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Level 2

Client's Business Made Long-Term Loan to Family Member (with continuing loan amounts going out). How do I record in QBO?

My client's business made a long-term loan to a family member.  No payments are due until 2021 and interest of 5% per annum will be due on the unpaid principal beginning November, 1, 2021.  The loan amount continues to increase and per the contract, the lender (the business) promises to pay up to $40,000 to the borrower (family member).  So far approximately $20k paid out.

 

The loan will be repaid in consecutive monthly installments commencing on 11/1/21 and continuing on the first of each month until 10/1/2031 with any balance then due at that time.  Monthly payment of principal and interest to be determined by the loan balance existing on 11/1/21.

 

I want to make sure I record this correctly.  Thank you in advance for your assistance!

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Best answer March 26, 2019

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Moderator

Client's Business Made Long-Term Loan to Family Member (with continuing loan amounts going out). How do I record in QBO?

Allow me to step in, ccc1.

 

Let me address your concern with recording long-term receivables.

 

Receivables are either short-term or long-term. You can record long-term receivables from your customers by following these steps:

  1. Click on the Gear icon and choose Chart of Accounts.
  2. Select New.
  3. Choose Other Assets as the Account Type.
  4. Select Other Long-term Assets as the Detail Type.
  5. Enter the name of the account.
  6. Once you're done, click on Save and Close.

I'm attaching an article for more in-depth information about managing receivables:

This should point you in the right direction. Leave a comment below if you have further questions. I'll be here to answer them.

View solution in original post

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Moderator

Client's Business Made Long-Term Loan to Family Member (with continuing loan amounts going out). How do I record in QBO?

Hello there, ccc1.

 

I appreciate you joining us here in the Community today. Let me help you record a Long Term Loan in QuickBooks Online (QBO).

 

If the loan will continue to be repaid, you'll need to create a Long Term Liability (or non-current liabilities). Let's first set up a business load from your Chart of Accounts. I'll walk you through the steps below:

  1. Go to the Gear icon.
  2. Under Your Company, choose Chart of Accounts.
  3. Select New.
  4. Set the Account Type to Long Term Liabilities.
  5. Set the Detail Type to Loan Payable.
  6. Type in the name of the account. 
  7. Select Save and close.

Once done you can enter the opening balance for the loan.

 

Here's how:

  1. Click the Plus icon (+) at the top.
  2. Under Other, choose Bank Deposit.
  3. From the drop-down, select the bank account where the loan funds will be deposited.
  4. Enter the date of the deposit.
  5. Under the Account column, enter the loan payable account you created and the amount.
  6. Select Save and close.

Now, you're ready to record a loan payment. I'll show you how to do it below:

  1. Go to the Plus icon (+) at the top.
  2. Under Vendors, choose Check/Check.
  3. Add a check number if you send an actual check.
  4. Enter the following information in the Account details section.
  5. Select Save and close.

I've got you an article should you need reference: Record a loan and its payment.

 

Please let me know if you have any other questions about recording loan payments. I'm always here to lend a hand.

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Level 2

Client's Business Made Long-Term Loan to Family Member (with continuing loan amounts going out). How do I record in QBO?

Charles,

Thank you for replying.  This is not a liability.  It is a receivable.  The business made the loan and will be receiving the payments beginning in 2021.

Moderator

Client's Business Made Long-Term Loan to Family Member (with continuing loan amounts going out). How do I record in QBO?

Hello there, ccc1.

 

Thanks for pointing that out. Allow me to share some information about recording Long Term Liabilities to a Family Member in QuickBooks Online.

 

You can issue a multi-purpose loan to your customer. Let's first create an account to track the loan and its payment.

  1. Go to the Gear icon.
  2. Click Chart of Accounts.
  3. From the upper left, select New.
  4. Set the Account Type to either Other Current Assets or Current Assets.
  5. Choose Loans to Others in the Detail Type drop-down.
  6. Add a name for the loan.
  7. Select Save and close without entering an opening balance.

Once done you can issue a check for the loan. I'd be glad to show you how below:

  1. Click the Plus icon (+).
  2. Click Checks.
  3. Select the account used to fund the loan (Example: Checking or Money Market) for Bank Account.
  4. Choose the account used to track the loan as the off setting account.
  5. Enter the amount.
  6. Select Save and close.

Now you're ready to record customer payments. To do this, you can create a recurring invoice for your customer for monthly payments.

 

To know more about tracking customer loans, here's an article that you can refer to: Track customer loans.

 

Fill me in if you have follow-up questions about this. I'd be happy to clear things up for you. 

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Level 2

Client's Business Made Long-Term Loan to Family Member (with continuing loan amounts going out). How do I record in QBO?

Thanks Charles.  That's the only way I saw to handle it, but wanted to make sure since it really is a long term receivable, not current really a current asset.  I don't really see where there is a place to record long term receivables.  The recipient won't be making any loan payments until 2021 so no need to worry about recording those receipts yet.

Highlighted
Moderator

Client's Business Made Long-Term Loan to Family Member (with continuing loan amounts going out). How do I record in QBO?

Allow me to step in, ccc1.

 

Let me address your concern with recording long-term receivables.

 

Receivables are either short-term or long-term. You can record long-term receivables from your customers by following these steps:

  1. Click on the Gear icon and choose Chart of Accounts.
  2. Select New.
  3. Choose Other Assets as the Account Type.
  4. Select Other Long-term Assets as the Detail Type.
  5. Enter the name of the account.
  6. Once you're done, click on Save and Close.

I'm attaching an article for more in-depth information about managing receivables:

This should point you in the right direction. Leave a comment below if you have further questions. I'll be here to answer them.

View solution in original post

Highlighted
Level 2

Client's Business Made Long-Term Loan to Family Member (with continuing loan amounts going out). How do I record in QBO?

Thank you JaneD.  Changed to long term, which makes much more sense!

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QuickBooks Team

Client's Business Made Long-Term Loan to Family Member (with continuing loan amounts going out). How do I record in QBO?

So glad to hear this good news from you, @ccc1.

 

Whether you need to track your business income and expenses, send invoices, received payments from your customers and a lot more you can always count on QuickBooks to get the job done. 

 

For additional insights, here's a short video tutorial about creating an account in your chart of accounts:

 

 

On the other hand, as your business continues to grow, you can be sure our software will grow alongside with it. To see the new app features that are in store, stay tuned to our blog: https://intuit.me/2L2zqTv.

 

Our Community page has tutorials that cover all of QuickBooks Online's features, so be sure to check them out in your spare time.

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Level 1

Client's Business Made Long-Term Loan to Family Member (with continuing loan amounts going out). How do I record in QBO?

What if I am not issuing a physical check for the loan?  Are there different instructions if the funds for the loan are transferred?

Highlighted
QuickBooks Team

Client's Business Made Long-Term Loan to Family Member (with continuing loan amounts going out). How do I record in QBO?

Good question, deronisabel.

 

The process is the same. You still need to write a check when funds for the loan are transferred in QuickBooks Online. Simply enter the EFT in the Check # field when you record the payment.

 

You can also visit again this page: Set up a loan in QuickBooks Online. Then, proceed to Step 3: Record a loan repayment. It provides instructions and detailed steps on how to enter the loan made via an actual check or electronic payment.

 

Stay in touch with me if there's anything else you need about your loan. I'm always right here to help.

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