Expenses Reimbursed from PPP Loan Proceeds are Categorized Transfer
awllc
Member Posts: 2
Hello all! I know we don't give Accounting advice here but I thought I'd just try this specific question that doesn't seem to be answered by the PPP article published by Wave. I have established the Account, and have expenses (Rent, Owner Draws) that I have used the PPP Loan for. When those expenses are used, the Category changes from the Expense to "Transfer To PPP Loan". This seems to look right but when I look at my Income Report details, those expenses are missing from the Categories they should be in (Rent, for example). As such, we don't get a write-off of these in our tax calculations. As of 12/31/2020 we had not been forgiven for these loans so they are that. Is this the way it should be or is there some additional step I should take to make sure these Expenses and Income (for Owners Draws) make it into the Income Statement appropriately?
Comments
Hey all, I wanted to share my epiphany. I should not be re-categorizing Expenses to be Transfers to the Loan Line because we have neither paid back nor been forgiven for any of the funds in the Loan Line (PPP account) established. All expenses will remain as they are and the forgiveness or payment of loan will be the only transactions that hit the loan directly. I have put a "Note" in the Expense indicating it was a PPP Expense so I can know which go with the PPP, but no accounting transactions are made between the PPP loan and my expenses in Wave. I hope this makes sense, it did for me! I just went back and returned all of the expenses and owners draws back to their typical categories and my Income Statement, etc. looks correct. I still have a full balance in my loan account, which is accurate. I'll make entries as I get statements and/or forgiven. Whew! I'm becoming an accountant more and more each day running a small business!