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Level 1

How to record loan receivable the owner of our company

If the owner of the company borrow money for his own company, how to record this loan receivable from him. What I did, was set up the owner as a customer and entered the opening balance. But this loan receivable always appear in my AR aging report, which I don't want it. How can I separate the notes/ loan receivable from AR receivable from sales? Thanks!

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Best answer 12-10-2018

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Level 15

Then the money out is entered as Other Asset = Loan to Sh...

Then the money out is entered as Other Asset = Loan to Shareholder. You don't use Sales for this. The account is not AR (a different asset) but Note Receivable or Loan to Shareholder as an Asset. There are lots of different Asset type activities, and only Sales are AR.

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Level 15

Then the money out is entered as Other Asset = Loan to Sh...

Then the money out is entered as Other Asset = Loan to Shareholder. You don't use Sales for this. The account is not AR (a different asset) but Note Receivable or Loan to Shareholder as an Asset. There are lots of different Asset type activities, and only Sales are AR.

View solution in original post

Level 1

Thank you very much for the help!

Thank you very much for the help!
Level 1

Just so I'm clear....A LLC, single membered shareholder,...

Just so I'm clear....A LLC, single membered shareholder, can receive a loan from a sole proprietor?
Level 15

"Just so I'm clear....A LLC, single membered shareholder,...

"Just so I'm clear....A LLC, single membered shareholder, can receive a loan from a sole proprietor?"

If this is two different people, yes.

If this is the Same person, no. You cannot be in debt to/from yourself, if the tax form filed is Sched C. Sched C = you are your Business Tax entity are the Same entity. Sched C is part of your 1040.

If you file taxes for the business as 1065, 1120S or 1120, your Entity is a Separate Entity.


Level 15

This has nothing to do with Customers or Sales. The first...

This has nothing to do with Customers or Sales. The first thing is, you need to tell us the Entity type of this business. A Sole Proprietorship cannot have a loan to or from the Owner; that is all just Equity activities.

Level 1

The entity is corporation.

The entity is corporation.
Level 1

Re: Then the money out is entered as Other Asset = Loan to Sh...

How would I set-up this account in Chart of Accounts?

 

QuickBooks Team

Re: Then the money out is entered as Other Asset = Loan to Sh...

Hi there, @newbutlearning.

 

You can set up this account as Other Current Liability or Long Term Liability in your chart of accounts. This way, it will not show in your Account receivable aging report. I'll be glad to guide you on how.

  1. In your QuickBooks Desktop (QBDT) account, go to the Lists menu.
  2. Select Chart of Accounts.
  3. Click New in the Account drop-down arrow.
  4. Select Other Account Type
  5. Choose either Other Current Liability or Long Term Liability and click Continue.
  6. Fill in the needed information.
  7. Once done, click Save & Close.

For more detailed steps and information on how to record loans in your QBDT account, feel free to check this article for reference: Manually Track Loans.

 

Also, I'll recommend reaching out to your accountant. This way, you'll be guided further on recording loan payments.

 

 I'm also adding this article in case you want to learn how to combine multiple transactions into a single record in your QuickBooks Desktop account: Record and make Bank Deposits in QuickBooks Desktop.

 

Don't hesitate to reach out to us if you have other concerns or queries. I'll be around to help. 

Level 1

Re: Then the money out is entered as Other Asset = Loan to Sh...

How do i record the repayment now? What account do i set up for this? or what process in quick books do i use to show the repayment? 

 

Thanks for your help. 

Moderator

Re: Then the money out is entered as Other Asset = Loan to Sh...

Hi there, Stilllearningacct.


We've got your back on how to handle prepayments from customers. In order to track these prepayments, we'll need to create an account called "Prepaid Customers." This would be a current liability account.

 

Here's how to create the account:

  1. Go to the Lists menu.
  2. Select Chart of Accounts.
  3. Click on Account and select New.
  4. Choose Other Account Types and select Other Current Liability.
  5. Enter the account name and description.
  6. Click on Save and Close.

When you make a deposit for the prepayments, you'll deposit it straight to this account. 

  1. Go to the Banking menu.
  2. Select Make Deposits.
  3. Choose the customer name, select the account you've set up, enter the amount and description.
  4. Click on Save and Close.

We'll then create a credit memo refund. Note: add a service item with the account is pointed to Prepaid Customers. 

 

Once done correctly, your “Prepaid Customer” account will now be zeroed out. Also, your Open Accounts Receivable will have a credit balance on it. 

 

Next step is to create an invoice. Click Customers, then select Create Invoices. After this invoice is created, we need to apply our prepayment. QuickBooks will recognize there is a prepayment, or you can select the button at the top to apply credits.

 

We have also other ways to record upfront deposits, here's an article for the steps: Manage upfront deposits or retainers

 

Let us know if you have other questions. We are here to help. 

Level 1

Re: Then the money out is entered as Other Asset = Loan to Sh...

Sorry i think you misinterpreted my question. How do you record the repayment. So Shareholder repays the company the money they were loaned.

Level 1

Re: Then the money out is entered as Other Asset = Loan to Sh...

So how about the flip side now. How do I record the repayment of this loan to shareholder?
How do i set this up?

QuickBooks Team

Re: Then the money out is entered as Other Asset = Loan to Sh...

Hello there, @Stilllearningacct.

 

You can make a deposit to your prepayments in QuickBooks. Let me guide you how.

  1. Go to the Banking menu.
  2. Select Make Deposits.
  3. Choose the customer name, select the account you've set up, enter the amount and description.
  4. Click on Save and Close.

For more information on how to record loans in your QBDT account, feel free to check this article for reference: Manually Track Loans.

 

If you have any other questions or concerns, please reach out to me here in the Community.  I'll be glad to help you. Have a good one!

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