Speaker, Author, Consultant, Fraud Examiner

What a whirlwind the last few weeks have been. So much to sort out and figure out, and then once you figure out how to “play the game,” someone changes the rules.

Truly we can say we have never experienced anything like it and I hope we never do again. However, IF something like this were to happen again, I hope you have made action plan lists from your experience now.

One of the games that changed constantly was the SBA Paycheck Protection Plan (PPP) & Economic Injury Disaster Loan (EIDL). It was mind-boggling.

Now the well has run dry. Some have received or will receive their funding. Others will not. There are still many questions surrounding the EIDL and when it will be funded as that money is not monitored by a lending institution but the SBA itself.

What has not changed is the PPP was designed and approved to be used within an 8-week window.

The clock starts ticking the day the SBA PPP money is deposited into your account.

You have 8 weeks of transactions to track: payroll, health benefits, retirement benefits, utilities, mortgage or rent, interest payments on debt obligation (incurred prior to 2/15/2020). 75% of the PPP is to be spent on payroll costs, which include “owner compensation replacement.” The loan forgiveness (at this writing) appears to be based on how the money is spent over the 8 week period. Therefore, tracking how your money is spent is vitally important!

Be mindful of a few things:

  • If your business location is owned as a separate business by you, and the business pays you rent, the rent is established as to what it was prior to February 15, 2020. In fact, mortgage payments and utility payments are frozen as to what they were prior to February 15, 2020.
  • There does seem to be some questions over what is the difference between payroll costs and owner compensation replacement and if the latter is a part of the 75% payroll rule.
  • If you have received a PPP or EIDL, you will need to track these, whether through your CPA or in your QuickBooks. If the CPA, feel free to share with them this article. If in your QuickBooks, how you track it depends on whether you are currently using Class Tracking. Class Tracking is typically used to track various aspects of a business or, most often, multiple locations. I have a couple of solutions, either way.

If you are not at this time utilizing Class Tracking, this is the easiest way to track the loan.

  1. In QuickBooks, Edit > Preferences > Accounting > Company Preferences > Select “Use class tracking for transactions.
  2. Lists > Class List. At the bottom of this window, Class > New. Enter PPP in the Class name. A class field will be shown on every transaction window now: every register (check, credit card, liability, etc), write check, deposit windows.
  3. Lists > Chart of Accounts. Account > New. Create an Income Account called “COVID19 Relief” or “SBA Loan.” When you make a deposit into your bank, designate the deposit to this account AND choose the Class PPP. If you enter deposits through the bank register window, you will need to click the Splits button (bottom left) to see the Class field.
  4. 75% is to be used for payroll. Therefore, you must track the employee checks and liability checks. If you have an outside payroll company processing your payroll, you normally enter three amounts in your register that are withdrawn from your bank account: Net payment amounts either direct deposited in the employees accounts or the paycheck amounts if printed, payroll taxes and the payroll company’s service charge, all withdrawn from the business’ bank account. When entering these three amounts, choose the Class PPP for each transaction.
  5. Do the same thing as above if you download each employee’s paycheck into QuickBooks – choose the Class PPP.
  6. If you are processing payroll through QuickBooks, QuickBooks has completed an update of payroll items, adding a National Paid Leave payroll items and CARES Retention payroll items for you to use. If you are not currently using Class Tracking, use Class Tracking instead of implementing these payroll items. When you process payroll, in the Enter Payroll Information Window, click on the employee’s name (blue) and choose PPP in the Class field in the upper right corner, beneath the pay period dates. Click Save & Next to do the same thing in every employee’s Preview Paycheck window.
  7. If you are processing payroll through QuickBooks, when you make liability payments, be sure to choose the PPP Class in the appropriate field for state and local taxes only.
  8. For rent and utility payments, and anything else decided that meets the criteria of loan forgiveness, if you enter these transactions through the Check Register window, click the Splits at the bottom left to access the Class field. In the Write Check window, it is on the far right of the check voucher section.
  9. Reports > Company & Financial > Profit & Loss by Class. Be sure to start the date range on the date your PPP loan was deposited into your account. Review the expenses not in the PPP Class to make sure you have all the allowed expenses.
  10. Upper left corner of this report, click Customize Report. Select % of Income in the bottom right. Click the arrow down to the right of Display columns by and choose Total Only. In the Filter tab, choose Class then choose PPP. This narrows the report to just your PPP income and expenses and displays the percentage of the loan being spent on the various areas. In the Header/Footer tab, in the Report Title Field, edit the Report Title to be PPP Loan Tracking Report. Click OK.
  11. Memorize this report to use for the next 8 weeks. Run this report every week to ensure you are using your money as directed.

If you are also receiving funding from the EIDL, create another Class called EIDL and follow the same instructions above.

If you are using the Class Tracking option, each transaction only allows for one Class to be selected. Therefore, the Class Tracking option is not your solution. There is a solution, albeit it not as easy as Class Tracking.

  1. Lists > Chart of Accounts. Create a Bank Account called PPP EIDL as a subaccount under your primary checking account.
  2. When you create payroll or pay liabilities or rent or utilities, enter it under this “bank account.”
  3. Because it is a subaccount, you will still be able to reconcile the primary account, as all subaccounts are a part of the primary account.
  4. The report is not as great but do-able. Reports > Custom Reports > Transaction Detail. Click Customize Report. In the Filters tab, choose Account > Multiple Accounts. Select All, then deselect Checking Account and Savings Account, leaving the COVID19 subaccount chosen. Deselect also Credit Card liability accounts and business loan accounts that are not to be tracked for the PPP and EIDL.
  5. In the same Filters window, choose Detail level on the left and then Summary only in the middle. Scroll down on left to Transaction Type and choose Multiple Transactions. In the pop up window, choose Check, Deposit, Bill Payment, Paycheck and Payroll Liability Check. Click OK.
  6. In the Header/Footer tab, edit the Report Title to be PPP EIDL Loan Tracking Report. Click OK.
  7. There is no % of income available for this report but it will give you a balance and a total.
  8. Memorize this report to use for the next 8 weeks. Run this report every week to ensure you are using your money as directed.

Daily the landscape changes the tracking requirements. However, I believe these are the best options for tracking under the current guidelines.

I hope this clarifies how to best track the funds this loan is provided for.  If you have any questions, feel free to contact me.

18 thoughts on “SBA PPP & EIDL Tracking in Quickbooks”

  1. Dudley Beaty says:

    If you have gotten both the PPP and EIDL can you do the following: enter a new class named COVID 19 PPP and enter a second new class called COVID 19 EIDL. This way the separate items can be tracked separately since they can’t be spent on the same things. Then you can create one report PPP Loan Tracking Report and a separate one named EIDL loan Tracking report. This way you can keep all expenses separate and run reports for each one separate, since these two loans need to be kept separate and can not be spent on the same things.

    What do you think Susan?

    • susangunnsolutions says:

      Hey Dudley – There is not clear instruction about what specifically is required to track for the EIDL. That makes this hard to answer. I asked two bankers and two CPAs and got a variety of answers, BECAUSE there have been no guidelines regarding this from the SBA. SOOOOO. The $10k “grant” is to be used for economic relief for temporary loss of revenue. There were no specifics regarding what this was to track nor any requirements given for tracking. In fact, since the initial availability of this loan, it has been reworded to be called an Advance, as well as the wording of “up to $10,000.” Based on the answers I received, I believe that simply running a Profit and Loss report for the months that you were “affected” (shut down, soft openings, etc), would be sufficient to provide proof of advance necessity. The PPP is different. There are specific guidelines stating what this loan is for, which is why I only included it for the tracking. The 75% payroll is the key ingredient. Hope this helps!

    • susangunnsolutions says:

      Hi Cristi –
      Creating a separate bank account is completely unnecessary if you use the class tracking in your QuickBooks. If you are not using QB, but the accountant is doing the accounting, then creating a bank account may be easier for them to track your expenses BUT you will need to switch your payroll to that account, etc. If you do, NO patient revenue is to be deposited in the additional account but only used for PPP deposit and expenses. Great to hear from you!

  3. Jenny Smith says:

    /thank you so much for this information!!! There was no guidance on how to register these loans in QB and how to track them in QB. I very much appreciate you providing this information to us free of charge. Thank you for being the BEST resource out there for Dental Managers using QB. Stay safe! Jenny

    • susangunnsolutions says:

      Thanks, Jenny. It takes a village and there are a plethora of consultants doing what we can to help you! Virtual hugs!

  4. Andrea says:

    Your directions on the first page say to code the SBA Loan deposit as and Income Account. I thought it was a Long Term Liability?

    • susangunnsolutions says:

      If you enter it as a long term liability, it will be difficult to track the expenses connected with the PPP or the EIDL. For the purposes of the Profit and Loss Report, to view the percentage of what you are spending for the various aspects of your practice, I made the recommendation of entering it as income and using Class Tracking option.

  5. Cathy says:

    I made a liability payment for IRA contributions, however it is not reflected on the Class report. What report can I use to see these transactions? For example the employer match amount has been classified as COVID-19, but can’t track it. Thank you.

    • susangunnsolutions says:

      Hi Cathy – If you go to the liability payment itself through the check register and double click on it, the Write Check window opens. On the voucher part of the check, on the right side is the Class field. It is the payments themselves that must be designated as COVID-19. You are most welcome!

  6. Peter Chien says:

    When one downloads credit card transactions, some charges may not be eligible for PPP relief (ie. supplies) and some may be (ie. utilities). Are we able to designate only certain specific transactions under “Covid19” class? Thanks.

    • susangunnsolutions says:

      Hi Peter – Yes. After downloading your credit card charges, go to the Credit Card register itself, select the transaction that is eligible, choose Split and then you will see the Class field. You will not be able to choose it when you download but can later by going to the actual credit card register. Hope that helps!

  7. Bill Galinsky says:

    Susan, really great ideas here. But, I’m a little confused. I received the initial EIDL “grant” from the SBA, and a few weeks later I received the PPP loan from my bank. Both of these were deposited directly into my business checking account. I created a separate income category for both of these. I also setup up the class tracking as you suggested, but when I run the report it doesn’t show the amount of the PPP loan. Do I need to create an offsetting journal entry for this?

    • susangunnsolutions says:

      Hi Bill – No journal entries needed! It sounds as if the class was not also chosen for the deposit when it was created. Double click on it to make sure it is chosen. Simply adding it as an income, will not display it on a class report but when you choose a class for anything, it will show up on the report. Hope this helps!

  8. Gina says:

    I’m a little confused, my CPA said to designate the PPPL as a long term liability, but you are saying to set it up as an income account. Can you explain why you set it up as an income account?

    • susangunnsolutions says:

      Income account in order to create the Class Report to show you what percentage of the PPP has been spent on the variety of areas.
      The PPP is most likely a forgiven loan, not a long term liability. The forgiveness is dependent on the terms: minimum of 75% payroll.
      With the structure I suggested, understanding those areas makes it tons easier. This cannot be done easily as a long term liability.

  9. Peggy Barber says:

    Thank you for this great information. We received PPP, the EIDL Advance, and the EIDL. Gross income was reduced by 50% each month since February. Managed to keep afloat using credit cards, line of credit, savings. Can I record expenditures since February against the EIDL loan, or must I start with expenses after receiving the loan?

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