Have you recently applied for PPP Loan Forgiveness? Here’s a step-by-step guide on how to record this in QuickBooks.
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The Payment Protection Program (“PPP”) is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll.
The PPP loan has a 1% interest rate and terms of two years. The loan is 100% forgivable if used for payroll costs, interest on mortgages, rent, and utilities (due to coronavirus pandemic).
To record a forgiven PPP Loan in QuickBooks, you will need to create two accounts: one for the Loan Proceeds and one for the Loan Forgiveness.
Account Type: Other Current Liability
Name: PPP Loan Proceeds
Description: This account tracks the amount of the loan that is yet to be forgiven.
Account Type: Other Income
Name: PPP Loan Forgiveness
Description: This account tracks the amount of the loan that has been forgiven.
What is PPP Loan Forgiveness?
PPP Loan Forgiveness is when the government pays off a portion of your PPP loan if you meet certain requirements. To record PPP Loan Forgiveness in QuickBooks, you will need to create a Journal Entry.
If you have not already done so, you will need to set up an account in QuickBooks for your PPP Loan. To do this, go to the Lists menu and click on Chart of Accounts. Click on the Account button and select New. Choose Other Current Liability from the Account Type dropdown and enter PPP Loan in the Name field. Click Save & Close.
Once you have set up your PPP Loan account, go to the Company menu and click Make General Journal Entries. In the Date field, enter the date that the PPP Loan was forgiven. In the first line of the journal entry, select your PPP Loan account from the Account dropdown and enter the amount of the loan that was forgiven in the Debit column. On the second line of the entry, select Accounts Receivable from the Account dropdown and enter the same amount in the Credit column. Click Save & Close to record your journal entry.
How to Record PPP Loan Forgiveness in QuickBooks
QuickBooks is one of the most popular accounting software programs. It offers users a variety of features and options. One of the features that QuickBooks offers is the ability to record PPP loan forgiveness.
The Paycheck Protection Program (PPP) offers low-interest loans to eligible small businesses and nonprofits to help cover payroll and other expenses during the COVID-19 pandemic. If you received a PPP loan, you may be eligible for loan forgiveness if you use the loan proceeds for eligible expenses and meet certain other requirements.
Forgiveness of your PPP loan is not automatic – you must apply for forgiveness with your lender. Once you have applied for forgiveness, your lender has 90 days to issue a decision.
If your PPP loan is forgiven, you do not have to pay it back. However, you will need to record the forgiven amount in QuickBooks so that it does not show up as an outstanding liability on your balance sheet.
There are two ways to record PPP loan forgiveness in QuickBooks:
1. If you have not yet received a decision from your lender on loan forgiveness, you can record the forgivable amount as an estimates liability using the following steps:
-Go to the Vendors tab and select Estimate Liabilities from the drop-down menu.
-Enter the amount of your PPP loan that you expect to be forgiven in the Amount field.
-In the Vendor field, select your PPP lender from the drop-down list or enter their name if they are not already set up as a vendor in QuickBooks.
-In the Memo field, enter “Expected Loan Forgiveness” or something similar so that you can easily identify this liability later on.
-Click Save & Close.
The Paycheck Protection Program (“PPP”) provides small business owners with loans that can be forgiven if the proceeds are used for specific expenses, including payroll, rent, and utilities.
If you’re a small business owner who has received a PPP loan, you may be wondering how to record the loan forgiveness in QuickBooks. Here’s a step-by-step guide:
1. Create a liability account in QuickBooks called “PPP Loan”.
2. Enter the amount of the PPP loan into the liability account.
3. When you receive forgiveness for the loan, create an offsetting entry in an equity account called “Forgiveness of PPP Loan”.
4. Enter the amount of the forgiven loan into the equity account.
5. If you have any questions about how to record PPP loan forgiveness in QuickBooks, we recommend contacting a certified public accountant or QuickBooks ProAdvisor for assistance.
The Paycheck Protection Program (PPP) loan forgiveness application is now available through the Small Business Administration (SBA). Borrowers can apply for forgiveness through the SBA’s website or through their lender.
To record PPP loan forgiveness in QuickBooks, begin by opening the QBank Transactions page and selecting the “Add New” button. Under “Type,” select “Loan.” For “Lender,” select “SBA.” Enter the amount of the loan that was forgiven in the “Amount” field.
In the “Memo” field, enter a brief description of the loan, such as “PPP Loan Forgiveness.” Finally, select the appropriate account from the “Account” drop-down menu and click “Save & Close.”