Im selling my business and financing the sale, how do I record the loan?

I appreciate you for taking the time to visit Community for assistance, @jrbarnes. I’m here to help so you can record the loan properly in QuickBooks Desktop.

To start, you’ll need to set up a liability account to track the loan. Here’s how you do it:

1. Go to the Lists menu, then select Chart of Accounts.
2. Right-click anywhere, then click New.
3. Choose Other Account Types, then select the right account type for your loan:
   • Use Other Current Liability for short-term loans payable over one year
   • Use Long Term Liability for long-term loans payable over a longer period.
4. Press Continue.
5. Enter the name and number for the account.
6. Select Save & Close.

Once done, create a new vendor for the bank or company you need to pay for the loan. I’ll show you how:

1. Select the Vendors menu, then go to the Vendor Center.
2. Click New Vendor.
3. Enter a name.
4. Select OK.

After, you'll want to make an expense account to track fees and charges. Then, you can record the loan amount and its payments. Check out this guide for complete instructions: Manually track loans in QuickBooks Desktop.

When you start recording transactions associated with this event, you can generate reports anytime to see the progress and structure of your business.

I’d be glad to help you more if you have any other questions or concerns about managing your transactions. Select the Reply button below to add your comments. Take care always!

Thanks for your reply Madelyn

However, I am selling my business and I am financing part of the purchase price. I need to set up a long term asset account so that when the buyer makes monthly payments to me, I can deduct from the principal and track interest income.

James

@jrbarnes 

The note for the seller financing portion of a business sale should be set up as an 'Other Current Asset" (OCA) account.  Create an OCA account called 'Note Receivable'.  When you receive a payment from the buyer, create a deposit and assign the principal portion of the payment to the newly-created Note Receivable account and the interest portion to the Interest Income account.  This will reduce the principal balance and book the interest income on each payment.  That's the easy part.  

Creating the journal entry (J/E) to establish the Note Receivable balance (the amount you're carrying) can be complicated.  Was this an asset sale or a stock sale?  Do you have a CPA? 

Thank you for that info. This was an asset sale. I do have an accountant so I can ask him to do the journal entry for me.

Can you help me with the Journal Entry required for selling a business with Seller financing.

Can you give me some guidance on the JE for this transaction?