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Set up a loan in QuickBooks Online

by Intuit•728• Updated 4 days ago

You can set up a liability account in QuickBooks Online to record a loan and its payments. This account tracks what you owe. You can also record the deposit of that loan money into your bank account.

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Create an account for the loan

Here is how to set up your liability account to track the loan.

Go to All apps , then Accounting, then Chart of accounts (Take me there).
Select New to create a new account.
From the Account Type ▼ dropdown, choose the appropriate option:
- If you aren’t paying off this loan within the fiscal year, create a Long Term Liabilities account with the Notes Payable detail type.
- If you’re paying off this loan by the end of the fiscal year, create an Other Current Liabilities account with the Loan Payable detail type.
Give the account a relevant name, like "Loan for a car" or "Covid-19 relief loan".
Enter the loan’s Opening Balance and the date you’re tracking from:
- For a new loan that’s been deposited to your bank, leave the Opening Balance at US $0.
- For a loan you’ve partially paid back you’re adding to QuickBooks Online, pick the date you want to start tracking from and enter the account balance. You will also need to create a second journal entry for the deposit.
Select Save.

Note: To balance the transaction in your chart of accounts, any beginning balance will be posted to the Opening Balance Equity account.

Create a journey entry for the deposit

If you’ve added a loan with an opening balance other than $0, and your bank feeds show the deposited loan amount, record the deposit into your bank account with an additional journal entry. Here’s how to create a journal entry:

Select + Create.
Select Journal entry.
Select the liability account from the Account field. To remove or reduce the opening balance, enter the opening balance amount in the Debit column.
Select the Opening Balance Equity account. Enter the same amount from line 1 into the Credit column to balance the transaction in the chart of accounts.
Check the amounts. You should have the same amount in the Credit column on one line and the Debit column on the other. This means the accounts are balanced.
Record why you made the journal entry in the Memo section.
Select Save and close.

If you plan to use your loan money in a different way

Reach out to your accountant if you decide to use the money right away to make a purchase and not put it in a bank account. This can get tricky, and they know how to handle the next steps. If you don't have an accountant, we can help you find one.

Note: To pay and amortize the debt of an intangible asset, see the Amortization schedule in QuickBooks Online.

Next steps

When you're ready to pay back the loan, create a check for each loan payment. Record each payment to the account you created for this loan. Record each interest payment to your expense account.