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Lenkyta
Level 2

Owner's loan to a contractor

Hello,

Would anyone please help me to properly record a loan to a contractor by the owner? The contractor will repay in several installments. 

Thank you very much!

Best, Lenka

2 Comments 2
Joesem M
QuickBooks Team

Owner's loan to a contractor

Thanks for posting the Community space, @Lenkyta.

 

You'll need to create a liability account first if the owner made a loan to the contractor. This way, you can properly record the loan in QuickBooks. 

 

Here's how:

 

  1. Click on the Gear icon and choose Chart of Accounts.
  2. Select New
  3. From the Account Type ▼ dropdown menu, select Long Term LiabilitiesNote: If you plan to pay off the loan by the end of the current fiscal year, select Other Current Liabilities instead.
  4. From the Detail Type ▼ dropdown, select Notes Payable.
  5. Enter the name of the account.
  6. Enter the amount as a negative amount
  7. Click  Save and Close.

 

Once done, proceed to Step 2 and 3 of this article on how to record the loan and its repayment: Set up a loan in QuickBooks Online.

 

However, if it's the contractor that needs to record the loan and its installment, I'd suggest asking for guidance from your accountant. They'll know what account should you use to properly record the loan to ensure the accuracy of your books.

 

Once everything is set up, then the contractor can now repay the installment, just click this article: Enter a refund from a vendor.

 

I'm adding these articles that will help you track your loans and how to enter credits in QuickBooks:

 

 

 If you meant something else, I'd appreciate any extra details you have so I can provide the steps to move forward. Take good care.

Lenkyta
Level 2

Owner's loan to a contractor

Hi Joesem and thank you so much for getting back to me so promptly. I did create a long term liability account (with an opening balance negative 2000) as this will be repaid in 4 installments through Feb 2021. The loan was a part of the regular biweekly contractor pay. I assigned the wages portion to the Contractor account and what account to use for the $2000?

 

Thank you!

Best, Lenka

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