Editor’s note: If you need bookkeeping in order to get your PPP loan forgiven, Bench can help.
Once you’ve been approved for a PPP loan, here are some good next steps to make sure your forgiveness period goes smoothly—and you get your loan forgiven.
1. Connect with your employees
With your new funding in place, you can now be more confident in contacting any employees you had to lay off or put on furlough. Putting your employees back on payroll will not only provide them with stable income, but will also make you eligible for loan forgiveness.
If your business is still closed or operating with reduced capacity, you should still keep as many employees on full payroll as possible to meet the forgiveness requirements, even if those employees can’t fulfill their old responsibilities in the same way. Now is a good time to work on backburner projects that were never a priority before, or even begin work on projects that will set your business up for success post-coronavirus.
Also check that your employees are no longer collecting unemployment benefits—the PPP doesn’t mix with unemployment benefits.
Further reading: PPP and Unemployment Benefits
2. Set up a new bank account
In order to get your PPP loan forgiven, you need to prove you spent the funds on the right things—at least 60% on payroll, the remaining 40% on utilities and rent/lease/mortgage interest payments. Having a separate business bank account to hold your PPP deposit will make it easy to track (and more importantly, prove) those expenses.
However, most business owners don’t pay for everything with their debit card. If you use cash, credit cards, PayPal, and other payment methods, you’re going to need a proper bookkeeping and recordkeeping setup.
3. Begin bookkeeping and recordkeeping
In order to get your loan forgiven, you’ll need to not only spend the PPP funds on the right things, but also prove these expenses to your lender.
In order to do so, you’ll need to begin tracking, and categorizing, every expense. A simple bank and credit card statement likely won’t be enough for your lender.
An organized collection of documentation proving your expenses will make processing your claim faster and reduce the chance of a rejection.
Recordkeeping involves noting:
- The amount you spent
- What you spent it on
- The date
- The purpose
You’ll also need to keep track of the receipt/invoice/official record of payment.
If you need a primer on bookkeeping, check out our guide here.
And if you need someone else to do the bookkeeping for you, check out Bench. We’ll do your bookkeeping for you, fully remotely. Learn more.
4. Apply for forgiveness
Now that you have your employees back on the payroll, and you have a bookkeeping plan in place, you’re ready to start spending your funds. When the time comes for forgiveness, you’ll submit an application with your lender.
Further reading: A Complete Guide to PPP Loan Forgiveness
5. File your 2019 taxes
If you applied for the PPP with completed (but unfiled) tax forms, go ahead and submit those to the IRS. The sooner you file your return, the sooner you’ll get a refund (if you’re owed one). You’ll also have one less thing to worry about while you run your business over the next few weeks. The tax filing deadline has currently been deferred to July 15, 2020. If you need 2019 bookkeeping and taxes done, Bench can help with that too.