Recordkeeping Requirements and Your EIDL LoanAug 12, 2022
Did you receive an Economic Injury Disaster Loan (EIDL) loan for your business? If so, you may have missed some of the conditions and requirements in the fine print when obtaining a loan from the Small Business Administration (SBA).
Under the section "Books and Record," it outlines your bookkeeping and recordkeeping requirements, such as maintaining accurate books for the most recent five years of operation.
Here are some of the requirements of the EIDL loan agreement:
- Borrower will maintain current and proper books of account in a manner satisfactory to SBA for the most recent 5 years until 3 years after the date of maturity, including extensions, or the date this Loan is paid in full, whichever occurs first. Such books will include Borrower's financial and operating statements, insurance policies, tax returns and related filings, records of earnings distributed and dividends paid and records of compensation to officers, directors, holders of 10% or more of Borrower's capital stock, members, partners and proprietors.
- Borrower authorizes SBA to make or cause to be made, at Borrower's expense and in such a manner and at such times as SBA may require: (1) inspections and audits of any books, records and paper in the custody or control of Borrower or others relating to Borrower's financial or business conditions, including the making of copies thereof and extracts therefrom, and (2) inspections and appraisals of any of Borrower's assets.
- Borrower will furnish to SBA, not later than 3 months following the expiration of Borrower's fiscal year and in such form as SBA may require, Borrower's financial statements.
- Upon written request of SBA, Borrower will accompany such statements with an 'Accountant's Review Report' prepared by an independent public accountant at Borrower's expense.
- Borrower authorizes all Federal, State and municipal authorities to furnish reports of examination, records and other information relating to the conditions and affairs of Borrower and any desired information from such reports, returns, files, and records of such authorities upon request of SBA.
What do you need to do?
Having an accurate and up-to-date set of books will allow the SBA (and you too!) to understand the financial health of your business by using financial statements such as the balance sheet and income statement (also called a profit and loss statement).
You will need to track and categorize your business transactions. Receipts, invoices, etc. should be filed and recorded. This can take time, but it will be worth the effort to understand what is happening to your money in order to get the most deductions available to you at tax time.
How can we help?
If you're behind on your bookkeeping, we can help. We provide year-round bookkeeping, tax planning, and tax preparation services which includes all the documents you need to satisfy the requirements of your EIDL loan.
If you want to improve your business situation, get assistance now. Schedule your free consultation today or give us a call at (218) 491-4002. We're here to help!
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