EIDL Loan

Let me guide you on how you can set up a liability loan for EIDL in QuickBooks, Andib.

Proper loan management includes monitoring, evaluation, and decision-making at each stage to mitigate risk and maximize returns. In QuickBooks Online (QBO) you can record the loan and its payments to track what you owe. 

To set up a liability account, follow the steps outlined below: 
 

1. Go to the Gear icon, then select Chart of accounts.
2. From the Account Type dropdown, select Long Term Liabilities, then select Notes Payable from the Detail Type dropdown.
   Note: if you plan to pay off the loan by the end of the current fiscal year, select Other Current Liabilities Account Type dropdown, then Loan Payable from the Detail Type dropdown instead.
3. Give the account a relevant name, like "SEA EIDL Loan Payable."
    

Once done, a new loan will show the full balance to be paid back. If the money from the loan was deposited to your bank. You can do the steps below:

1. Leave the Opening Balance at US $ 0 and select Save.
2. Categorize the bank deposit in your liability account to establish the beginning balance.

Then, create a journal entry. You can debit the expense account the loan was used for, then credit the liability account since this loan has already been spent. To create one, follow the steps below:

1. Click + New.
2. Select Journal entry.
3. Select the Expense account from the Account field under the Debit column.
4. . to balance the transaction in the chart of accounts.
   • Check the amounts. You should have the same amount in the Credit column on one line and the Debit column on the other. This means the accounts are balanced.
5. Enter information in the memo section so you know why you made the journal entry.
6. Click Save and close.

However, I still recommend reaching an accountant for the correct way to record the entries, at the same time for the accounts that you'll have to use. 

For more details on how to record the loan and its payments, read this article for your reference: Set Up A Loan in QuickBooks Online.

Furthermore, you can run reports to track if entries are recorded to the correct account. Just make sure to customize them to ensure you'll get the data you need most. I've got this resource for more details: Customize Reports in QuickBooks Online.

Reply below if you need further assistance on how to handle loans. We're always one post away if you need further assistance. Have a nice day!

Thanks for this, I remove the opening balance so that corrected my negative opening balance equity problem.  However we started our QBO account as of 1/1/2024 so the deposit for the funds from the EIDL Loan is not part of our transactions (deposit or expense allocation) and now the Note Payable has a negative balance ...