How to record business loan interest?

Thanks for posting in the Community, Gibbo2.

Let me guide you on how to record the loan interest in your QuickBooks Online (QBO) account. You'll have to make sure to create a separate expense account for the loan interest. Here's how:

Set up an expense for the loan interest.

1. Click on the Transactions tab.
2. Click on Chart of Accounts.
3. Click on New.
4. Under Account type choose Expenses.
5. Under Detail type choose Interest Paid.
6. Enter a name of the account you want to show in your transactions and reports.
7. Click on Save and close.

Once done, you can create an expense transaction for the loan interest.

1. Click on the + New button and choose Expense.
2. Choose a Payee, payment date and payment method.
3. From the Payment account select the bank account you've paid the interest.
4. Choose the Interest Paid expense account from the Category column.
5. Enter amount of interest.
6. Click on Save and close.

If you want to do the journal entry process, I recommend checking in with your accountant to know more on how to balance the amounts for each account used on the JE. 

You can check this link to learn more about: Set up loan in QuickBooks Online.

Drop a comment below if you need any help managing your transactions in QBO, I'm here to help you any time!

Thanks for message back

I cannot create an expense transaction as the payment account only allows my to select bank or other assets. The loan is set up as a long term liability account.

Thanks for getting back to us, Gibbo2,

To be able to balance the journal entry, I recommend contacting your accountant to get more information on how to balance the amounts to avoid messing up your books. Or contact our Customer Care Team through the Help (?) in QBO and click on Contact Us.

Post again in the Community if you have more questions about QBO.