Construction Loan

Welcome to the Community, Sara. Separating project expenses from your regular operating expenses can provide significant benefits. I'll guide you through the process and offer my expertise in this matter.

If you're referring to setting up and recording a construction loan in your QuickBooks Online, you can set up a liability account to record and track loans. You can follow the steps below:

1. Go to the Gear icon, then select Charts of Accounts.
2. Click the New button to create a new account.
3. Select the  Liabilities option.
4. Under the Save Account Under field, select Long Term Liabilities or Other Current Liabilities if you plan to pay off the loan by the end of the current fiscal year.
5. Under the Tax Form Section field, select Other Long Term Liabilities or Other Current Liabilities.
6. Fill in the Account name and description.
7. Click the  Starting date and Opening balance, then select the tracking date of this account and enter the account balance.
8. Select Save.

After setting up your liability account, you may proceed with recording the money you got from the loan. If you plan to put the loan directly into your bank account, you can follow these steps:

1. Click the +New button.
2. Select Journal Entry.
3. Select the liability account you've created in the Account dropdown button.
4. Enter the loan amount in the Credits column.
5. On the second line, select your bank account in the Account dropdown button.
6. Enter the same loan amount in the Debits column.
7. Select Save and Close.

If you decide to use the funds immediately for a purchase rather than depositing it into your bank account, I recommend reaching out to your accountant for guidance and advice.

For more detailed information about recording a loan repayment, check out this link: Record a loan repayment.

On the other hand, if you want to create a new project and track its expenses, you can follow this guide on how to:

1. Click Projects on the left navigation panel.
2. Select New project.
3. In the Project name field, enter the project name.
4. Select a customer from the Customer dropdown.
5. Enter a Start date and End date for the project.
6. Select a project status from the Project Status dropdown.
7. Select Save.

In addition, visit this article to add new and existing transactions to your project: Manage Projects in QuickBooks Online.

Keep me posted if you still have other questions about managing your loans and projects in QBO. I'll be here to assist you. Have a nice day!

@SaraLeah 

As far as the actual construction costs, I would suggest creating a fixed asset account called '2023 Addition Construction' or something similar.  You can assign all bills/expenses entered for construction to that account and then let your CPA/tax accountant make adjusting entries based on what costs can be expensed and what costs need to be capitalized.