Anyone have ideas about how to handle PPP loan money? According to the rules, 75% has to be used for payroll. I'm at a loss as to how to track the money using categories.
My bank gave me a list of the following, which I thought was descriptive. One of the more important things is all this activity must occur within 8 weeks of receiving the payment, so you have to make sure to document paying yourself that 75%, and using the other 25% appropriately, within 8 weeks of loan "origination" for it to be forgiven.
Here's my retyping of the document. All typos are my own. My lending agent handwrote and highlit (highlighted?) "* Read Carefully* " at the top of it.
- Copies of payroll tax reports filed with the IRS which includes Form UIA 1028 or Forms 941, 940, state income, and unemployment tax filing reports for the 8 week period following the origination of the loan.
- Copies of payroll reports for each pay period for the 8 week period following the origination of the loan. Gross wages including PTO (which might include vacation, sick, and other PTO) should be reflected.
- Documentation reflecting the health insurance premiums paid by the company under a group health plan including owners of the company for the 8 week period following the origination of the loan should be provided. Copies of the monthly invoices should suffice.
- Documentation of all retirement plan funding by the employer for the 8 weeks following the origination of loan should be sufficient. Copies of work papers, schedules and remittances to the retirement plan administrator should be available.
- Copies of all lease agreements for real estate and tangible personal property should be presented along with proof of payment during the 8 week period following the loan origination date.
- Copies of all statements of interest paid on debt obligations incurred prior to February 15th, 2020 indicating payment amounts and proof of payment for the 8 week period following the loan origination date.
- Copies of cancelled checks, statements, or other evidence of utilities paid during the "covered period" for the 8 week period following the loan origination date.
Important notes: Each lender may require more or less information. IN addition, each borrower will need to make a certification that the documentation is true and correct, the amount for which forgiveness is being requested was used to make payments to retain employees and to make interest payments on covered mortgage obligations, covered rent obligations, and covered utility payments. In addition, the SBA may request further information.
I did as you: budgeted the money first to a PPP category. I then would take money from it each time I had a qualifying expense. I would edit the subject line of the transaction with "PPP" and make a note in the PPP category that I took some out and what I went toward. I also created a PPP Offset category to place a bit of cash back into as I could, so I could make sure if something wasn't reimbursable, I'd have some money to be able to pay it back. (Not all businesses would have that luxury, for sure.) The way it's set up, I can do a quick search for "PPP" in All Accounts and pull up all transactions that should be covered according to the guidelines.