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Manage a line of credit in QuickBooks Online

SOLVEDby QuickBooks1Updated 3 weeks ago

Learn how to set up and track a line of credit in QuickBooks Online.

You can track liabilities and expenses in QuickBooks, providing you with the business data you need to better manage your cash flow. It helps you decide when to spend, borrow, or transfer money.

Set up your liability and expense accounts

Set up a liability account for the principle

When you pay for things with your line of credit, record the transaction as a bill or expense in this account.

  1. Go to Settings Settings gear icon. , then select Chart of accounts (Take me there).
  2. Select New.
  3. From the Account Type ▼ dropdown, select Current liabilities.
  4. From the Detail Type ▼ dropdown, select Line of Credit.
  5. (Optional) You can change the account name in the Name field.
  6. Select Save and Close.

Set up an expense account for the interest

If you incur interest charges, record your paid interest in this account.

  1. Go to Settings Settings gear icon., then select Chart of accounts (Take me there).
  2. Select New.
  3. From the Account Type ▼ dropdown, select Expenses.
  4. From the Detail Type ▼ dropdown, select Interest paid.
  5. (Optional) You can change the account name in the Name field.
  6. Select Save and Close.

Track your line of credit

Once you’ve set up your two accounts, you can track the transactions in your line of credit. Make sure you record the bills and expenses, and if you want to put your credit funds into another account, you need to make a transfer.

Note: When you make a payment, you can track what you pay back to your bank or creditor. Either way, be sure to split the expense between principal and interest in the category details.

Pay with a paper cheque

If you’re going to send the bank or creditor a paper cheque, follow these steps:

  1. Select + New.
  2. Under Suppliers, select Cheque.
  3. In the Payee field, select or enter the financial institution's name.
  4. In the Bank Account ▼ dropdown, select the financial institution.
  5. In the Category field, select Line of credit. Then, enter the amount of principal that you want to pay.
  6. In the Category field, select Interest paid. Then, enter the amount of interest you want to pay.
  7. Select Save and close.

Pay with a debit or credit card

If you’re paying the bank back with a debit or credit card, you can:

Tip: If you want your transactions to download automatically from your financial institution, you can connect your account to the bank feeds.

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