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Zippygal
Level 3

Setting up an account for a loan made to private party out of business funds

Hello,

The business owner made a loan to a private party so they could purchase a vehicle. The party is to pay back the loan in monthly payments. How do I set this up to track it?

Solved
Best answer March 28, 2019

Best Answers
KhimG
QuickBooks Team

Setting up an account for a loan made to private party out of business funds

Hello there, @Zippygal.


Thanks for reaching out to us. I’m happy to guide you through the steps in setting up a loan and payment in QuickBooks Desktop.


In order to keep track of the loan and its payments, you must set up an Other Current Asset account in QuickBooks. Let me show you how:

  1. Go to the Lists menu and select Chart of Accounts.
  2. Scroll down and click the Account drop-down and choose New.
  3. Choose Other Account Types and select Other Current Asset on the drop-down list, then click Continue.
  4. Complete the details by entering an Account Name and other necessary fields.
  5. Hit Save & Close.

current asset 1.PNG current asset 2.PNG current asset 3.PNG current asset 4.PNG

 

Now, you can start recording the loan amount by creating a check. To do that, follow the steps below:

  1. Go to the Banking menu and select Write Checks
  2. Select the Bank Account from which the company is funding the loan. 
  3. Enter the Date and Amount.
  4. Complete the check with the customer’s name, address and a memo describing the transaction as a loan.
  5. Choose the loan account you created in the lower part of the screen.
  6. Hit Save & Close.

When they start making payments, separate this into two components: payment on a principal and the interest. Record it by making deposits. Here’s how:

  1. Go to Banking menu and select Make Deposits.
  2. Choose the proper Account for the loan repayment and the Date.
  3. Select the customer’s name on the Received From column and choose the loan account you created.
  4. Enter the Amount that corresponds to the payment of the loan principal.
  5. Click on the second line of the deposit window and enter the customer’s name.
  6. On the From Account, choose an interest income account and enter the amount of the payment for an interest in the Amount column.
  7. Complete the remaining fields.
  8. Hit Save & Close.

Check out this link for more information: Track customer loans. The article is for QBO but much of the information and steps are relevant for QBDT.
 
That should answer your concern for today. Leave a comment below if you have any other questions, I’m always here to help. Take care and have a great day!

View solution in original post

3 Comments
KhimG
QuickBooks Team

Setting up an account for a loan made to private party out of business funds

Hello there, @Zippygal.


Thanks for reaching out to us. I’m happy to guide you through the steps in setting up a loan and payment in QuickBooks Desktop.


In order to keep track of the loan and its payments, you must set up an Other Current Asset account in QuickBooks. Let me show you how:

  1. Go to the Lists menu and select Chart of Accounts.
  2. Scroll down and click the Account drop-down and choose New.
  3. Choose Other Account Types and select Other Current Asset on the drop-down list, then click Continue.
  4. Complete the details by entering an Account Name and other necessary fields.
  5. Hit Save & Close.

current asset 1.PNG current asset 2.PNG current asset 3.PNG current asset 4.PNG

 

Now, you can start recording the loan amount by creating a check. To do that, follow the steps below:

  1. Go to the Banking menu and select Write Checks
  2. Select the Bank Account from which the company is funding the loan. 
  3. Enter the Date and Amount.
  4. Complete the check with the customer’s name, address and a memo describing the transaction as a loan.
  5. Choose the loan account you created in the lower part of the screen.
  6. Hit Save & Close.

When they start making payments, separate this into two components: payment on a principal and the interest. Record it by making deposits. Here’s how:

  1. Go to Banking menu and select Make Deposits.
  2. Choose the proper Account for the loan repayment and the Date.
  3. Select the customer’s name on the Received From column and choose the loan account you created.
  4. Enter the Amount that corresponds to the payment of the loan principal.
  5. Click on the second line of the deposit window and enter the customer’s name.
  6. On the From Account, choose an interest income account and enter the amount of the payment for an interest in the Amount column.
  7. Complete the remaining fields.
  8. Hit Save & Close.

Check out this link for more information: Track customer loans. The article is for QBO but much of the information and steps are relevant for QBDT.
 
That should answer your concern for today. Leave a comment below if you have any other questions, I’m always here to help. Take care and have a great day!

View solution in original post

KellyNWalters1
Level 2

Setting up an account for a loan made to private party out of business funds

I have another question! 

The owner did the same, he loaned to a personal party but, the check sent was for $3500.00, the total loan amount is $4000.00, I guess just a base amount for interest. How do I add the additional $500.00 after the check is made out for $3500.00

 

Thanks!! 

Pabz_L
QuickBooks Team

Setting up an account for a loan made to private party out of business funds

Hello there, @KellyNWalters1.

 

If you're charging the customer with interest, you can record it by making deposits and enter the principal amount of the payment on the first line. On the second line, use your Interest Income account and enter the amount of the interest.

 

You can follow the step given by my colleague KhimG when making deposits.

 

 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 additional questions by adding a comment below. Wishing you and your business continued success!

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