Relationships involving lending are frequently profitable for both sides. While the customer owns the loan receivable, the debt they owe can be recorded in the QuickBooks accounting program. Depending on the loan type, there are different ways to record a loan receivable. We’ll go over everything with you right here and show you how to enter that sum in your accounting program. In QuickBooks, there is a function that enables you to “record a loan payment” by setting up liability accounts. You will keep track of the amount and interest paid for each of your loans in the cash and non-cash liabilities account. In this article, we’ll go over the procedure to Record a Loan Payment and Receivable in QuickBooks Desktop or Online.
Setup a Liability Account Before you Enter Payment for a Loan in QuickBooks
You must set up a liability account in QuickBooks accounting software if you want to use it to keep track of your loans and loan payments.
Create a Liability Account
Here’s how to create a liability account in QuickBooks desktop so that you can monitor loan payments:
- Launch QuickBooks and then move to the Lists option
- Next, choose the “Chart of Accounts” option
- Select “New” from the menu
- Choose the account type, select:
- If you have a short-term loan with a one-year repayment period, it will be listed under Other Current Liability Account
- If you have a long-term loan that is repayable over more than a year, it will appear on your long-term liability account
- After that, select “Continue” button from the menu
- Enter the liability account’s name and number here
- At last, hit the “Save & Close” button.
Click here: How to Setup QuickBooks Loan
Create a Vendor Account
You must set up a vendor account by following the instructions below in order to pay the bank or business:
- Choose Vendor Center from the Vendors menu
- Select New Vendor from the menu
- Put the vendor’s name here (bank or company name)
- You can also enter a vendor’s contact information
- In the end, click on the “Ok” button.
Create an Expense Account
You must set up an expense account by following the instructions below in order to keep track of loan-related interest payments:-
- Go to the Chart of Accounts can be found under the Lists menu
- Next, click on the “New” button
- Choose Expense and then click Continue
- Now, enter the account name
- At last, select the “Save and Close” option.
You have now created each account needed for QuickBooks Desktop to record loan payments.
If you have any specific query, also get in touch with the experts of QuickBooks Live Chat 24×7.
In QuickBooks Desktop
How to Record a Loan Payment and Receivable in QuickBooks Desktop?
You can record loans in QuickBooks Desktop using one of two methods. Cash and non-cash asset loans can both be recorded, but the procedures for doing so vary.
Record a Cash Loan in QuickBooks
You can use the methods shown below to record a cash loan in QuickBooks:
- Select Banking from the menu
- Simply select Make Deposits
- If a new window titled Payments to Deposit appears, choose the “cancel” button
- In the Make Deposit window, enter the following information:
- Through the Deposit To field, choose the account where the loan will be deposited
- Enter a memo followed by choosing the date option
- Choose the liability account you created to keep track of loan payments under From Account
- In the Amount column, enter the loan amount
- In the end of the process, click on the “Save & Close” button.
Record a Non-Cash Asset Loan in QuickBooks
Follow the instructions below to record a non-cash asset loan in QuickBooks:
Create a New Asset Account
- Select Chart of Accounts under Lists
- Select New by performing a right-click on a blank section
- Choose Your Account Type:
- Select Fixed Asset if the assets taken as loans have long-term value
- Other Current Assets: This category of account should be used to record assets whose value can be converted to cash
- Other Assets: Choose this option if the asset doesn’t fit any of the two aforementioned account categories
- Once done with that, select the “Continue” button
- Now, you’re supposed to enter the account name and number for this asset
- In the end, hit the “Save & Close” button.
Read Blog: QuickBooks Loan Manager
Enter Journal Entry
- Make General Journal Entries can be found under the company menu
- For the transaction, choose the date
- Please enter the Entry No
- Debit the loan asset account by choosing it on the first line
- The liability account is then be selected and credited on the second line
- Finally, select the “Save and Close” button.
You’ve entered a loan payable in QuickBooks by doing the procedures listed below. Now that you have started making loan payments, you may use this accounting program to keep track of them.
Another Method to Record a Loan Payment in QuickBooks Desktop?
You have the option of manually or automatically entering Record a Loan Payment and Receivable in QuickBooks. Users that consistently pay the same amount at the same time will find automation helpful.
The actions listed below should be followed in order to register a loan payment in QuickBooks Desktop:
- The very first, Click on the “Write Checks” under the Banking menu
- Select the bank account you’ll use to repay the loan by clicking the dropdown menu
- After that, check the date and check number
- Choose the bank’s name in the Pay to the Order of field
- Move to the expenditure tab, and then:
- Select the first line’s liabilities account for loan repayment
- For the second line’s interest amount to be recorded, choose the interest expense account
- In the end, select the “Save and Close” tab.
You have the ability in QuickBooks Desktop to memories a check. By doing this, QuickBooks will be able to enter loan payments on a recurring basis.
How to Record a Loan Receivable in QuickBooks Desktop?
Receivables from loans can be used for the following purposes:
- Keep track of the loans given to a client
- Make a note of a loan to an employee
- Keep a Loan to Another Company Record
You can keep track of each of these transactions and record them all; recording and receiving repayment are both necessary. To record payable loans in QuickBooks, users first need to create an asset account.
Create an Asset Account to Record Loan
- Navigate to the Lists menu
- Next, click on the Chart of Accounts
- Select: in the type field
- Other Current Assets: If the loan is repaid after a year, the other current assets will be used
- Other Assets: If the loan will be repaid in the current year
- Select the “Continue” tab
- After that, enter the Account Name and Description
- From the Tax Line drop-down menu, choose a tax
- Finally, enter the amount paid for the loan and then hit the “Ok” button.
Record Loan Payments
- In the beginning, go to the Banking section
- Next, click on the “Make Deposits” option
- By using the Payments to Deposit window, associate a payment
- Select the Asset Account you created by doing the aforementioned procedures, and then enter the name of the client, business, or employee who will be repaying the loan
- Enter the sum that the debtor has already paid
- Type in the debtor’s name here
- Select the Interest Account created to record interest earned from loan repayment
- Any extra payment should be entered and assigned to the appropriate account
- At last, click on the “Save and Close” tab.
How to Record a Loan to an Employee in QuickBooks Desktop?
Use advance payment to record loans to an employee in QuickBooks.
Visit here: Employee Not Showing QuickBooks
Below are the methods to accomplishing that:
- Select Accounting in the left panel
- Click New under the Chart of Accounts tab
- Select Other Current Assets under Account Type
- Select Employee Cash Advances under Detail Type
- Select “Save and Close”.
This is a simple way to record any advance payment or loan made to a worker, independent contractor, or contractor for your business.
In QuickBooks Online
How to Record a Loan in QuickBooks Online?
In comparison to QuickBooks desktop, QuickBooks online makes it simpler to record loan payments. The best course of action is to set up a liability account. This account will be used to keep track of the loan and its payments. You can find out how much you owe by looking at the amount recorded.
Setup a Liability Account for Tracking Loan Payments
Here is how to create a liability account to track the loan and its repayment:
- Chart of Accounts can be found by clicking Settings and then choosing it
- Select “New” from the menu
- Choose the Account Type
- If you intend to pay back the loan over the course of a fiscal year, create a loan term liabilities account
- If you anticipate paying back the loan at the end of the year, put it in the Other Current Liabilities Account
- From the drop-down menu for Details Type, choose Notes Payable
- Give the account a name by typing it in
- Give the account a meaningful name to make it simple to find it later
- When you’re ready to begin keeping track of your finances, click on it
- Choose: from the list of choices using the drop-down menu
- Today: to start keeping track of payments and transactions
- Other: starting the tracking on a specific day. A date from when QuickBooks must begin recording the transactions in this account must be entered here
- The Amounts area is where you should enter the account’s balance
- Fill out the loan’s complete amount
- As a liability to your company, make it a negative figure
- At last, select the “Save and Close” button.
You now have a liability account where you may monitor loan payments.
Record Loan Amount
It is now time to enter the cash received through the loan after you have set up a liability account to keep track of loan amounts and payments. There are two specific ways to accomplish this.
Option 1: Put Loan Money into the Bank Account
This is the preferable option if you intend to accept the loan and deposit the funds into your bank account. Additionally, if you deposit the money into a bank account that is linked to QuickBooks online, the loan-related transactions will be retrieved and recorded immediately. When you reconcile statements at the end of a fiscal period, all you have to do is match them.
Following the instructions below will allow you to record the loan amount that was instantly deposited into your bank account.
- Click New, then choose Journal Entry
- If you want to record loan payments, choose the liability account you made
- In the credits column, enter the whole amount you intend to deposit into the bank
- Select the bank account you’ll be using to keep your loan in on the second line
- The loan amount should be entered in the debits column
- Select “Save and Close”.
Option 2: Use Loan Amount Instead of Saving into a Bank
Get in touch with your accountant if you intend to use the loan money rather than deposit it into your bank account. It is not advisable for those without extensive accounting understanding to attempt this work because of its complexity.
You can get in touch with us and we’ll assist you discover an accountant if you don’t have one already.
Record a Loan Payment in QuickBooks Online
Everything is set up at this point. All you have to do is make payments and record them in QuickBooks online.
Here’s how you can go about it:
- Click Check under the New menu
- Enter a check number
- Enter the Debit or ETF in the Check number section if you’re planning to use a direct withdrawal
- Choose the liability account for monitoring loan payments from the Category drop-down menu
- Enter the monthly loan payment amount
- To track loan interest, navigate to the second line and choose the cost account from the Category drop-down option
- Enter the loan’s interest cost
- On subsequent lines, enter any more charges
- In the end, click on the “Save & Close” button.
The feature is useful if you need to Record a Loan Payment and Receivable in QuickBooks to an employee in QuickBooks Desktop or Online. When new data is required, you input it into the accounting program used by your business, and your account is automatically updated. I hope you were able to accurately record and modify the interest amount. If you have any specific query, also get in touch with the experts of Live Chat. Contact our specialists at the QuickBooks Helpdesk Team for more information.
Frequently Asked Questions!
How Do I Categorize the Bank Loan Account When I Connect to a Bank Loan Account?
The processes to categories the bank loan account are listed below:
- You must first click the Gear Icon to access the Chart of Accounts
- After that, press the “new” button and choose “long-term liabilities” from the list of account types
- Select the notes payables option from the detail type drop-down arrow
- In this case, you must call the account something pertinent, such “Loan for a House”.
What are the Steps Involved in Recording Loans as Advance Payment?
Following are a few instructions that must be followed in order to record a loan to another company as an advance payment:
- The Accounting option, which is located on the left panel of the home page, must be selected in the first step
- The new selection in the Chart of Accounts menu must now be selected
- Navigate to the account type after that and select Current Assets
- After that, select the Employee Cash Advances under the Detail Type
- After completing the aforementioned procedures, select the save and close option.
What Actions Should I Do in QuickBooks Accounting Software to Adjust a Loan Balance?
The steps you need to take are shown below to change a loan balance in the QuickBooks accounting program:
- In the beginning, you must navigate to the list option and choose the Chart of Accounts
- After that, select Edit Account by clicking right on the long-term liabilities account
- In this step, you must click the Edit Account window’s Change Opening Balance button.
- After finishing the aforementioned procedures, click “Save & Close” button.