Recording transactions properly is important while being perfect in accounting. The manual entry of data is no more required when you already have advanced QuickBooks software installed in your systems. Along with the amount owed to your organization and the amount you owe to an entity, there are many other data that you might have to enter. This includes the loan payment details. Know how to enter a loan Payment in QuickBooks Online.
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QuickBooks Online makes entering loan payment information easier for users.
What is a Loan Payment?
The businesses have to take up significant loans to meet their financial needs while setting up their businesses or establishing a proper setup or provide the support that the business requires for smooth functioning. When a company borrows money from a banking or financial institution, it should record the amount as a liability into the balance sheet. As and when repay the loan in the form of installments and record it in QuickBooks Online, it will reduce liability.
Why Enter a Particular Loan Payment in Your QuickBooks Online?
Though the loan amount is something that the business never forgets, it is required to be noted somewhere to not miss out on paying any installment. Having an organized set of data helps businesses keep a tab of the loans taken from different financial institutions. When it comes to paying loans, it is a liability for any business. Thus, being a businessperson, you cannot be casual about handling the same.
When the loan payment for different financial institutions is not recorded, you end up having a messy balance sheet. Above all, when you pay the loan and do not enter into the balance sheet, your liability keeps increasing even if you keep on paying your installments on time.
How to Enter a Particular Loan Payment in Your QuickBooks Online?
Here are a few steps following which helps users to enter the loan payment details in QuickBooks Online:
Step 1: Set up a Liability Account
- Go to Settings
- Select Chart of Accounts
- Find the Account Type drop-down
- Tap the New option and select Long Term Liabilities
- Go to Detail Type drop-down
- Click on Notes Payable
- Enter loan amount as Negative in the Amount field
Note: As future payments are a liability, you select Negative as your option.
- Click Save
- Click Close
Step 2: Record a Loan Payment
Option I: Check Payment
- Click the Plus (+) button
- Select Check
- Enter the check number in the Check No. field
Note: If you are using Direct Withdrawal or EFT, you can add Debit or EF in the Check No. field.
- Go to the Category Details portion and fill in the details asked for:
- The first line is the liability account. Enter the loan amount
- The second line is the expense account where you should enter the interest and the amount.
- The rest of the lines are for additional fees or charges, if applicable
- Click on Save
- Choose to Close
Option II: Cash Loan Payment
- Navigate to the Banking menu
- Select Make Deposits
- If a new window with the title “Payments to Deposits” open, cancel it
- In the Make Deposit window, fill in the details:
- To the Deposit To field, select the account where the loan is to be deposited
- Choose the Date and Type
- In the From Account, click on the liability account created in Step A.
- In the amount field, enter the loan amount
- Choose to Save
- Click to Close
Option III: Non-cash Loan Payment
- Go to the Lists menu
- Select Chart of Accounts
- Right-click on the blank space
- Click New
- Choose the Account Type:
- Fixed Asset: Choose this if the assets taken as loans have a long term value
- Other Current Assets: Go for this alternative if the assets can easily be converted into cash.
- Other Assets: Choose this type of account if they do not fit in the above two criteria in any manner.
- Select Continue
- Add the name and number of the account
- Choose Save
- Click Close
The above steps are easy to follow and you can easily enter a loan amount in QuickBooks Online. However, there might be instances where you get stuck in the middle of something.
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Frequently Asked Questions (Faqs)
Why Should you Enter a Loan Payment in QuickBooks Online?
When the loan payment for different financial institutions is not recorded, you end up having a messy balance sheet. Thus, you must enter the loan amount in QuickBooks Online. When you pay the loan installment and do not enter it into the balance sheet, your liability keeps increasing even if you keep on paying your installments on time.
How do you Track the Loan Money after Creating the Liability Account?
The steps to track the loan amount are as follows:
Choose Journal Entry
From the Accounts drop-down, select the liability account created
Enter the loan amount in the Credits field
From the Account drop-down, select the asset column in the second line
In the Debits column, enter the loan amount to be paid
How to Enter a Mortgage Payment in QuickBooks Online?
The steps are as follows:
Choose the Create icon
Select the Expense option
Enter the details of the entity you owe to in the Payee field
From the Payments drop-down list, choose the account you will pay from
Enter the date of payment
Select the Payment Method from the drop-down options
In the Ref no. field, put in the unique identification no. if any
Record the payment
From the Category drop-down, select the account for tracking the loan. It is the first line to be filled
In the Amount option, enter the amount of loan to be paid