Record keeping tips for your business and the Payment Protection Program
As a small business owner, you’re often juggling multiple roles – from marketer to bookkeeper. While the administrative tasks aren’t always the most fun part of owning your own business, they are one of the most important. Particularly if you’ve recently received a Payment Protection Program (PPP) loan and want to apply for loan forgiveness.
Here are some other suggestions to consider:
1. Coordinate with your accounting professionals. Whether you employ a part-time bookkeeper or retain a certified public accountant, a knowledgeable professional can act as a point person to manage or oversee your PPP record-keeping and stay in touch with your lender.
2. Open a new dedicated PPP bank account. Keeping your PPP funds in a separate account rather than commingling them with other funds may make record-keeping easier.
3. Set up a system to track PPP expenditures. Use an accounting system like Quicken or FreshBooks, or spreadsheet software like Microsoft Excel or Google Sheets.
4. Track how much, when, and why. Make a record of the amount, date, and PPP-allowed purpose of each expenditure of your PPP funds. Remember that funds must be used within eight weeks of the date your loan was funded to qualify for loan forgiveness.
5. Set up proper controls. Use proper accounting controls, such as two authorized signatures for large transactions or a PIN for a debit card, to help protect against fraud.
6. Consider using a payroll service. A third-party payroll service that's up to speed on the PPP rules may be a smart investment to help you manage your record-keeping tasks.
7. Keep copies. Set up files to hold paper copies of pay stubs, mortgage statements, rent checks, utility bills, and other documents related to your PPP expenses. You may not need all of this paperwork, but it could prove helpful to have.
PPP loan forgiveness isn't automatic or guaranteed. Businesses that intend to apply or haven't yet decided whether to do so should make record-keeping a high priority. The good news is creating good record-keeping habits now will only continue to help your business in the future.