Did you recently get a loan? In QuickBooks Online, you can set up a liability account to record the loan and its payments. This account tracks what you owe.
Here's how to set up your liability account to track the loan. We'll also show you one way to put that loan money into your bank account.
Step 1: Set up a liability account to record what you owe
First you need to create and set up a liability account so you can record the loan. Here’s how.
Go to Settings, then select Chart of accounts (Take me there).
Select New to create a new account.
From the Account Type ▼ dropdown, select Long Term Liabilities, then select Notes Payable from the Detail Type ▼ dropdown. Note: if you plan to pay off the loan by the end of the current fiscal year, select Other Current LiabilitiesAccount Type ▼ dropdown, then Loan Payable from the Detail Type ▼ dropdowninstead.
Give the account a relevant name, like "Loan for a car" or "Covid-19 relief loan."
Step 2: Determine the loan balance
A new loan will generally show the full balance to be paid back. If the money from the loan was deposited to your bank:
Leave the Opening Balance at US $ 0 and select Save.
Categorize the bank deposit in your liability account to establish the beginning balance.
A prior loan that is added to QuickBooks Online and was partially paid back should be set to the current payoff balance.
In the Opening Balance section, pick the date you want to start tracking your finances from.
Enter the account balance for that date.
Select Save.
Note: The beginning balance will post to Opening Balance Equity. This will balance the transaction in thechart of accounts.
If you add a balance in the liability account during Step 2, and your bank feeds show the deposited loan amount, you will need to make a second journal entry when you record the deposit. Note: The opening balance entry in the liability account created the first journal entry in the account's register.
Here’s how to create a journal entry:
Select +New.
Select Journal entry.
Select the liability account from the Account field. To remove or reduce the opening balance, enter the opening balance amount in the Debit column.
Select the Opening Balance Equity account. Enter the same amount from line 1 into the Credit column to balance the transaction in the chart of accounts.
Check the amounts. You should have the same amount in the Credit column on one line and the Debit column on the other. This means the accounts are balanced.
Enter information in the memo section so you know why you made the journal entry.
Select Save and close.
If you decide to use the money right away to make a purchase and not put it in a bank account, reach out to your accountant.This can get tricky and they know how to handle the next steps.Don't have an accountant? We can help you find one.
On the first line, in the Account field, enter the name of the customer loan account. In the Debits field enter the loan amount.
On the second line, in the Account field, enter Accounts Receivable. In the Credits field enter the loan amount. In the Name field enter the Customer Name.
Another word for liabilities is debts. Liabilities come in many different forms. They can be rent, outstanding bills, credit card debt, owed taxes, and loans. There are two classifications of loans in QuickBooks Online: current liabilities and long-term liabilities.
To record the initial loan transaction, the business enters a debit to the cash account to record the cash receipt and a credit to a related loan liability account for the outstanding loan.
Go to Employees, then Employee Center. Select your employee. Select Payroll Info, then add the repayment item in the Additions, Deductions, and Company Contributions section. Select OK, when you're done.
Introduction: My name is Kareem Mueller DO, I am a vivacious, super, thoughtful, excited, handsome, beautiful, combative person who loves writing and wants to share my knowledge and understanding with you.
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