There continues to be a lot of conflicting information regarding the different programs associated with the CARES Act. We will continue to update this post as we find out more however this money is coming in or has already come in and needs to be accounted for immediately so we wanted to share some of the key things we are doing with PPP, SBA EIDL – the actual loans as well as the EIDL Advance money that some are referring to as Grants.
How to do PPP / EIDL Accounting
IMPORTANT:
If both an EIDL Advance/Grant and the PPP Loan are received, the PPP loan forgiveness amount is REDUCED by the EIDL Advance/Grant amount. This means the PPP loan will not be 100% forgiven if the taxpayer received EIDL Advance/Grant money.
The PPP funds expenditures for payroll do NOT include FICA and Federal Taxes, only the wage costs and state taxes are eligible for forgiveness. So, the payroll tax piece charges will need to be split to PPP expense and payroll taxes. This is something that can be done through accessing your payroll company’s records to get the actual amounts and then splitting the payments when they come into your accounting software.
Q&A:
Other things –
Common Mistakes:
The SBA recently published the PPP forgiveness application. The forms and instructions for borrowers on how to apply for forgiveness for their PPP Loans can be found here.
We will be writing another post on this within the next week so stay tuned!
As we continue to learn more we will pass it along but in the meantime, if you need help or have questions, Finance Pals would love to give you some free tips and advice over a 30 minute phone call. We love all things Finance, whether it’s bookkeeping, accounting, FP&A, fractional CFO responsibilities or taxes and want to share our knowledge with you!