Created with Sketch.Learn about PPP and Loan Forgiveness, stay informed with the latest changes.
Created with Sketch.Need help with 1099's or other Year End topics? Visit our Year End Resources page.
Created with Sketch.New to QuickBooks or using a new product? Visit our Get Started resource page to help you get going.
Created with Sketch.Need to make changes to your account? Visit the Account Manager Portal.
cancel
Showing results for 
Search instead for 
Did you mean: 
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.
10 Comments
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.

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.

 

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.

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!

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. 

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.

Level 1

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

Echo the last comment suggesting that loan/mortgage accounts become part of bank feeds.  Modern loan/mortgage accounts are just like bank accounts nowadays given they have offsets, redraws, and even debit cards so transactions can be processed directly onto a credit facility (like a credit card but not).  So these loans/mortgages are no longer set and forget with an amortization schedule.  That's where modern, contemporary banking is going.  Would be good for QBO to follow.  And would suggest with some priority.

Level 4

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

@Ashley H That a business accounting solution platform doesn't provide bank-transaction import functionality for loans in this millenium is simply bonkers. It's not like the development is a heavy lift.

 

Maybe you think that long-term debt isn't a thing for your target small business market. You might have been right then, but this is now.

 

You do realize that during the pandemic approximately 4 million new business loans were originated under SBA programs? And that nearly 2 million of them were PPP loans for under $50k? Dontcha think QBO might want to position itself as helping out these small businesses?

 

If not, you might as well save everyone a bunch of time and post this on your website: "WARNING: QBO can't help you account for your PPP or EIDL -- go somewhere else."

Level 1

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

This is a featured that should be added to the bank feed.  The reason that I chose QBO is to reduce in manually entering transactions and see my financial portfolio in one place.  If loans are not a feed then it is not really serving it's purpose.  Especially with technology currently.  This should be an automatic feed so that customers can see the current status of their loans and not log in elsewhere.   

Sign in for the best experience
Ask questions, get answers, and join our large community of QuickBooks users.
Sign In / Sign Up

Need to get in touch?

Contact us