Learn how to record a loan in QuickBooks Online.
Did you recently get a loan? In QuickBooks Online, you can set up a liability account to record the loan and its payments. This account tracks what you owe.
Here's how to set up your liability account to track the loan. We'll also show you one way to put that loan money into your bank account.
Step 1: Set up a liability account to record what you owe
First you need to create and set up a liability account so you can record the loan. Here’s how.
- Go to Settings ⚙, then select Chart of accounts (Take me there).
- Select New to create a new account.
- From the Account Type ▼ dropdown, select Long Term Liabilities. Note: If you plan to pay off the loan by the end of the current fiscal year, select Other Current Liabilities instead.
- From the Detail Type ▼ dropdown ▼ dropdown, select Notes Payable.
- Give the account a relevant name, like "Loan for a car" or "Covid-19 relief loan."
If you add a balance in the liability account during Step 1, you will need to make a second Journal Entry when you record the deposit.
Entering a balance already credits the liability account for the loan and uses an offset to opening balance equity. Adding the credit again step 2 will duplicate the entry to the liability account.
Second journal entry then needs to debit the liability account and credit opening balance equity.
Step 3: Record a loan repayment
When you're ready to pay back the loan, follow these steps to record each repayment.
- Select + New.
- Select Check. Or if you're in Business view, follow the steps to switch to Accountant view first. Then come back to these steps.
- Add a check number if you plan to send an actual check. If you use direct withdrawal or an EFT, enter Debit or EFT in the Check no. field.
Then enter the following in the Category details section of the check:
- On the first line, select the liability account for the loan from the Category dropdown. Then enter the payment amount.
- On the second line, select the expense account for the interest from the Category dropdown. Then enter the interest amount.
- On additional lines, add any additional fees. Select the appropriate accounts from the Category dropdown.
- When you're done, select Save and close.