How do I record a payback to a shareholder when I only have an account called "Loan to shareholders"?

Hello there, annette23.

You've got it right. You'll need to make a new account to record a payback to a shareholder in QuickBooks Online. You can set up a liability account for this one. Let me show you how:

1. Go to Accounting on the left panel.
2. Within the Chart of Accounts tab, click New at the upper-right corner.
3. In the Account dialog, select either Other Current Liabilities or Long Term Liabilities from the Account Type drop-down list, depending on the type of loan and its repayment time frame.
4. In the Detail Type drop-down list, select either Other Current Liabilities or Long Term Liabilities.
5. Enter a name for the account in the Name field.
6. Once done, click Save and close.
   

The next step is to create a journal entry for the loan. Make sure to enter the amount of the loan and add it to the appropriate expense accounts. Once done, record the loan payments using a check. Here's how:

1. Go to the + New.
2. Under Vendors, select Check.
3. From the Account drop-down list, select the liability account you created for this loan.
4. Enter the amount of the payment. Then, add all the necessary information.
5. Then, hit Save and close.
   

For further guidance, I'd recommend reaching out to your accountant to make sure everything is properly set up. They'll ensure to use the correct account when recording a payback to a shareholder. This way, your data won't mess up.

Check this article for more details: Record a company loan from a company officer or owner. 

Please let me know if you still need my help. I'd be glad to help you further. Stay safe and have a great day!

Hi annette23,

Hope you’re doing great. I wanted to see how everything is going about recording a payback to a shareholder in your QuickBooks Online account. Was it resolved? Do you need any additional help or clarification? If you do, just let me know. I’d be happy to help you at anytime.

Looking forward to your reply. Have a pleasant day ahead!

Thank you so much Sarahann
I will try it today and come back to you again 

Hi, again Sarahann!

So I set the Account Type to Long Term Liabilities and when I was doing the drop-down for Detail Type we had as you said Long term Liabilities but instead of the Other current Liabilities, we have Shareholders notes payable. Is that what I am using?

How would you record a payback to a shareholder when I only have an account called "loan to Shareholder" in desktop?

Good day, @TerryR25.

Thanks for joining this conversation. Allow me to chime in and help record your payback to a shareholder in your QuickBooks Desktop (QBDT).

The process will be the same as what my colleague Sarah shared above for the Online version of QuickBooks. For QBDT, please refer to these steps.

To set up a liability account, here's how:

1. In QBDT, go to the Lists menu at the top to get to the Chart of Accounts.
2. Right-click anywhere, then select New.
3. Select Other Account Types, then select the right account type for your loan:

• • Other Current Liability: Use this for short-term loans payable over one year.
  • Long Term Liability: Use this for long-term loans payable over a longer period.

1. Select Continue.
2. Enter the name and number for the account.
3. Select Save & Close.

Once done, create an expense account so you can track interest payments or fees/charges. Here's how:

1. Go back to the Chart of Accounts.
2. Right-click anywhere, then select New.
3. Select Expense, then Continue.
4. Enter the account name for the interest payments or fees and charges.
5. Select Save & Close.

Now that you have a liability account for the loan, here’s how to record the loan amount. Here's how:

Cash loans

1. Go to the Banking menu, then select Make Deposits.
2. If the Payments to Deposit window opens, select Cancel.
3. In the Make Deposits window:

   

    

   1. In the Deposit To field, select the account to deposit the loan into.
   2. Check the Date and enter an optional Memo.
   3. In the From Account column, select the Liability account you created in Step 1.
   4. In the Amount column, enter the loan amount.
   5. Select Save & Close.

Non-cash loans

1. Create an asset account.
   1. Go to the Lists menu, then select Chart of Accounts.
   2. Right-click anywhere, then select New.
   3. Select the account type for your non-cash loan:
      • Fixed Asset: Use this for items that have useful value for more than a year (vehicles, buildings, and so on)
      • Other Current Asset: Use this for items with value that can be converted to cash (like prepaid expenses)
      • Other Asset: Use this for items that are neither Fixed Assets nor Other Current Assets.
   4. Select Continue.
   5. Enter the name and number for the account.
   6. When you’re done, select Save & Close.
2. Enter a journal entry.

   

    

   1. Go to the Company menu, then select Make General Journal Entries.
   2. Enter the Date and journal Entry No.
   3. Select the first line and debit the loan asset account.
   4. Select the second line and credit the liability account.
   5. Select Save & Close.

Finally, here's how to record the payment:

1. Go to the Banking menu, then select Write Checks.
2. Select the Bank Account you want to use to pay the loan.
3. Verify the Check NO. and Date.
4. In the Pay to the Order of field, select the name of the bank.
5. In the Expenses tab:
   1. On the first line, select the liability account you created in Step 1. Then enter the payment for the principal amount.
   2. On the second line, select the interest expense account. Then enter the payment for the loan interest.
6. (Optional) Memorize the check if you want QuickBooks to automatically enter the payment at regular intervals.
   1. Select Memorize.
   2. Fill out the fields as needed.
   3. Select OK.
7. When you’re done, select Save & Close.

You can also check out this article for detailed information about the process: Manually track loans in QuickBooks Desktop.

If you want to keep track of your loans and be reminded about upcoming payments, you can track and manage your loans with the QuickBooks Loan Manager.

I also recommend consulting your accountant for further guidance. They'll be able to provide you with the best accounting advice for your unique business. If you don't have an accountant, you can check out this link to find one near you.

For tips and other resources, check out our website for future reference: Self-help articles.

Please leave a comment in this thread if you have additional questions about recording paybacks or anything else in QBDT. I'll be more than happy to help. Have a great day.

Hi @SarahannC 

I am trying to payback a shareholder loan in quickbooks online and when I go to create a cheque, I cannot find the "To/from shareholder loan" that I have created to in step 1 suggested by you. 

Please help. 

Thanks

Pranab

I appreciate you for joining this conversation. Let's work together to understand why the accounts you've set up aren't appearing when creating a check. We'll then go through a few steps to resolve the issue, pranab.

First, manually enter the name of the account in the Category column of the check. if it's not showing, it could be that that account status is in inactive. Follow these steps to reactivate it:

1. Go to Transactions, then choose Chart of Accounts.
2. Click the small Gear icon and select the Include inactive option.
3. Locate the category then select Make inactive.

If everything is correct, but the account still doesn't appear in the category column when you create a check, we can proceed with troubleshooting steps. Sometimes, browser-cached data can interfere with the functionality of websites. Thus, I recommend accessing your QBO account in an incognito window to ensure that cached data are causing the problem.

• Google Chrome: press Ctrl + Shift + N
• Mozilla Firefox: press Ctrl + Shift + P
• Safari: press Command + Shift + N

If it works, you can clear your browser's cache to resolve issues related to stored data. Lastly, you can use other supported and up-to-date web browsers.

Additionally, you'll want to learn about the difference between bills, checks, and expenses: Handle bills to be paid later and bills to be paid immediately using bills, checks, or expenses.

If you need further assistance, please don't hesitate to post again, and I'll be around to help you.

Hi Sarahann,

Did all the trouble shooting steps and still cannot find the "To/from shareholder loan" in the drop down menu. 

Just to confirm this should show up necxt to the payee tab and on the "Bank account" drop down menu. 

regards,

Pranab

I appreciate you for sharing your concern and providing additional details, Pranab. Let me help you create a check in QuickBooks Online (QBO).

The liability accounts you created will appear in the Category column when you record transactions. It's where you choose the correct expense or liability account to categorize the transaction.

In the Check window, the Bank Account field selects the account from which funds will be withdrawn, typically your checking or savings account.

For more details, see this link: Create and record check.

Additionally, run these custom reports in QuickBooks Online to see your company's income and expenses.

We value your business and are committed to ensuring you record the loan correctly. Let me know if you have other questions. I'm here to support you on your journey to financial success.

Hi Maybelle,

thanks for clarifying. It seems I am doing all that right, so the question is will the principal portion of the loan come in as an expense in the profit and loss statement?

regards 

Pranab

Hi Maybelle,

thanks for clarifying. It seems I am doing all that right, so the question is will the principal portion of the loan come in as an expense in the profit and loss statement?

regards 

Pranab

Thanks for getting back to us, @pranab. I'm glad you're on the right track with the loan payments.

To clarify, the principal portion of the loan won't appear as an expense in the Profit and Loss statement. Instead, it reduces your loan liability on the Balance Sheet, representing a return of borrowed funds. Only the interest portion is recorded as an expense, reflecting the cost of borrowing. This recurring expense directly impacts your business's profitability.

In case you need to compare your income and expenses for different periods, check out this article for more guidance: Run a Profit and Loss Comparison Report in QuickBooks Online and Online Accountant.

If you have any more questions or if there’s anything else I can help with, please don’t hesitate to get in touch. I'm here to assist. Have a productive day ahead, pranab!