How to Record Bank Overdraft Protection on QBO

SMT22 · ‎September 20, 2023

How do I set up an account to record our business Bank Overdraft Protection? It is not a line of credit. Our bank puts the money into our bank account to cover the insufficient amount. As soon as we make deposits the bank takes the funds back in a lump sum including their interest charge. The interest charge appears on our bank statement but is hidden in the QBO bank feed. How do I also account for the interest charge? I appreciate any help at all!!! Thank you in advance!

Rustler · ‎September 24, 2023

Yes, the bank is loaning you the amount of the overdraft.

I would create a liability account for the overdraft loan
deposit the bank for the amount and use the liability account as the source account for the deposit
When you see the overdraft service charge, debit interest expense and credit the loan liability account, a journal entry works for this

the pay off the loan liabilty with money from the bank account

View solution in original post

Rustler · ‎September 24, 2023

Yes, the bank is loaning you the amount of the overdraft.

I would create a liability account for the overdraft loan
deposit the bank for the amount and use the liability account as the source account for the deposit
When you see the overdraft service charge, debit interest expense and credit the loan liability account, a journal entry works for this

the pay off the loan liabilty with money from the bank account

SMT22 · ‎September 25, 2023

Thank you so much for your help!!

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How to Record Bank Overdraft Protection on QBO