QuickBooks assists you in recording payments and tracking loan amounts so that you can keep up to date. Let us walk through the process of set up a loan in QuickBooks Desktop and Online. Generally, it is advised that you record the loan in your QuickBooks account as soon as you get it, along with record loan payments.
As far as the loans are concerned they are pretty standard in any business sector and keeping a record of the same can sometimes be demanding. A company’s obligations include cash and non-monetary loans such as office equipment and automobiles.
By setting a liability account, you can keep track of what you owe. However, because cash and non-cash loans, such as office equipment and vehicles, constitute liabilities for a firm, users must set up a liability account.
Set Up a Loan in QuickBooks Desktop
The creation of a liability account is next to mandatory if you need to set up a loan in QuickBooks Desktop. There is a step-by-step guide presented below, follow each step thoroughly to eliminate the possibility of unwanted errors.
The process of setting up a loan in QuickBooks Desktop is as follows:
Step 1: To Create the Liability Account
- First, hit on the menu saying ‘Lists’, then further proceed by switching to the Chart of Accounts option.
- Next, the tab right-clicks anywhere on the screen and then selects the button New.
- From the grid menu, choose the best suitable account type. The following types are as follows.
- Long-Term Liability: For a loan over a lengthy period of time, this account type is the best.
- Other Current Liability: This account type is used best for a short-term loan that might be paid back in less than a year.
- Hit the Continue button, next.
- Thereafter, add the number and name to your account.
- Click the Save and Close button.
Step 2: To Establish The New Supplier
After successfully creating a liability account you can now further set up the supplier.
- For the first step, from the drop-down menu, Choose Suppliers.
- Next, Then proceed to choose the Supplier Centre from the drop-down menu.
- Then further select, New supplier.
- Then, type in the name of the firm or bank to whom you wish to make a loan payment.
- Finally, To finish configuring the provider, click the OK button.
Step 3: Next form an Expense Account
- From the main menu, choose the option Lists.
- Now the lists grid will appear on the screen, click on the option Chart of Accounts.
- After the subsequent step, hit on the option new, after right-clicking on the screen.
- Next, proceed to choose Expense.
- After the above step, hit on Continue.
- Thereafter, Proceed to enter the account number for your interest payment, charges, and fees
- For the end step, select Save & Close from the menu.
These Expense accounts are majorly formed for the purposes of interest payments, fee tracking, etc.
Step 4: Now To Record Your Loan Amount
Now, in the process of recording Loan Amounts, there are two different ways of doing the same. The two different ways are known as Non-Cash loans and Cash Loans. Let us dig in further to know the process of each loan and how to proceed and correctly do the procedure without making possibilities for any error.
A. Non-Cash Loans
Usually, for recording Non-Cash Loans, generating an asset account and journal entry along with acute and accurate details is mandatory.
1. Setting Up the Asset Account: Follow the steps mentioned below with accuracy.
- Navigate first to the Lists menu.
- Now, From the drop-down menu, Select Chart of Accounts.
- Once selected Chart of Accounts, then, New button by clicking anywhere on the screen.
- The next step is to select the account type for the non-cash loan. The following account types are available to you:
- Other Asset: used for things that are neither Other Current Assets nor Fixed Assets.
- Other Current Asset: Use this account when the things have a monetary value that can be immediately exchanged, such as prepaid costs.
- Fixed Asset: Usually objects that have a value for at least a year, such as buildings, automobiles, and other assets follow up under this asset type.
- After the subsequent step, to continue, further press the Continue button.
- For the next step, enter your account number and name.
- Lastly, choose Save & Close.
2. To Enter the Journal Entry: Follow the steps mentioned below with accuracy.
- For the foremost step, proceed to choose the option naming as Company.
- Next, select the option Make Journal Entries, from the menu that appeared on the screen.
- Thereafter, Click on the Date and Entry No. of the journal.
- After the subsequent step, now On the first line, debit your loan asset account.
- In the second line, the responsibility can be credited.
- Finally, hit the button Save & Close.
B. Cash Loans
Generally, for the recording of Cash Loans, there is a specific need to Create a deposit account. Here’s how to do it in an accurate manner:
- Browse and navigate to the Banking Menu.
- Then go to the Make Deposits button and click on it.
- Now, it is possible that the Payments to Deposits window may display. If it appears, select Cancel from the menu.
- After the subsequent step, in the Make Deposit box, proceed to enter the following information:
- Proceed to the Deposit To section and choose the account where you want to deposit the loan.
- Now, may examine the Date column.
- Thereafter, Go to the From Account section and choose the Liability account you created before.
- Thereafter, enter the loan amount, In the Amount column.
- Finally, From the menu, choose Save and Close.
Step 5: To keep track of your Loan payments
Generally, The main payment will be recorded as a debit to your liabilities account in QuickBooks. When all of your payments have been made, the value in your liability account will be zero. In QuickBooks, the interest payment is also recorded as a corporate expense.
Once you’ve acquired all of the necessary information, continue to record loan payments in QuickBooks Desktop. Follow the steps mentioned below in an accurate manner, to avoid getting possible errors.
- For the first step, go to the banking menu.
- Then, from the drop-down box, proceed to choose to Write Checks.
- After the subsequent step, After that, click Bank Account. And further, select the bank account from which you wish to pay your loan.
- Once the above-mentioned step, continues, select the Date and Check No. choices.
- Thereafter, in the Pay to the Order field, proceed to enter the name of the bank.
- Next, fill out the following information in both lines after switching to Expenses.
- After the above step, In the first line, you can choose the liability account you created before (in Step 1).
- Then, further, add the payment for your principal amount.
- Next step, Pick the interest expense account on the second line. After that, the loan interest payment can be added.
- In case, If you want a QuickBooks account to enter the payment automatically, you can memorize the check. You can do so by doing the following steps:
- Click on the option Memorize.
- After filling in the fields with information, proceed to press the OK button.
- Finally, select Save and Close.
Set Up a Loan in QuickBooks Online
For Set up a loan in QuickBooks Online, there is generally a need for creating a liability account that is set to calculate what you usually owe. Accordingly, when you pay back your loans, you may record the amount you received from the loan as well as the loan repayment in QuickBooks Online.
Now, if you are stuck in your thoughts and reconsidering how to create a loan in QuickBooks Online. Let’s put an end to your misery and guide you through this information related to set up a loan in QuickBooks Online. The procedure is as follows, mind performing the steps as guided below to avoid any chances of getting unwanted errors:
Step 1: To Create a Liability Account
Start with the following steps
- For the first step, you will encounter a Gear icon on your screen, Open the Settings menu by clicking on the same icon.
- Next, hit on the Chart of Accounts Button and further choose the option New.
- On the screen, from the drop-down arrow, tab on Non-Current Liabilities.
- After the subsequent step, proceed to opt for the Loan Payable or Notes Payable, from the Detail Type drop-down box.
- Now, you need to proceed to name your desired account. For example; “Loan for a Macbook”
- Thereafter, Fill in the As of date in the Balance field and add the money to an account. Also, make sure to use today’s date in case you wish to start tracking right at that moment.
- For the last step, proceed to hit on the Save and Close button after you have completed filling out all the required fields.
This account usually grants you access to record the loan and also helps you to remain up to date with what you owe.
Step 2: To Keep a record of the loan amount you received
- First, proceed to Choose the “+New” option.
- Now, from the appeared drop-down menu on the screen, further select Journal Entry.
- After the above step, go to the first line and click the Account drop-down arrow, To pick the previously created liability account.
- In the given Credits section, now proceed to enter the Loan amount.
- Now, in order to choose a bank account, further, Go to the second line and click the Account drop-down arrow.
- Thereafter, move towards the Debits area and input the loan amount you specified before.
Step 3: To Keep a track of the Loan Payment
In every loan there comes a time for paying the loan amount back. You can record each and every repayment of a loan in QuickBooks Online. For doing this, follow the steps given below:
- In the First step, go and choose the “+New” Option.
- After this, select the option naming Cheque.
- Now, proceed to enter the accurate check number at this stage if you want to send the actual check.
- After the subsequent step, fill out the Category area with the essential details.
- Next is to Examine the Specifications:
- First, select the Category drop-down box, from the very first line.
- And then further pick out the liability account for your loan.
- Now, by using the Category Drop-down arrow, you may also select the appropriate account and also can further specify additional costs, if any.
- Lastly, hit the Save and Close option, once all the necessary information has been entered.
Set Up a Vehicle Loan in QuickBooks
In a layman’s knowledge, a Fixed Asset is an asset that is being or has been purchased for something long-term usage. Now, if you find yourself spiraling around the thought that how can you record a purchased vehicle or any other fixed asset? Drop your worries in this instance, and let us focus on the information on how to set up a loan in QuickBooks that is listed below.
Follow the given steps with complete accuracy and utmost caution to avoid getting any uninvited errors:
Step 1: To Form a Fixed Asset Account for a Vehicle
- Firstly, navigate to the Chart Of Accounts.
- For the next step, hit on the option naming New.
- Now, from the drop-down menu, proceed to select the Fixed Asset option.
- After the subsequent step, further, Enter the name and description of the account here.
- Finally, select the option Detail Type.
Step 2: To Add the Purchasing Vehicle
In addition to purchasing a vehicle, simply proceed to make the automobile purchase and link it to the Fixed Asset Account you created by completing the processes mentioned above.
Step 3: To Set Up a Liability Account
- For the foremost step, navigate to the option Chart of Accounts.
- The next step is to select the option naming New.
- After the subsequent step, from the list of choices, proceed to select the Long term Liability.
- Next, further proceed to enter the account information such as name, email address, etc.
- Finally, hit the button Save.
To record the loan payment, carry forward the given steps below:
- First, proceed to choose the Create button.
- Next, hit on the Journal Entry.
- Thereafter, select a liability account, from the Account Dropdown box.
- For the next step, proceed to further Enter the whole loan amount on the Credit side.
- After the subsequent step, proceed further to Select the Asset Account with which you want to attach the loan amount.
- Finally, Again, enter the loan amount, but this time on the Debit side.