How to Enter, Categorize, and Record Paycheck Protection Program Loan in QuickBooks Desktop

If you’re like most people, your paycheck is your biggest source of income. And if something happens to it, you […]

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If you’re like most people, your paycheck is your biggest source of income. And if something happens to it, you can quickly lose money. That’s why we offer the QuickBooks PPP (Paycheck Protection Program). It helps protect your paycheck from unauthorized access, theft, and other financial losses. The QuickBooks Paycheck Protection Program includes two important features: automatic backup and online access. When you set up your account, we automatically create a backup of your paycheck every night. And because our software is online, you can access it from any computer or device. This means that you can always be sure that your paycheck is safe and secure.

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About QuickBooks Paycheck Protection Program

The $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act is built on the Paycheck Protection Program (PPP). The PPP’s first round of financing approved $349 billion in SBA loans for small firms and other qualifying applicants.

  • Within two weeks after the launch of the PPP, this money had been gone.
  • The PPP was granted an extra $310 billion in financing in the second phase, which was revealed on April 24.
  • The initiative received an extra $284.45 billion in financing in the third funding round, which was announced on January 6, 2021.
  • In the event of a coronavirus pandemic, this lending scheme aims to keep companies operational and employees employed.
  • Payroll expenses, rent, and utilities may all be covered by low-interest SBA loans under the PPP, which can be applied for by small company owners and other qualifying candidates.
  • Borrowers may be eligible for debt forgiveness provided they satisfy certain requirements, including but not limited to spending at least 60% of the forgiveness amount on qualified payroll expenditures (and no more than 40 percent on eligible non-payroll costs).

How to Enter, Categorize, and Record Paycheck Protection Program Loan Forgiveness in QuickBooks Desktop

The QuickBooks Paycheck Protection Program helps you keep your finances safe and secure. It’s a free program that offers protection for your paycheck from unauthorized charges. If someone tries to make a payment on your behalf that you don’t want them to, they’ll be blocked from making the payment. This protects you from unexpected fees, like late fees or over-the-limit charges. You can also set up automatic payments so that your money is taken out each week or month and deposited into a protected account.

Enter PPP Loan

Below are the steps to enter the PPP loan in QuickBooks

  • Select Chart of Accounts from the Gear icon.
  • The New button may be accessed by clicking on it.
  • Select both the Account Type and the Detail Type when creating an account.
  • Enter the PPP loan number as the account number in the “Name” field.
  • Complete the Summary Box (Optional).
  • When you want to start monitoring your money from this account in the QuickBooks box.
  • Click the drop-down arrow and then choose other as your option.
  • You have to choose the date and time according to you
  • Fill out the what was your account’s balance field with the loan amount.
  • Hit on the button Save and Close to save details and close the window.

Categorize PPP Loan

You have to categorize the PPP loan in QuickBooks and for this follow the steps mentioned below:

  • On the first line
    • Click on the drop-down arrow of the loan Category
    • You have to choose the Liability account for the loan purpose
    • Mention the amount for the loan
  • On the Second Line
    • In the Category drop-down of interest
    • Choose the expense account for interest
    • Now mention the amount of interest to be paid
  • On additional lines, you can add any additional fees that you think must be recorded in the category and are related to it
  • Then choose the related account according to the additional fees you are adding
  • In the end, click on the Save and Close button.

Record PPP Loan

Here are the steps that help you to record a PPP loan into your QuickBooks account:

  • In QuickBooks, hit on the Banking menu option
  • Further, click on the Loan Manager
  • You have to click on Add a Loan option
  • Mention the correct information for the account you are adding to the loan
  • The fields that are required to be filled are:-
    • Name of Account
    • Origination Date
    • Lender
    • Original Amount
    • Term
  • Click on Next to continue after providing the information
  • Then enter the information about the Loan payment in the fields:-
    • Payment Amount
    • Due Date of the Payment
    • Number of Next Payment
  • After providing information, click on the Next button
  • Now, fill in the information in fields of interest. The fields are:-
    • Interest Rate
    • Payment Amount
    • Interest Expense Account
    • Compounding Period
    • Fees/Charges Expense Account
  • After all, this, click on the Finish button to finish the process.

Record PPP Loan Forgiveness

Follow the below steps to record PPP Loan forgiveness into your QuickBooks Desktop account:

  • In QuickBooks, go to the menu and click on the Accountant menu option
  • From the Accountant drop-down menu, choose the option Chart of Accounts
  • Next, click on the Account drop-down arrow
  • Then click on New to create a new account
  • After this, click on the radio button named Bank
  • Click on the Continue button to proceed further
  • You have to mention the account name that can be PPP Loan Funds
  • Hit on option Sub-account and then select the bank from the shown drop-down options
  • After this, click on the button Save and Close.

Now create the loan account in the Chart of Accounts the steps are:

  • In QuickBooks, go to Chart of Accounts
  • Then choose the option Account
  • Click on the New button or option
  • After that, choose the Other Account Types
  • Further, click on Long-Term Liability
  • When done press the Continue button to proceed
  • Mention the name of this account
  • Then click Save and Close when done.

Now, record the loan proceeds that are received and the steps to do this are as follows:

  • Click on the Banking menu in QuickBooks
  • From further menu options, choose Make Deposits
  • Now go to the Deposit To option and then change the account to a new sub-account
  • After that, in column name From Account, you have to select the account that you created for the loan
  • Mention the received amount of the loan in the Amount column
  • Click on Save and Close button to save the information and close it.

In the above article, you get to know all the basics about QuickBooks PPP (Payroll Protection Program). You have to follow the process accordingly to perform the task. Still, if you are facing any issues then connect with the Dancing Numbers helpdesk team who is here to help you all around the clock. The team members are experts and help you to fix the problems or issues immediately so that you won’t be stuck for so long.

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Frequently Asked Questions (Faqs)

What is the Loan Eligibility of the QuickBooks Paycheck Protection Program?

Small enterprises and organizations that are eligible for the initial PPP loans include:

Checked The Small Business Act defines small enterprises as those with less than 500 workers that fall under the following categories: 501(c)(3) nonprofit organizations, 501(c)(19) veterans’ organizations, and Tribal businesses (as stated in section 31(b)(2)(C)).
Checked Public broadcasting enterprises with less than 500 workers per location, such as non-profit newsgroups.
Checked Section 501(c)(6)-eligible businesses or destination marketing organizations with less than 300 employees.
Checked Those who are self-employed, independent contractors, or sole proprietors

What are the Loan Terms in QuickBooks PPP (Paycheck Protection Program)?

Some conditions of a Paycheck Protection Program loan are mentioned here, but these terms are not limited to the following:

Checked At a 1% interest rate.
Checked Until the SBA pays your forgiveness amount to your lender or informs your lender that you are not eligible for forgiveness (“Deferment Period”).
Checked You are not required to make any payments.
Checked It is possible for a Deferment Period to terminate if you do not submit an application for forgiveness within ten months of the maximum 24-week forgiveness covered period’s end date.
Checked During the Deferment Period, interest on your PPP loan continues to accumulate.
Checked A five-year maturity period.

With the Money from the QuickBooks Paycheck Protection Program, What can I get?

Paycheck Protection Program monies must be utilized to cover at least 60 percent of qualifying payroll expenditures in order for firms to retain their workers on payroll (and no more than 40 percent of PPP funds may be used to cover eligible non-payroll costs).

Employees whose primary place of residence is in the United States get the following compensation as part of their payroll expenses for both the first and second PPP loans:

Checked Compensation in the form of salaries, commissions, bonuses, etc.
Checked Tip money or its equivalent
Checked Paid sick, parental, family, and/or vacation time
Checked Allowance for dismissal or separation of the cost of providing group health insurance or group life, disability, vision, and/or dental insurance to all employees, including the premiums for such plans.
Checked Any retirement benefit that is due to be paid
Checked Reimbursement of taxes levied by the state and municipal governments

What are the Required Documents that are important to Submit When Applying for QuickBooks PPP (Paycheck Protection Program)?

You are required to take all the documents in one place with you before applying for the QuickBooks PPP loan. The documents to collect are as follows:

Checked Certificate of Finance cost confirmation
Checked Incorporation articles
Checked The trailing year benefit and loss statement or invoice whatever you have
Checked All proprietor’s driver’s license duplicate document
Checked Provide the all representatives affirmation who are staying in the United States
Checked Confirmation costs such as utility payments, home loan or lease installments, and interest installments on obligations.
Checked A point-by-point rundown of the employees who don’t live in the U.S related to the salary.

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