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It is probable you will need or want to document your COVID-19 related expenses to refer to at a later date. Maybe it will be an insurance claim or a government grant, possibly a loan application, or maybe just to compare against next year when we have all recovered from the business interruption.
We are suggesting to our clients that you create an account structure similar to the one pictured above to track these expenses.
Add a line item in your P&L and chart of accounts specific for all related “Covid-19 expenses”. If using QuickBooks or really any accounting software, label this as an “Other expense” item so that it is below Operating Income. Begin tracking these expense items. Cleaning, maintenance, supplies, Information technology, computer & communications software etc. Also include time of staff spent to plan for and around Covid-19. Any other increased costs should go to this line item. E.g. Interest costs may increase because of additional borrowings, they should go here. Maintain a separate file for the documentation of these expenses. There are multiple good reasons to do this, the most significant is that many of us will be applying for Government and/or Insurance assistance. It will be necessary to identify and detail those costs related to this disaster. Additionally, in the future you may be looking for a loan. Everyone’s Profit and Loss Statements will be affected. We can show the bank and those reviewing financial statements that this was a one-time blip related to the Covid-19 disaster and we do not want this negatively impacting our borrowing ability. For those clients’ where we maintain the chart of accounts and handle the bookkeeping, we will work with you do get this accomplished..