Small businesses throughout the country are now receiving funding from the Paycheck Protection Program. Many banks and accountants are encouraging their clients to open a new account in order to “track PPP funds.” Well, of course, they are! They can charge monthly service fees for the account and in many cases, bank employees are graded on the number of new accounts that they open. They have every reason to encourage you to do so. 

And so do we. The more accounts you have, the more time we will spend setting up the account, reconciling the account, and logging into your payroll, mortgage/rent, and employee benefit accounts to change the payment account and then changing it back after the 8-week period runs out.

Don’t do it! In these uncertain times, the last thing you need is unnecessary expenses. When others zig, we want to see you zag and that’s why we encourage that you have the funds deposited directly into your regular operating account.

The documents that certify the use of funds for forgiveness will be:

1. Payroll processing reports;
   
   
2. Copies of cleared checks; and
   
   
3. Mortgage and utility statements.

Bank statements wouldn’t accomplish anything other than proving the money moved, which can and will be shown from any account you choose.  We hope that you choose the option that doesn’t add additional layers further complicating things.

Not only that but say you have a mortgage to be paid. Mortgage payments generally contain principal and interest together in one payment. PPP forgiveness only includes mortgage interest! That right there nullifies the value of using a separate bank account to track PPP funds because you will have paid principle out of the same account which will be included in your balance. It will be required to provide a mortgage statement that parses out what portion of the payment went toward principal versus interest.

Instead of opening a separate account, keep it simple, and track these expenses outside of your accounting system or by utilizing your system’s custom reporting feature to create a report including only the eligible expense accounts. Although we generally have an idea of the federal governments’ guidance on what constitutes forgivable expenses, keep an open mind that things can change once businesses have been funded and new questions and concerns arise.  During this process, stay nimble and be flexible so that you can zag when you’re thrown a curveball.