is sparse and we expect the administration and SBA to fill in the gaps over the next several weeks. Detailed records and open communication with lenders can help organizations meet the eligibility requirements for loan forgiveness. Thank you for joining the thread, RB30. The original post was how to book forgiveness and my response was intended to be two-fold. When you make the deposit you're going to expense it there. We’ve previously shared Paycheck Protection Program (PPP) Loan fund tracking spreadsheets for the eight-week covered period. The fact that I should enter the loan amount as negative threw me off - did I confuse myself without really having to? payroll, rents, etc. In QuickBooks desktop please set up an other current liability account and name it PPP loan. Enjoy the rest of your day! Be sure to include details about the disbursements in the spreadsheet, so that you are tracking both how … It is designed to take the guesswork out of tracking which expenses count toward your PPP loan forgiveness. Tracking expenses is an important part of maximizing PPP loan forgiveness. To apply for forgiveness, you'll have to submit a request to your lender. Agreed, Zack. Setting up an efficient tracking system will allow for successful documentation. All bet are off if the AICPA is successful in it's challenge to the deductibility of the expense. I just wanted to clarify the matter. The next task for those who submitted loan applications for the Paycheck Protection Program (PPP) will be to determine how much of the loan will be forgiven. no tax deduction is available for expenses that are paid with tax-exempt dollars. Loan Forgiveness Guidance. Created with Sketch. Any qualified borrower of a PPP loan of $50,000 or less may use SBA Form 3508S to apply for loan forgiveness and be exempted from any reductions in their loan forgiveness amount based on reductions in full-time equivalent (FTE) employees or reductions in employee salary or wages. Yes, it's income and should be recorded as "Other Income" type in QBO. The law says it is exempt from taxes. Rev Proc. Download your free PPP Loan Forgiveness Spreadsheet for forgiveness amount calculation, PPP schedule and worksheet, and more to help you apply. If you're not sure how to create this liability, use this article to set up the loan in QuickBooks Online. First and foremost, forgiveness will be granted for the portion of the funds you utilize on expenses incurred during an eight-week period from the time the loan funds are received. salaries, payroll taxes, rents, etc.) Co-branded PPP loan forgiveness calculator (In Excel) for your clients. The SBA has partnered with a financial services technology provider to make available a secure platform (the PPP Forgiveness Platform) for lenders like VEDA to use to submit forgiveness decisions to the SBA. Forensic Accounting, Valuation and Litigation. This topic and related workbook have been updated in a current post here as of 8/18/2020.. By Tommy Greer. The P&L for the year would then appear correct (although a P&L for any other period would still be weird). Usually, QuickBooks let's you enter the full amount as a negative amount since it is the business liability. Because of the complexity of the PPP forgiveness calculations, the spreadsheet will be a constant source of updates, revisions and improvements. If forgiveness isn't granted, then the funds will be taxable income. Book the expenses as usual until the loan is forgiven. will not be deductible (as of IRS guidance for now) and therefore will add amounts to net income, which is taxable. The … For example, the PPP loan is $50,000, and $50,000 was spent on gross payroll not including employer taxes (employer share of SS and Medicare), and assuming other qualifications were met, the loan is 100% forgiven. Accounting for the PPP Forgiveness Spreadsheet. While this approach will provide the right answer in terms of taxable income in the P&L, it will not provide the easiest method to use that P&L to fill in the Schedule C (or business tax return). April 20, 2020. What is the best way to set up in QB's online to record all information? Chris Macksey. The SBA recently released the PPP loan forgiveness application. Please note that this blog and the 24-week PPP loan forgiveness templates are based on laws effective in August 2020 and may not contain later amendments. This should certainly be resolved in the next 60-90 days (one would hope). However, once forgiven, it has to be removed from the balance sheet and put somewhere....I'm suggesting "other income" so that expenses shown are accurate, otherwise payroll expenses will be understated. This approach is consistent with the CARES Act specifying that the employer is not subject to tax on the forgiven amount of PPP loans, and also is consistent with the intent of IRS Notice 2020-31 of April 30, 2020, which says that no tax deduction is available for expenses that are paid with tax-exempt dollars. Business Guide. We will amend and add to the template as information becomes available. The bad news is the liability will still need to be repaid. Interest, rent and “utilities” that are incurred during the … Perform a bank reconciliation at the end of the 8th week and tie your general ledger account to the bank statement. Assuming I received $30k PPP loan recorded as "short-time liability", eventually, $20k out of $30k can be forgiven, how do I write-off that loan? Local Assistance. Connect with and learn from others in the QuickBooks Community. 2020-51 provides that if a PPP loan recipient did not deduct expenses on their 2020 tax return and some or all of the loan that they were expecting to be forgiven is not forgiven, they may either deduct the expenses on an amended return for 2020 (or, for a partnership, an AAR) or deduct the expenses on their 2021 tax return. We are waiting on more guidance from the Treasury, and Congress. First, until forgiven, it is a loan and booked as loan. There are three PPP Loan Forgiveness Applications and corresponding instructions from the SBA. Please contact Cray Kaiser for most recent information. PPP Loan Forgiveness Calculation Form. It seems we need a clearer explanation of handling the QB accounting for PPP loan forgiveness. Thank you for your time and patience, have a nice weekend. The attached template should help – it is intended as a planning tool. Under the CARES Act, the funds from a Paycheck Protection Program loan won't be taxed as income if your loan is forgiven by the lender you received the money from. It includes step-by-step instructions and an example to follow. Nontaxable income? “My approach is to have all of our clients who get … I'm always right here to help. Sales & If you have any questions, I'm here to help you find an answer. Let’s first review the terms of the PPP. Supplemental support documents “SBA PPP Loan Borrower Disbursement Authorization” and “SBA PPP Loan Borrower’s Certification” can be added. While you all raise excellent questions, at this time we don't have that information yet. Record $20K as "Income"? Most are stating that the proper approach when the loan or a portion of the loan is forgiven is to: -- debit the liability account (the PPP loan) and. PPP - Loan Forgiveness Overview Revised May 29, 2020; PPP - FTE Employee Worksheet spreadsheet Revised May 27, 2020; PPP - Cost Tracking spreadsheet Revised May 21, 2020; PPP - Salary Forgiveness spreadsheet Revised May 21, 2020; For help with your specific situation, please reach out to our RINA CARES team at COVID@RINA.com. In this case debiting the "loan" and crediting "other income" creates the $50,000 income that is then offset by the $50,000 gross payroll expense so all is good. Let me know if you need additional information by commenting below. That is not currently the case, but if this passes, then the PPP forgiveness could not be included as ordinary income, but would have to be set up as a non-taxable "other income" and the expenses would be debits to profit/ordinary income, and would, then, reduce taxes. You can use this to calculate an estimate of what you may be forgiven for. I am a Sole Proprietor and just received my PPP loan. Congress is currently considering allowing the payroll and other qualifying expenses for the PPP loan (in full or part) to be forgiven to become normal deductible expenses that offset ordinary taxable income. At the same time, the expenses that are the qualifying expenses for the loan forgiveness (e.g., payroll at not less than 75% of the loan amount, rent and utilities not exceeding 25% of the PPP loan amount) are recorded as ordinary expenses. -- credit "Other Income" which then becomes taxable income, as it is adding to the overall income. The attached template should help – it is intended as a planning tool. PPP Loan Forgiveness Calculation Form. Excel Spreadsheet Template for tracking PPP expenses QuickBooks Guidance for tracking PPP expenses PPP Loan Forgiveness Fillable Application Paycheck Protection Program Overview. The QB P&L will not show regular spending vs. PPP spending, so keep a separate spreadsheet to track the PPP spending. This way, it won't throw off the balance. Federal Contracting. Accounting transactions when PPP or portion forgiven. Auto-suggest helps you quickly narrow down your search results by suggesting possible matches as you type. Once forgiven, then debit against the liability (loan amount) for the amount forgiven and book the credit to each of the expenses as the expense will no longer be deductible per IRS guidance. Eligible borrowers able to receive 2.5are x themonthly payroll amount based Products, Track Offsetting the PPP-loan-forgiveness "other income" with the PPP-loan-expenses that qualify for the "forgiveness" allow both the income and expenses to offset each other so no tax implication on either side. Yes, correct. 1. So then make a new vendor for the lender? If its not forgiven, its a loan like any other loan. The next task for those who submitted loan applications for the Paycheck Protection Program (PPP) will be to determine how much of the loan will be forgiven. However, it is my understanding that Congress is still addressing the matter of the IRS opinion that expenses paid with PPP funds (e.g. It's not income. Once you've completed that, everything should be good to go. into ... 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