I saw a question on Facebook about accounting for CARES act funds. These are forgivable loans issued by the SBA. However, they are still loans!
You would enter them as long term liabilities. Increase long term liabilities, increase the bank account the funds were deposited into. Pay your payroll liabilities as usual (this is wages/salaries and payroll taxes ONLY).
If you get these loans forgiven, they are then income. I strongly suggest putting them under “Other Income” and specifically labelling them as “CARES Act Loan Forgiveness Income” or “PPP Loan Forgiveness Income.” Do not, repeat, do not lump this income with your operating income! We don’t know yet how these funds will be taxed, so you want to make sure not to lump this with any other income. Also, do not just “change the account”. You’ll need a journal entry to document the change. This is important.
If you’re interested in having us handle your books, please reach out to us at 801-692-0032 to chat about your specific situation. We’re happy to help!