Why does tagged "business loan" show up as an expense on the P&L statement?

Thanks for posting here with your concern, Dali748.

I've got details to share and clear things out for you.

Since Business Loan transactions are under the expense category, this will show up on your Profit and Loss report as Loan principal. Also, Mortgage and Vehicle loan categories are part of this expense type category.

On the other hand, Business loan interests are categorized and will show on your P&L as Interest paid. All business credit card interest, loan interests, and other business-related interests are under this category.

I've added this reference for a complete list of expense categories and how they appear in the Profit and Loss report: Schedule C and expense categories in QuickBooks Self-Employed.

Moreover, you can check out this article that will help you guide in reviewing and downloading transactions from your account: Export transactions and get reports in QuickBooks Self-Employed.

We're always here to help if you have further questions while doing other QuickBooks tasks. Feel free to add a reply below. Have a good one!

Thank you for the reply!

But should these loan payments be tagged as a “Credit Card Payment” so they don’t show up on the P&L statement? 

I see they show there when tagged as “Business Loan” so I guess my main question would be do these loan payments actually belong there or should be treated similar to credit card payments? 

Thank you! 

Hello, Dali748.

Thanks for getting back to us! Making sure that we categorize all transactions properly ensures our tax forms are correct. So, I would like to show you the way and give you an idea of how to handle business loan payments. 

Normally, any expenses incurred would show up on your Profit and Loss report. 

Since your business loan payments are considered an expense, they would (as expected) appear on the report. 

Now, if we recategorize those payments as "Credit Card Payments", they are tagged as a Transfer. They wouldn't appear on the Profit and Loss report anymore. 

If you think that these shouldn't appear on the report, I would recommend consulting an accountant. They'll guide you on how your business loan payments should be categorized, and how they should appear on your reports. 

I would also recommend reviewing the table about how categories would affect your Schedule C. 

Open the article given by my colleague, then expand the Learn how Schedule C categories appear on reports section. 

I'll add this guide if you need help managing your estimated tax payments in QuickBooks: Pay federal estimated quarterly taxes in QuickBooks Self-Employed.

I'd be more than happy to help you out again if you have more concerns about your transactions. Do you have concerns about your taxes, other reports, or categories? Add them to your reply, and I'm sure we'll work something out. 

Thank you for the reply!

However, I feel like QuickBooks is not handling this properly from an accounting perspective; please see link below.

https://www.accountingcoach.com/blog/principal-payment-financial-statement

Only the interest from the business loan should be shown on the income statement, so the "Business Loan" category in QuickBooks shouldn't treat this loan payment as an expense and it should actually be treated more as a transfer/credit card payment so it's not reflected on the income statement.

Thank you!

I agree, that is the same thing I was wondering too. Last year I believe this issue was correctly categorized but now it is not. I have been using quickbooks for a few years now. Business loan payment should not be categorized as an expense because that is the principal interest is only categorized as an expense which quickbooks does have a tab for.

In my case sometimes I lend money, I mark the amount as business loan and it shows as an expense when it is not. A loan is not a business expense.

If I lend out 10,000 and get 11,500 back the 1500 is my income only.