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mjusko
Level 1
posted
‎May 03, 2021 02:36 PM
last updated ‎May 03, 2021 2:36 PM

Loan repayment - Liability account increases

Hi - 

I'm hoping someone can assist me. I took out a loan to purchase a small company. I have created the LT liability account and QBO automatically created the corresponding equity account that offsets it. The entire loan went directly towards the purchase of the company, so there was no deposit of any funds into any bank accounts.

 

I've now started making payments on the loan, but every time I try to record a principal payment for loan in QBO, the Liability account increases and the equity account decreases which doesn't seem right. I've gone though all the support documents I can find, but I must still be missing something.

 

Any assistance is greatly appreciated.

 

Thank you!

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1 Comment 1
Charies_M
Moderator
Moderator
‎May 04, 2021 04:28 PM

Loan repayment - Liability account increases

Welcome to the Community, mjusko.

 

You'll want to review how the liability account is set up. Check out the steps below to know-how:

 

  1. Go to Settings, then select Chart of Accounts.
  2. Select New to create a new account.
  3. From the Account Type ▼ dropdown, select Non-current liabilities. Note: If you plan to pay off the loan by the end of the current financial year, select Current liabilities instead.
  4. From the Detail Type ▼ dropdown, select Notes Payable (or Loan Payable).
  5. Give the account a relevant name, like "Loan for a car" or "Covid-19 relief loan."
  6. Choose when you want to start tracking your finances. In the Balance field, enter the amount in the account, and determine the as of date. Enter today's date if you want to start tracking immediately.
  7. Select Save and close.

For more information about managing loan payments, check this article (Proceed to Step 2): Make a loan payment in QuickBooks Online.

 

I also suggest contacting your accountant to help you review the accounts. You can also find an accountant by clicking on this link: Find an accountant.

 

You might also want to visit our QuickBooks Online learning guides for tutorials and webinars about the product.

 

I'll be right here if you have further questions. Keep safe and have a good one.

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