Are you planning for a loan in QuickBooks Online? Or already got a loan, and want to set up a liability account to record the loan and its payments? If yes, then you are in the right place. Today here in this blog, you will be clear that, how to set up a loan in QuickBooks Online.
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Let’s get into the blog, and start the procedure to set up the loan:
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Procedure to Set Up a Loan in QuickBooks Online
Here we have given the proper procedure in three-level to set up a loan in QuickBooks Online. Have a look;
Level 1: Set Up a Liability Account
In the first level, you need to set up a liability account to record what you owe. Just follow the below steps to set up a liability account.
- At first, you need to log into QuickBooks Online.
- After getting into the QuickBooks Online, go to the ‘Setting’ option, and pick the ‘Chart of Accounts’ option from the list.
- Click on the ‘New’ option to create a new account.
- And then go to the Account Type drop menu, and select the ‘Long Term Liabilities’ option.
- You can select the ‘Other Current Liabilities’ option if you planning to pay the loan by the end of the current fiscal year.
- Then select the ‘Notes Payable’ option from the ‘Detail type’ dropdown menu.
- After that a give a name for the loan, for example, ‘COVID 19 Relief Loan’, ‘Loan for Car’, and etc.
- Now choose an option to start tracking the money from the drop-down list, according to your need.
- If your tracking account is brand new then, choose the ‘Today’ option, and then, go to the ‘Account Balance’ field, and enter the balance in the account as of today.
- And if you are starting the account on another date then choose the ‘Other’ option. In the ‘Select a date field’ enter the date you start tracking money in the account in QuickBooks. And enter the balance of the account for the date you choose, in the ‘Account Balance Field’.
- In the next step, enter the full loan amount as a negative amount. (Note:- It is necessary to put the negative amount because the future payments to the bank are a liability for your business.
- At last, click the ‘Save and Close’ option.
Level 2: Keep the Record of the Money you Got from the Loan
Now, at this level, you need to record the money you got from the loan. Here we have given two procedures for different two scenarios, you can choose any one of them, according to your type.
Scenario 1: To Put Loan Money Directly into the Bank Account
- Click the ‘+New’ option, and then go to the ‘Journal Entry’.
- After that, in the first line, choose the liability account from the ‘Account’ drop-down, which you have just created.
- Then go to the second line, click on the ‘Account’ drop-down, and choose your bank account. Fill out the same amount loan in the ‘Debits’ column.
- After finishing all these, click the ‘Save and Close’ option.
Scenario 2: To Put Loan Money in a Different Way
The second scenario totally depends on you. If you want to put your loan money in a different way and don’t want to put it in a bank account then it will be good to consult with QuickBooks ProAdvisor, or with your Accountant. He/She can provide you with some tricky ways to put the loan money in the right way, and also help you to cover this problem step by step.
Level 3: Record a Loan Repayment
This is the final step to set up a loan in QuickBooks Online. Follow the mentioned steps to record a loan repayment.
- First, click on the ‘+New’ option.
- After that, click on the ‘Check’ option.
- Switch to the accountant view, if you are in business view then, come back to the steps.
- If you plan to send an actual check, add a check number. Enter Debit or ETF in the Check #field, if you use direct withdrawal.
- Fill out the ‘Category Details’ section of the check:
- Go to the first line, and from the ‘category’ drop-down select the liability account for the loan.
- Then go to the second line, and from the ‘category’ drop-down select the expense account for the interest. And enter the interest amount.
- Add any additional fees on the additional lines, and select the appropriate accounts.
- At last, click on the ‘Save and Close’ option.
That’s it. We hope you like this blog, and now you are able to set up a loan in QuickBooks Online. Just follow the steps carefully. Further if in case, you face any problem following the steps, or need any help to set up a loan in QuickBooks Online then, you can get our support at any time and anywhere.