Creating a Paycheck Protection Program Bank Account

In General Ledger, Payroll by Kevin Stroud

Dear AccountMate Clients,

Without going into the details of the Paycheck Protection Program, funds are finally being disbursed and one of the recommendations to assist in tracking the usage is to set up a separate bank account. We’re getting calls on how to do this and thought it would be worth letting EVERYONE know the three simple steps:

  1. Create GL Accounts for the Loan and Checking Account: In the General Ledger module, under <Maintenance><Account Segment Values> create an asset account (very near your regular checking account) and a liability account (in the long term liabilities area of your account numbers)—selecting “Account Group ID” the same as very similarly “placed” accounts on your Balance Sheet. If you have a single-segment chart of accounts, then you’re done as creating the segment automatically creates the account. If you have a multi-segment chart of accounts you’ll need to hit <Maintenance><Chart of Accounts> and create the fully-formed GL accounts for the asset and liability.
  2. Create the Bank Account: In the AP/AR/BR/PO/SO module, hit <Maintenance><Bank Account> and add the new bank account, filling in the “Account #” and “Bank Routing #” and selecting the asset account created in step #1. Copy the settings on the rest of the tabs from your regular bank account (if you’re not already using blank-check-stock and printing your own MICR then now is the time to start!), except the “Next Computer Check #” will be different for this account—can be anything you’d like that works with your check stock. And, have I mentioned printing your own MICR lately?! <grin>
  3. Record the Initial Loan and Deposit Amount: In the Bank Reconciliation module, hit <Transactions><Record Deposits/Other Receipts>, change the option in the upper left to “Record Other Receipt”, select your new bank, use any “Transaction Code” you’d like and enter the amount—then the trick is: On the GL Distribution tab, enter the liability account you created in Step #1 and save the transaction.

Now use this new bank when printing employee payroll checks (or recording direct deposit), payroll tax deposit payments, and rent/mortgage and utility payments in AP—and you’ll always have complete visibility to “how much money is left” under <Maintenance><Bank Account> and you can easily provide check registers for the distribution of these funds.

All our best to everyone—and hoping life returns to normal for everyone soonest!


Kevin E. Stroud

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