[GNC] Anyone using GnuCash to account for US PPP or EIDL funds?

[Dale Alspach]

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 <tim.quinn at att.net> 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 <tim.quinn at att.net> 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
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