Mastering PPP Loan Forgiveness Recording in QuickBooks
The Paycheck Protection Program (PPP) was introduced as part of the CARES Act to support small businesses during the economic challenges caused by the COVID-19 pandemic. The program offered forgivable loans to businesses that used the funds for qualifying expenses like payroll, utilities, and rent. Proper accounting of PPP loans and their forgiveness in QuickBooks is critical to ensure compliance with tax regulations and to maintain accurate financial records. This guide will walk you through the process of recording, tracking, and accounting for PPP loans and their forgiveness in QuickBooks. 1. Understanding PPP Loan Forgiveness The PPP loans are forgivable if businesses adhere to specific guidelines: At least 60% of the loan must be used for payroll expenses. The remaining 40% can be used for utilities, rent, and mortgage interest. Businesses must maintain employee and compensation levels during the covered period. If the forgiveness criteria are met, the loan amount used...