So, you secured a Paycheck Protection Program (PPP) loan from the SBA, now what?

Most businesses do not need help figuring out how to spend this money. However, when it comes to accounting for the loan, plenty of businessowners are confused about how to handle it correctly.

• Should the loan be counted as income if it will be forgiven, or is it still a liability?
• How can you reduce your audit risk after receiving the loan?
• What can the money be used for in your day-to-day operations?

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You asked, so we are providing a guide to help you navigate the waters. Follow this PPP bookkeeping how-to guide to keep your books clean after receiving your loan:

During an audit, financial inaccuracies are typically uncovered that have broader business implications. Whether these inaccuracies are the result of fraud, mistakes, or ignorance, they can have deleterious effects. Internal audits may unearth problems that negatively affect financial statements and financing attempts, while federal tax audits can identify issues that result in costly fines and penalties.  

Understanding which inaccuracies auditors find most often provides a foundation for self-imposed accountability. Focusing on areas where problems typically exist equips business owners with the information needed to improve financial accuracy and make smarter business decisions.  
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Furthermore, exercising extra caution around common problem areas protects the integrity of financial reporting, ensuring that the business’ financial position will be accurately represented to potential investors, existing shareholders, and state and federal authorities.