How to show ppp loan forgiveness in quickbooks?

I went through this process myself last year for my small retail business, and let me tell you - it's confusing but totally doable!What worked for me was:1. I created a separate bank account in QuickBooks just for the PPP funds (you don't need a real separate bank account, just a QB account)2. Every time I paid payroll or rent, I transferred money from the PPP account to my regular checking and categorized those transfers as "PPP Eligible Expenses"3. When forgiveness came through, I just zeroed out the PPP account and categorized the difference as "Forgiven Debt"The beautiful part of this method? When my accountant asked for documentation, I could just run a report on that PPP account and show exactly where every dollar went. It made the forgiveness application so much easier!Honestly, the hardest part was figuring out which expenses qualified - the rules changed like three times while I was tracking everything!

As a QuickBooks ProAdvisor, I'd approach this a bit differently than the previous answer. The key is maintaining clear audit trails!Here's my method:Setup:- Create a Other Current Liability account named "PPP Loan Payable"- Create a Other Income account named "PPP Loan Forgiveness Income"Recording the loan:- When funds hit your bank, categorize the deposit to the PPP Loan Payable accountTracking expenses:- Use tags or classes like "PPP-eligible" for every relevant transaction- Keep detailed payroll records showing the 8-24 week covered periodForgiveness journal entry:- Debit: PPP Loan Payable (to reduce the liability)- Credit: PPP Loan Forgiveness Income (to recognize the income)Quick tip: QuickBooks Online has actually added some specific features for PPP tracking - check their help section for "COVID-19 relief" tools that might automate some of this process for you!

Hey! I'm a small business accountant and we've been handling a ton of PPP forgiveness cases. Here's how we typically handle it in QuickBooks:When you receive the PPP loan:- Record it as a loan (not income) - Create a liability account called "PPP Loan"When you use the funds for payroll/eligible expenses:- Track everything meticulously using classes or tags for "PPP Eligible Expenses"When forgiveness is approved:1. Create a new expense account called "PPP Loan Forgiveness" or similar2. Write off the loan - Debit the PPP Loan liability account and credit the PPP Loan Forgiveness account3. This effectively zeros out the loan without affecting your income statement improperlyImportant: The timing matters! Don't record forgiveness until you actually receive official approval from the SBA. I've seen too many businesses get into trouble by counting their chickens before they hatch.The IRS has some good guidance on their website about how forgiven PPP loans interact with other COVID relief programs.