Entering Expenses and Paying Bills for Line Of Credit accounts

The categorization of the line of credit account as an Other Current Liability prevents its use for direct payments towards bills and expenses, eh44. While waiting for insights from another user, discover alternative methods for tracking expenses and settling bills using this type of account.

In QuickBooks Online (QBO), you can only connect your financial institution to an account set up as a bank and credit card. It's why you're unable to link your bank account using the line of credit account.

To pay your bills and record expenses with your line of credit, utilize a journal entry instead. With this, I recommend contacting an accountant for further assistance, or you can visit this website to look for one: Find a QuickBooks ProAdvisor. Also, you have nothing to worry about, as these transactions will reflect on your Federal and state 1099s.

Additionally, ensure to affect the Accounts Payable when creating a journal entry to pay your bills. After that, proceed to these steps to apply it as a bill payment:

1. Select + New, then Pay bills.
2. Choose any Payment account. An amount will not be deducted from this account, as it will only affect your line of credit.
3. Pick the bill you need to link to your journal entry.
4. Click Save and close.

Once you're ready to pay back your bank or creditor, refer to this article for the detailed process: Manage a line of credit in QuickBooks Online.

Moreover, you can generate QBO reports to keep track of your cash flow. These data can help you stay updated on your business's financial status and plan future expenditures.

Please keep us posted in the Community forum if you need additional guidance when handling line of credit transactions in QuickBooks Online. We can always lend a hand whenever the need arises.

@eh44  "I originally had this account set up as a credit card account, which worked great for our purposes, but I ran into issues when it came to filing out 1099s, as payments made with credit cards could not be included in 1099 totals."

This line is more than a little concerning.

Exactly how were you paying the people you gave 1099s out to, in the context of this quote?

Asking as, depending on exactly what you were doing, you may have erroneously inflated the income tax burdens of your 1099 recipients. There is a very good reason why it won't let you put credit card payments on 1099s.

@KimberlyS  "Also, you have nothing to worry about, as these transactions will reflect on your Federal and state 1099s."

Maybe don't tell your customers how to bypass the safety measures your own company implemented to save the customers from themselves.