Why You Need a Separate Bank Account for Your PPP Funds - Good Cents Bookkeeping

Review, Reexamine, Reconsider 

Deciding whether or not to open a separate bank account for your PPP funds is something I’ve been asked a lot about. 

Here is what I have learned in the past month navigating eleventy bajillion PPP applications and sitting in on hours of webinars, PPP parties with my professional colleagues, and reading and rereading legislation, guidelines, and guidelines to guidelines about the CARES Act: 

It’s like COVID-19. 

A lot of people have a lot of things to say…

But no one knows anything 100% for sure yet. 

A month ago, accountants + bookkeepers were saying, “Meh, no need to open up a new bank account. Journal entry here, a journal entry there, a pinch of reconciliations, and Badda Boom, Badda Bing, your PPP loan will be forgiven, and your loan will be forgiven.” 

That is not the case today, and it’s not what I’m advising for my clients, friends, or colleagues. 

IF YOU HAVE RECEIVED, OR EXPECT TO RECEIVE A PPP LOAN, OPEN UP A SPECIFIC PPP BANK ACCOUNT. 

Here is my thought: loans of high value (likely over $200k, but again, that’s a “made up” number) will almost all be audited

Smaller loans will likely be selected for random audits. 

If you want your loan forgiven, you need a paper trail that is cleaner than a sterile N95 mask. 

If you deposit your PPP funds into a separate bank account, and you ONLY pay PPP eligible expenses from this account if and when you are audited, it will be easy peasy.

Remember, an easy audit means little intervention from your accountant and/or bookkeeper, which can mean real savings for you. 

More importantly, having pristine records could be the magic key to getting your entire PPP loan forgiven if you play by the rules.