How to Account for PPP Loan Forgiveness in QuickBooks?

This article will discuss how to account for PPP loan forgiveness in QuickBooks and related queries.

With PPP (Paycheck Protection Program), one can take advantage of low-interest private loans to cover payroll and other costs. This program offers loans that are about 2.5 times your average monthly payroll expenses, so it’s an excellent option for small business owners who wish to keep costs down.

QuickBooks accounting software by Intuit helps small business owners account for PPP Loan Forgiveness, tracks corresponding expenses, and makes them aware of how it affects their earnings. In addition, QuickBooks enables business owners to record their accounting transactions error-free.  

Account for PPP Loan Forgiveness in QuickBooks

Proceeds from the PPP Loan forgiveness account are always transferred to “other Incomes” head in the books of accounts. Remember that the PPP Loan will be counted as another income according to the accounting standards. Hence, you must create a new income account to track your finances.

So, you need to learn how to record this entry in QuickBooks online. 

How do I Record the Forgiveness of the PPP Loan on QuickBooks?

Follow the steps given below to account for PPP loan forgiveness on QuickBooks:

Step:1 First, open the Accounting Tab in your QuickBooks account.

Step:2 Then, Select Chart of Accounts and press on the new option.

Step:3 Next, Choose Other Income as the type of account for your entry.

Step:4 Once done click Other Miscellaneous Income when the detail type dropdown comes up. 

Step:5 Finally, when you are finished with this task, click on the Save button and then press on Close.

Create a Journal Entry – PPP Loan Forgiveness: QuickBooks

Following are the steps to creating a journal entry for the SBA PPP loan account amount-

Step:1 Select the (+) new button on your screen.

Step:2 Next, from the dropdown, click on Journal entry.

Step:3 Click on the liability account you created from the Account dropdown.

Step:4 Here, enter the PPP loan sum on the Credit side in the liability account.

Step:5 Again, from the Account dropdown, click on your bank account.

Step:6 Enter the loan amount again on the Debit side

Step:7 At last, click on the Close button to end the task.

Remember: A journal entry for PPP forgiveness is prepared when your bank forgives you for the payment of the total or partial loan amount. 

QuickBooks Customer Service

If a QuickBooks user faces an error or difficulty managing their virtual books of accounts, they can contact QuickBooks’s customer care representative to relieve their query. 

Following give is the contact number of the customer care representative:

Contact Number (Desktop Support) – 800-446-8848

FAQs – Quickbooks PPP Loan Forgiveness 

Q.1 Does QuickBooks have a PPP Loan Forgiveness Report?

Answer: Yes, QuickBooks does provide a PPP loan forgiveness report to its users. Please ensure, before submitting your report, you have entered all the necessary details and data carefully to avoid other errors and omissions.                                                                     

Q.2 How do I Submit PPP Forgiveness to QuickBooks?

Answer: Visit the PPP Centers’ portal, click on Live Chat, or you can directly connect with their team using the Intuit link to PPP support chat. Also, users can visit QuickBooks’s PPP loan forgiveness website and solve their queries.

Q.3 Can I Deduct Expenses Paid with my PPP Loan?

Answer: Yes, Expenses paid with a PPP forgiveness loan are deductible. Business expenses paid with emergency (EIDL) Economic Injury Disaster Loan grants, Business expenditures paid with previously forgiven PPP loans and targeted EIDL advances are deductible. The PPP is now a genuine lifeline for struggling small businesses during the epidemic. 

Conclusion

Amazing! Now you are well versed with the steps of accounting for PPP loan forgiveness in QuickBooks online. QuickBooks provides the best quality virtual bookkeeping software by working efficiently with accepted accounting principles and making the financial lives of small business owners more manageable and effective.

Users can choose from several resources provided by QuickBooks. Right from live bookkeeping, find an expert, QuickBooks resource center to QuickBooks blog, all the resources are up to date and at the users’ fingertips!