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djfinley
May 17, 2020
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As a sole proprietor, how should I enter a EIDL. It is not a grant, should it be entered as taxable income as I will be paying expenses and myself from the loan?

  • May 17, 2020
  • 2 replies
  • 0 views
Original commenter did not share additional details
Best answer by IamjuViel

Hello, @djfinley.

 

You can categorize the Economic Injury Disaster Loan (EIDL) as Personal Income in QuickBooks Self-Employed. Once you start paying the loan, the payment for the loan capital will be categorized as Business Loans. Then, assigned Schedule C: Interest for the interest paid.

Here's how:

  1. Go to the Transactions menu.
  2. Click the Add Transaction button.
  3. Enter the Loan details.
  4. Choose Personal in the Type column.
  5. From the Category column, select Income.
  6. Click the Save button.

As a sole proprietor, freelancer, consultant, or independent contractor, you don't pay yourself a salary. Also, you can't deduct your salary as a business expense. Instead, your personal income from the business consists of the business profits, and those get added to your personal income tax return.

 

Also, I'd recommend consulting with an accountant so you'd be guided accurately in tracking your loans and grants.

 

Lastly, you can read through these articles for more insights about handling taxes and Covid-19 related loans:

Leave your comments below if you other questions about tracking your self-employed income and expenses. I'm always here to help.

2 replies

IamjuViel
IamjuVielAnswer
May 17, 2020

Hello, @djfinley.

 

You can categorize the Economic Injury Disaster Loan (EIDL) as Personal Income in QuickBooks Self-Employed. Once you start paying the loan, the payment for the loan capital will be categorized as Business Loans. Then, assigned Schedule C: Interest for the interest paid.

Here's how:

  1. Go to the Transactions menu.
  2. Click the Add Transaction button.
  3. Enter the Loan details.
  4. Choose Personal in the Type column.
  5. From the Category column, select Income.
  6. Click the Save button.

As a sole proprietor, freelancer, consultant, or independent contractor, you don't pay yourself a salary. Also, you can't deduct your salary as a business expense. Instead, your personal income from the business consists of the business profits, and those get added to your personal income tax return.

 

Also, I'd recommend consulting with an accountant so you'd be guided accurately in tracking your loans and grants.

 

Lastly, you can read through these articles for more insights about handling taxes and Covid-19 related loans:

Leave your comments below if you other questions about tracking your self-employed income and expenses. I'm always here to help.

    K
    kcnya222
    September 5, 2020

    Thank you for this information but here's my situation. I just upgraded from QuickBooks Self-employed to Online Essentials, where I was able to use my personal account, track and separate business transaction from the personal. With Online version, I cannot do the same so I have chosen to just bring the balance of business transaction over and not link that account.  But I received the funds in that personal account. I am currently in the process of opening a business checking to deposit those funds but in the meantime how do i record the funds. Do i create a dummy account until i have the business checking? Also, someone stated your solution would Personal income) would cause the funds to be taxed, if that's the case could it be entered as owner's equity or is the solely for incorporated entities?

    A
    ajcas
    June 17, 2020

    This information is incorrect. If you enter the EIDL Loan as income, you would have to pay taxes on it. And remember, it's a loan.  The best thing to do is to enter the loan in Quickbooks as a long term liability and from there, you can monitor your expenses, interests and payments. This is what my accountant advised. I hope it helps!

      J
      jungle555
      April 8, 2023

      Their is no Category for Long term Liability

      DHeraV
      DHeraV
      April 8, 2023

      Hello there, @jungle555.

      I'm here to share information about categories of Schedule C in QuickBooks Self-Employed (QBSE). In QBSE, no specific category is intended for Long Term Liability. To view the available category for Schedule C in QBSE, kindly visit: Schedule C and expense categories in QuickBooks Self-Employed.


      Moreover, to ensure that you'll get to categorize your transactions accurately, I recommend consulting your accountant for proper guidance in organizing your transactions in QBSE.

      Additionally, I'll also share this link where you can search for articles that can serve as your reference to guide you manage your QuickBooks account: QuickBooks Self-Employed Help Articles.

      Feel free to leave a reply if you require further assistance with categorizing transactions in QuickBooks. The Community team always has your back. Have a good one.

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