I have a banks transfer which is the company paying a director for wages/services. However, with the same transaction I need to be able to debit the director's loan account. Ie record the transaction as an expense, but also include it in the loan account.
I can't set the loan account to be a source of payment, so I don't see how its possible...
Thank you for coming to the Community for help, @dogie.
QuickBooks Online has an option to set up the loan account in your account. An owner's draw account is an equity account used by QBO to track withdrawals of the company's assets to pay an owner.
To start, let’s set-up an Equity Account for the owner's wages.
1. Go to the Gear icon at the top, and then tap Chart of Accounts. 2. From the Chart of Accounts window, hit New. 3. In the Account Type drop-down, select Equity. 4. From the DetailType drop-down, choose Owner’s Equity. 5. Enter an opening balance, then tap Save and Close.
The next steps are to set up a liability account to record the loan. Let me show you how:
1. Go to Settings ⚙ and select Chart of Accounts. 2. Tap New. 3. In the AccountType ▼ dropdown, choose Long Term Liabilities. 4. From the Detail Type ▼ dropdown, select Notes Payable. 5. Give the account a relevant name, like "Loan for a house." 6. Enter the full loan amount as a negative amount in the Amount field. Since the future payments to the bank are a liability for your business, the amount should be negative. 7. Hit Save and close.
1. From the Create ⨁ icon, select Check. 2. Choose the bank account where your money will be withdrawn. 3. Fill in the check fields. In the Account field, be sure to select the Owner's equity you created. 4. Hit Save and Close.
Here's how to record a loan payment:
1. Select the + New button, choose Check. 2. Enter the following information in the Category Details section. • First line: Liability account for the loan and the amount of payment • Second Line: Expense account for the interest and the amount • Succeeding lines: Any additional fees along with the appropriate accounts 3. Hit Save and close.
I've attached a screenshot for your reference:
You can also issue a multi-purpose loan to your customer, for more details you can visit this article: Track customer loans.
Please know that you can always reach me here for all of your QuickBooks needs. I want to ensure your success. Thanks for dropping in.
Hmm, this seems a convoluted way to create a loan, and would only work for the owner and not other parties. I ended up following another method suggested bypassing not being able to 'pay' an expense from an asset account (the loan), by creating an intermediatory credit card.
That way I could go bank transfer out -> loan account as an expense, credit card to contractor expense as an expense, and then a transfer from the loan account to the credit card to zero the balance.