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How to treat personal expenses in quickbooks how to#

Your 2019 Schedule C (same item you used to apply for the loan).

EIDL application number (if you applied for an EIDL loan in addition to the PPP Loan.

Employees at time of application and employees at time of forgiveness (most likely 1 for both).

Disbursement date (date you received the funds).

You’ll need your business legal name, address, and other relevant information like your EIN or Social Security Number along with the following: Once it does, I suggest using the SBA 3508S if your PPP loan was under $50,000. Well, they are meant for different business types, loan amounts and all the variations in between.įor most of you, I’m guessing you’re either a sole proprietor (a single-member LLC qualifies as a sole proprietor) or possibly a single-owner S Corp.Īs a sole proprietor, it’s pretty simple to apply for forgiveness as long as the bank that issued your PPP loan has its application ready to roll. There are 3 different forgiveness applications for PPP loans. The SBA took its time coming up with the forgiveness application. This helps you track any debt for the business. Just like the PPP, any loan or liability should show up on the balance sheet. In this example, you’ll see that this business also received an EIDL loan. Take a moment to look right now and see that it showed up on your business balance sheet.

However, it’s an important rep ort to track since it lists your assets and liabilities. Many of you might never look at your balance sheet.

You can check that the PPP loan is set up correctly by running your Balance Sheet report.

Make sure the deposit to your account went to that account vs.

Type Long Term Liability or Other Current Liabilities. Here’s what that looks like using Quickbooks Online. Why?īecause it truly is a forgivable loan from the SBA. If you received the PPP loan, then I suggest making sure it was put on the books as a loan. This way it doesn’t show up on your profit and loss or income statement as income.

How to treat personal expenses in quickbooks how to#

It’s really important to understand how to record the PPP loan on your books. It’s really important to keep good records especially when extra items like the PPP loan and EIDL occur. This is especially true if you use bookkeeping software, you are treated as an S Corp and/or you have employees that you pay. However, I do recommend your PPP funds are recorded properly on your books. Seriously time to rejoice over that nice little addition to the December bill.Īs far as the PPP loan and taxes, there’s nothing special to do. You get the benefit of the PPP loan funds of $20,000 not counting as income AND the $20,000 for salaries now counts as a business deduction. Now that the bill has been signed, the $20,000 IS deductible. The $20,000 for salaries paid with PPP funds was not eligible as a business deduction, expense or write-off. Before the December bill was signed that $20,000 was not deductible to your business. You then used those funds to pay salaries (yours and/or your employees) of $20,000. That’s right! You wouldn’t be able to deduct payroll, rent, utilities, etc. Why?īefore the December bill was signed, any expenses paid for with PPP loan funds were not deductible. However, if you treat yourself like an S Corp or have payroll for employees as a sole proprietor ( a single-member LLC is by default a sole proprietor for taxes), then this does apply to you and you should be paying attention.

Since a sole proprietor doesn’t run payroll for the owner, the PPP loan proceeds were never taxable income nor is paying yourself ever a deductible expense. If you’re a sole proprietor with no employees on payroll, then this probably won’t impact you one way or another. Number 2 above is the best news since before the latest bill signed on Decemany expenses paid for with PPP funds were not deductible. any expenses paid for with the PPP loan funds can be treated as normal deductible business expenses!.the PPP loan is not treated as income on your tax return even once it’s been forgiven!.Finally, we got some clarity from the government about PPP loans on tax returns and expenses paid with the loan. It also clarified points around handling the PPP loan and taxes. The most recent legislation passed by the US government has made some great changes for those who received the PPP loan. Are you among the many businesses that received a PPP loan in 2020 to help your business get through the tough times? If so, now’s the time to learn how to handle the PPP loan and taxes.