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J
jtb19nh2
March 21, 2020
Question

Recording loan payments

  • March 21, 2020
  • 6 replies
  • 30 views

Hello - I am not an accountant by any means. I am trying to do my own books for a small business and need help with how to record items. I have taken out a kabbage loan from time to time. How should I be recording this in quickbooks? The money comes into my account as a lump sum and I pay it back over a few months with interest.

 

Any help is appreciated.

Thanks,

Jeff

6 replies

JaneD
JaneD
Level 6
March 21, 2020

Welcome to the Community, jtb19nh2.

 

Let' set up a liability account first in QuickBooks Online (QBO). Youll be using this account to record loan and its payments. I'll guide you how.

 

  1. Go to the Gear icon and choose Chart of Accounts.
  2. Click on New.
  3. Select Long Term Liabilities from the Account Type drop-down arrow. If you plan to pay off the loan by the end of fiscal year, choose Other Current Liabilites.
  4. From the Detail Type drop-down arrow, select Notes Payable.
  5. Choose when you want to start tracking your finances from the ▼ drop-down arrow.
  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. Click on Save and Close.

Once done, you can record the loan with interest as an expense in QBO. For more details, check this article: Make a loan payment in QuickBooks Online.

 

If you want to learn more "How do I" steps, visit our Help Articles page for reference.

 

We're a couple of clicks away if you have further questions. We're here to help.

    V
    Viola25
    December 23, 2021

    Hi, I have set up the loan, but the money was used to pay AP invoices.  How do I record that?  It actually never made it into cash/bank account.

    Rubielyn_J
    Rubielyn_J
    Level 8
    December 23, 2021

    I appreciate you for joining this thread, @Viola25. I've got some insights about recording loan payments in QuickBooks.

     

    We can use a clearing account since you used the loan for your A/P invoices. It is used to move money from one account to another when you cannot move the funds directly. 

     

    To set up a clearing account, here's how:

     

    1. From the Lists menu, choose Chart of Accounts.
    2. Right-click anywhere on the page, then click New.
    3. In the Add New Account window, choose the Bank radio button.
    4. Click Continue.
    5. In the Account Name field, input Clearing Account.
    6. Do NOT enter an opening balance.
    7. Lastly, choose Save & Close.

     

    Then, create a journal entry to use the clearing account. For detailed steps, please see this article: Create a clearing account.

     

    I’d also suggest working with your accountant for additional guidance. They can advise you on what account A/R or A/P account to use. If you’re not affiliated with one, you can check our ProAdvisor page and we’ll help find one from there.

     

     If you want to keep track of your loans and be reminded about upcoming payments, you can track and manage your loans with the QuickBooks Loan Manager.

     

    Keep me posted if you have other questions about recording loan payments. I'll be happy to help you again. Stay safe!

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