How to handle a line of credit.

smorgan01 · ‎February 04, 2022

I have a new line of credit. In the past I set it up as a credit card but I know that is not how to handle it. I am running QB Desktop Premier 2021. I setup a new account for the line of credit. I selected loan which made my account and Other Liability Account. I get that part. Here is where the problem is. My bank deposits the money I need into the account. Then I need to write a check to pay the vendor with this money. Since I can't write a check on a loan account, I need to move this money to my checking account. Once I do this the LOC account in QB will have a zero balance but I need to pay it back to the bank. What is the best way to handle this?

Also, my loan does not show up in the Account Balances window on the right hand side of my screen. I can see AR, AP, Credit Cards, and Bank Accounts. How do I get the loan to show up there?

MariaSoledadG · ‎February 04, 2022

I have related steps on how to handle line credit and I'm happy to guide you how, smorgan01.

You'll have to make sure to create a Line of Credit account in Charts of Account (COA). To do this, I've outlined the steps below:

Go to the Lists menu then Chart of Accounts.
Right-click anywhere then press New.
Choose Loan then Continue. If you don't see this option, pick Other Account Types then Other Current Liability
Press Continue to proceed.
Enter the details of your LOC then click Save and Close.

If you use the LOC to put money into your account, use the Transfer Funds or Make Deposits option to increase the bank balance. I've attached a screenshot for your visual guide:

Then, if you'll want to pay to LOC, you can simply write checks. Here's how:

Go to the Banking menu then Write Checks.
For the Pay to the Order of field, enter or add a LOC vendor.
Add the interest and the principal or the LOC account we created earlier (Loan or Other Current Liability).
After putting the amount Save and Close.

For future reference, read this help article: Manually track loans. It also includes steps on setting up a liability account and recording the loan amount.

Drop a comment below if you have any concerns about the line of credit. I'll be here to further assist you.

View solution in original post

MariaSoledadG · ‎February 04, 2022

I have related steps on how to handle line credit and I'm happy to guide you how, smorgan01.

You'll have to make sure to create a Line of Credit account in Charts of Account (COA). To do this, I've outlined the steps below:

Go to the Lists menu then Chart of Accounts.
Right-click anywhere then press New.
Choose Loan then Continue. If you don't see this option, pick Other Account Types then Other Current Liability
Press Continue to proceed.
Enter the details of your LOC then click Save and Close.

If you use the LOC to put money into your account, use the Transfer Funds or Make Deposits option to increase the bank balance. I've attached a screenshot for your visual guide:

Then, if you'll want to pay to LOC, you can simply write checks. Here's how:

Go to the Banking menu then Write Checks.
For the Pay to the Order of field, enter or add a LOC vendor.
Add the interest and the principal or the LOC account we created earlier (Loan or Other Current Liability).
After putting the amount Save and Close.

For future reference, read this help article: Manually track loans. It also includes steps on setting up a liability account and recording the loan amount.

Drop a comment below if you have any concerns about the line of credit. I'll be here to further assist you.

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