Tracking Special COVID-19 Funding and Expenses in QuickBooks

You probably thought you had your QuickBooks setup for the season but then the pandemic hit.  The federal government has rolled out funding options to help businesses through this unprecedented time. It will be extremely important for you to track not only that you received the funding but that you used the funding appropriately.  Having recently listened to a banker explain the new SBA loans, he made sure all understood the importance of being able to verify you used the funds as intended.  And if you run payroll in QuickBooks, many of you will need to track the new types of medical leave.  Below are some ideas to help you setup your QuickBooks so you can track as required by the different programs.

Accounts

If you don’t already, be sure you have appropriate expense and cost of goods accounts so you can track and verify the funding was used for the allowed business costs.   For some of you, that might be all you need or want to do.

Classes

Another idea might be to create a Class for the type of loan if it covers more than one type of expense (which the SBA loans do). The Economic Injury Disaster Loan (EIDL) and the Paycheck Protection Program (PPP) include rent, utilities and some types of interest in addition to your payroll expenses; then all the spending would be in one column. If you get funding for both, then you will need to show that you didn’t use them both for the same thing (i.e. double-dipping).

For some of you, just having a Class for the loan will make it easier to see just the costs covered by your loan.  That will also help ensure that you don’t use both types of loan for the same expense (unless you meet certain criteria).

However, those of you who use Classes for the different divisions in your company will have to decide if you just want to use the type of loan for a class or if you want to use sub-classes (in QB desktop) or locations (QBO).  If you decide you want sub-classes and locations, then you’ll need to decide if the loan is the main class or a subclass/location of your different divisions.  My inclination would be to have the loan a subclass of the division so you can still compare profitability of divisions whether for this year only or compared to previous year(s).

COVID

With the 2020 version of QuickBooks, you can now collapse the subclasses and just see the “parent” class.

COVID

Bank Accounts

COVIDAnother option is to have a dedicated bank account for the loan (you can have a subaccount of your regular bank account), but for some of you, that might get confusing or hard to manage if for any reason the total check could be a combination of uses.  That’s why I prefer Classes.

National Paid Leave

For those of you who will pay for sick time under the Families First Coronavirus Response Act (FFCRA), Intuit is recommending you create the following payroll items (I’m including the definitions in case that helps) if they aren’t already (there’s a chance they were included in a payroll update). Payroll limits are one (1) year only.

  • National Paid Leave Employee: Your employee is sick and under quarantine with COVID-19. Limit is $5100.
  • National Paid Leave Family: Your employee is taking care of a family member who is sick or impacted with COVID-19. Limit is $2000.
  • National Paid Leave FMLA: Your employee is taking leave under the Family Medical Leave Act (FMLA) to care for children under 18 whose school or child care is closed because of COVID-19. Limit is $10,000.
  • National Paid Leave – Health Credits: If you are contributing to an employee’s health insurance during the time they are being paid under the FFCRA provisions, you can track this amount and a credit will be applied to your federal tax liability.

How you setup the payroll item varies depending the payroll product you are using.

You will also need to edit the employee records to include these various leaves before you can pay them.  Whether you set these up for all employees or wait until you need to edit the employee record is up to you.  If you have lots of employees, I’d be tempted to do it as needed, but it’s entirely up to you.

Here’s a link for those of you using payroll in the desktop versions of QuickBooks and here’s the link for those of you using the online versions of QuickBooks

  • If you use the time sheets in QuickBooks, you might want to add Service items that align with the new Payroll Items
    • National Paid Leave (or COVID) liability account
    • Payroll reports. Personally, my favorite payroll report in the desktop versions of QuickBooks is the Payroll Summary Report because I can do so much customizing.  The default is hours and rate for each employee, but you can omit employees and do time periods (like month or week)- helpful when reviewing for the 941’s.

COVID

You might choose to have employees as the column and just select the national paid leave payroll items which would let you see if they are nearing their limit

COVID

As you go through the year, you’ll figure out which reports you’ll want to run for the COVID-19 funding and expenses.  This article will give you 5 Fast Ways to See Key Reporting and the two videos below will help you customize your reports (there are ways some of you have never realized existed!).

Better Business Decision by Customizing QB Reports

Filter to Find What You Want

Give some thought on how you want to track your COVID funding and expenses, then be diligent with your data entry, and review your reports so you will meet the criteria for the different aspects.  If you need help with this, you can contact our office or your accountant.

Leave a Reply