I just had a committee meeting for a 501(3)(c) this week where this was discussed. This is not really a gnucash issue but an accounting issue. A banker sits on the committee and part of the problem is that SBA has not finalized their procedures. Apparently some draft information has been released and it appears that fairly detailed information on how the funds were spent will be required. (This is again the banker's input.) There was disagreement on exactly how to proceed, but a few things were settled. The PPP funds were placed in a special subaccount of the checking account. (Our CPA was consulted and she said it was unnecessary to actually have a separate account at the bank.) A liability account was added to show this as a loan even though we expect the loan to be forgiven. The disagreement was over two approaches for handling expenditures from the subaccount. First Approach: Continue with all current procedures and accounts for expenditures. When PPP related expenses occur, e.g., biweekly payroll or utility bills, a transfer with a detailed memo is used to move funds from the special subaccount into the main account to cover the allowed portion of the expense. Second Approach: When PPP expenses occur directly credit the subaccount for the expense. In the case of payroll this requires some additional splits to handle the non-PPP portion and modifications of some other transactions. (These have to do with the use of an external service to actually do the tax calculations and pay the employees.) I am advocating the first approach as simpler and less likely to disrupt our normal reporting. The second approach was claimed to provide a better record for applying for forgiveness.
Dale On Sat, May 23, 2020 at 9:31 AM Tim Quinn <[email protected]> wrote: > I realize some more information might be useful. > > Briefly (and oversimplified), both PPP and EIDL are US government programs > which provide money from the government to a small business. > > PPP funds are a loan, some or all of which can be forgiven (not need to be > paid back) and is expressly not taxable as income, according to the > interpretations of the law I have read. > > In my case, the EIDL funds are actually a grant, not a loan, and the tax > treatment is a little ambiguous currently. > > But I’m actually less concerned with the tax treatment currently than the > following... > > I want to be very explicit in my accounting to show what expenses we are > using the government funds for. That part I’m not quite sure the best way > to handle. Normally we write checks to pay expenses, so I debit the > checking account. The government funds are already in the business checking > account, so I am trying to choose the best way to identify that specific > expenses — paid out of the checking account — are linked to the PPP or EIDL > money. > > I’d appreciate hearing from anyone who is actually dealing with these same > issues or has advice how to handle this. > > Thanks again. > > - Tim > > > > > > On May 23, 2020, at 7:41 AM, Tim Quinn <[email protected]> wrote: > > > > I’ve been reading various non-GC articles and blog postings about how a > small business might account for PPP or EIDL funding and expenses. > > > > I’ve looked for but have not found any GnuCash list posting about this. > > > > I’m curious if anyone is using GC for this and, if so, how you’ve chosen > to do so? > > > > Or, even if you’re not doing this yourself, what advice you might have > for those of us who will try? > > > > Thanks in advance. > > > > - Tim > > _______________________________________________ > > gnucash-user mailing list > > [email protected] > > To update your subscription preferences or to unsubscribe: > > https://lists.gnucash.org/mailman/listinfo/gnucash-user > > If you are using Nabble or Gmane, please see > https://wiki.gnucash.org/wiki/Mailing_Lists for more information. > > ----- > > Please remember to CC this list on all your replies. > > You can do this by using Reply-To-List or Reply-All. > > _______________________________________________ > gnucash-user mailing list > [email protected] > To update your subscription preferences or to unsubscribe: > https://lists.gnucash.org/mailman/listinfo/gnucash-user > If you are using Nabble or Gmane, please see > https://wiki.gnucash.org/wiki/Mailing_Lists for more information. > ----- > Please remember to CC this list on all your replies. > You can do this by using Reply-To-List or Reply-All. > _______________________________________________ gnucash-user mailing list [email protected] To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user If you are using Nabble or Gmane, please see https://wiki.gnucash.org/wiki/Mailing_Lists for more information. ----- Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
