PPP Forgiveness Checklist 2020

Here is a simple checklist to make sure you’ve got your bases covered, so you get your loan 100% forgiven.
Pillar one:
Spend at least 75% of the funds on payroll costs
  • Salaries
  • Wages
  • Vacation pay
  • Parental and family leave Medical benefits
  • Sick leave
  • Other health benefits
Spend the remaining 25% of the funds on approved expenses
  • Mortgage interest
  • Rent
  • Utilities
Note: In order for the mortgage interest, rent, and utility expenses to be forgivable, the mortgage/ rent/utilities expenses can’t be brand new — they had to be in effect prior to February 15, 2020.
I suggest that keep copious records. Setting up a NEW, FRESH, bank account to park the PPP funds in it and then use that checking account to fund the approved expenses will make this easier for reconciliation, record keeping, and audit.
Pillar two:
In order to prove your PPP expenses and qualify for forgiveness, we recommend the following six steps.
  • Record the PPP deposit as a loan on your books
  • Over the next eight weeks, complete bookkeeping on all financial transactions
  • Record the expense amount
  • Record the vendor/payee
  • Record the “category” of the expense (Utilities, Rent, Payroll, etc.)
  • Record the date of the transaction
  • Record the purpose of the transaction
  • Store the receipt or official record (such as payroll records)
  • At the end of eight weeks, add up the total amount spent on forgivable categories
  • Apply for forgiveness through your lender
The Rules for Self-Employment
It is important to note, if you’re self-employed, you can still qualify for the PPP even if you don’t have employees. The difference is that you’re given a PPP loan based on 2019 net profit, not 2019 payroll records. You don’t need to spend 75% on the loan on the payroll. Instead, eight weeks’ worth of your 2019 net profit can automatically be forgiven, being treated as a replacement for profit. But for the remainder of the funds, you will need to follow the above checklist. I suggest you consult your accountant.
Here are some helpful resources on Paycheck Protection Program
PPP Forgiveness Checklist
Compiled by Raymond Reggie
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