[US] COVID-19: How to bookkeep your EIDL grant and loan
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[US] COVID-19: How to bookkeep your EIDL grant and loan
If you’ve received an EIDL grant or loan, here’s how to bookkeep it, from start to finish.
The Economic Injury Disaster Loan program is offered through the Small Business Administration. Unlike PPP...
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Question about the EIDL grant. "Forgiven loan amounts under the Paycheck Protection Program are excluded from gross income and will not be taxable as income."
Following the above method of creating the "other income - EIDL" account it adds this loan amount into income on the P&L. How will this be accounted for since it is non-taxable income?
Hey @ChrisCVC!
So first of all, you might be confusing the PPP loan and the EIDL grant/loan, so I'm not sure exactly which one you're asking about. Having said that, if you're asking about PPP loan forgiveness, it's reported on the tax return similarly to how meals and entertainment are only 50% deductible; you record the full amount as an accounting expense, but on your tax return, only 50% is deducted, and the other 50% is a book-tax difference. In the case of sole prop/Schedule C filers, it simply doesn't need to be reported. However, in the case of a corporation or partnership, there are mechanisms in the tax return to reconcile book-tax differences.
If you're is asking about the taxability of the EIDL grant, my tax teams haven't been able to find a solid answer from the IRS or the SBA, and so they purposely didn't include the taxability of the grant portion in the EIDL article. However, taxable or not, the EIDL grant should be accounted for as income because it does not have to be paid back.
We have to only use the IEDL for operating expenses. Is there an easy way for Wave to account for the expenses we are charging to the IEDL?
Hey there @SarahHeartsong
Your operating expenses can be categorized as normal to the appropriate expense account. There’s no requirement for the EIDL loan to keep track of what expenses the money is used for, so you can just account for the expenses as regular expenses. This guide should still allow you to follow the same bookkeeping practices to show your expenses as well as your repayment!
I want to confirm that I should be seeing two line-items in my transactions list as it relates to recording loan deposits. One is "Created Transfer", the other is "EIDL Loan Deposit". One of those was automatically created by the app after following instructions.
My transactions are automatically recorded from my bank, so per the instructions I left the bank account as is (business account), and selected the CATEGORY as "Transfer from... EIDL Loan".
So now I see the amount in GREEN "Transfer from EIDL Loan", and I see in BLACK "Transfer to Business Account". Is this correct? Thank you
Hey @pvel3! From what you've described here, yes, this sounds like it is being accounted for appropriately
How do I handle the Account for the EIDL Grant? When and how will that balance be zeroed out?
@cwsink - Reading the EIDL instructions just tonight, the EIDL grant is an income account, like revenue and rebates, They're not an asset or liability. The EIDL loan is a liability, which will work its way to zero as you pay off the loan. As far as I can tell, the EIDL grant income should be treated similarly to your revenue account(s). If you do something at year end to zero revenue, then do the same thing to the EIDL grant. We don't; we just let each year's income stand as is, and rely upon reporting to segregate each year's income.