Since the forgiveness aspect of the PPP loan is of high importance, and since the use of the funds is restricted, we have suggested setting up a separate bank account to hold the PPP funds. This will allow you to keep them separate and to keep clear records for how they were spent on the allowable items of payroll, rent, utilities and mortgage interest. This does not mean that you have to pay the expenses directly from the PPP account. In fact, we wouldn’t recommend it for a couple of reasons. First, you may not have received checks for that account, or you would have to change your bill payment account to point to the new PPP account, etc—it would just be cumbersome. Second, we don’t yet know the nuances of the forgiveness aspect since the guidance has still not been issued; and because of that you may pay something you shouldn’t from the PPP account, or not pay something you should.
A better system is to keep a simple list of eligible expenses and transfer that amount from the PPP account to your regular operating account to cover them. To this fluid list, you can add items as they are paid or remove items as we discover they were paid in error, allowing you to transfer more or less to true up the PPP funds. This method is especially easier to handle the payroll items. It is difficult to change bank account info with your payroll provider. Additionally the payroll provider would then debit the PPP account for payroll fees—which aren’t allowed, for payroll taxes—which aren’t allowed, and for net paychecks—which would be too little since PPP covers the higher gross wages figure. Transferring in and out of the PPP account gives you flexibility to adjust or correct amounts along the way as needed.