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Level 1

When I connect to a bank loan account, how do I categorize it?

The only option I get are, checking , cash etc. Nothing for a loan.
7 Comments 7
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Community Champion

When I connect to a bank loan account, how do I categorize it?

I don't think you can connect to a loan.  I've never heard of anyone doing that.

QuickBooks Team

When I connect to a bank loan account, how do I categorize it?

Hi there, VC bookkeeper.

 

QuickBooks Online doesn't have the option to connect bank loans. I suggest to manually enter the loan transactions in QBO. Before doing the steps below, I recommend contacting an accountant to help you categorizing the transactions.

 

Here's how to enter loan transactions:

 

First, set Liability account to record the loan:

 

1. Click the Gear icon and select Chart of Accounts.

2. Click the New button.

3. In the Account Type drop down list, select Long Term Liabilities. Take note that if you plan to pay off the loan by the end of the current fiscal year, select Other Current Liability. Otherwise, select Long Term Liabilities.

4. From Detail Type drop down arrow, select Notes Payable.

5. Give the account a relevant name, like "Loan for a car."

6. Enter the full loan amount as a negative amount in the Amount field. Since the future payments to the bank are a liability for your business, the amount should be negative.

7. Click the Save and close button.

 

One done, you can now record the money you got from the loan. please follow these steps:

 

1. Select the Plus icon and the choose Journal Entry.

2. On the first line, select the liability account you've created. Then enter the loan amount in the Credits column.

3. On the second line, select the appropriate asset account from the Account drop down. Then enter the same loan amount in the Debits column.

 

After that, please check this article for additional information and follow step 3 to finish the process: Set up a loan in QuickBooks Online.

 

Please check this article on how to assign multiple categories to a single transaction: Assign, categorize, edit, and add your downloaded banking transactions.

 

Please know that you're always welcome to post if you have any other concerns. Wishing you and your business continued success.

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Level 1

When I connect to a bank loan account, how do I categorize it?

This isn't true unless they removed the functionality at some point.  I currently have a loan account connected in my bank feed.  I have had 2 others in there in the past as well (paid now).  I'm looking at my COA and it shows the current one as connected to the feed and that it is 233 "Long Term Liabilities" account.  That said, I'm here because I just refinanced some debt and am trying to connect a new loan with the same institution I have a past loan with (and had a connected bank feed for) and it isn't allowing it.  So I'm guessing there is either some work-around, or QBO reduced the feature set of the bank feed for some unknown reason.

 

I'm going to try connecting it as a different account and then re-assigning it once it's pulled in and see if that works.  I suggest the OP do the same if they haven't already found a different solution.

 

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Level 1

When I connect to a bank loan account, how do I categorize it?

I was able to connect a loan as a credit card for one company and then reclassify it to long term liabilities. However, when I try the same in another company it won't let me change the account category. I get the following error:

 

This account is being used on a Check, Deposit, Payment or other transaction where an account of type 'Cash' or 'Undeposited Funds' is required. You must locate and change those transactions to use a different Cash account before you can change the Account Type of this account. To find the transactions using an Account, run an Account QuickReport, or use the Account Register.

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QuickBooks Team

When I connect to a bank loan account, how do I categorize it?

Thank you for joining the thread, @kevin57.

 

Since you already created transactions on the credit card that you're connecting, QuickBooks Online (QBO) will not let you edit the account type as a liability. Liability account can't work as a bank account in QBO, thus, you can't create a transaction that has a liability as a bank account.

 

If you want to modify the account type, you must follow the pop-up notification to locate and change those transactions to a different cash account before changing the account type.

d5 1.PNG

 

For more information about managing accounts in QBO, read these articles:

 

Post again if you have any other questions. I'm always here to help. Have a good day!

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Level 2

When I connect to a bank loan account, how do I categorize it?

Is this a feature that could be added? Loan account transactions need categorizing only once..... a loan payment is a transfer from a bank account to a loan account. and an interest charge is interest expense.... with a webconnected account and properly set up rules quite a bit of work can be saved. 

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QuickBooks Team

When I connect to a bank loan account, how do I categorize it?

Thanks for the feedback, @cscharlesiv.

 

I'm going to pass this along to the Product Development Team about bringing in a feature to allow categorization with a loan transaction in the Banking Feed of QuickBooks Online, as I can see how this be beneficial by saving time and work. You can visit our Blog to see recent updates to our products, as well as seeing what's coming in the future.

 

If you have any further questions or concerns, please don't hesitate and reach back out! I'm here to help in any way that I can. Have a beautiful day.

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