Organizations are typically required to take the loan in order to aid capital investments for building new premises, procuring equipment, or commencing product research and development. When the company gets the loan amount, it is inevitable for them to record a loan in QuickBooks as a liability in the accounts and keep a track of every loan taken along with the return done to reduce the liability. With QuickBooks as your accounting application, you can swiftly set up a liability account for both short-term and long-term loans. This, in turn, helps to record and make track of the loan deposit amount and all loan repayments.
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It is always sage to enter loan payments at regular intervals of time to ascertain that the company’s accounts are up-to-date at the end of each fiscal period. To do this, you are suggested to visit the ‘Banking’ option in the main menu, and thereafter in the context menu, choose the ‘Write Checks’ option. Now, you are suggested to type in the payee name and repayment amount in the required options in the Write Checks window.
Going forward, assign the interest element of the loan repayment to the desired expense account in the detail area of the Write Checks window. Assign the remaining part of the payment, which is often referred to as the principal, to the liability account created to keep up with the loan updates. Moving ahead, visit the ‘Edit‘ option and opt for the ‘Memorize Check‘ option. Now, hit on the ‘Save and Close‘ option to save the entry and exit the window, reports QuickBooks Accounting Software.
Loan Into QuickBooks Accounting Software: Explained
Businesses looking forth to borrow the amount to fund capital investments to cater to their varied business needs and purposes. This is nothing but a loan and this loan amount needs to be mentioned as a liability in the books of accounts and then to reduce the liability, it should track each payment that you have made for the loan. In QuickBooks, you can track and record a loan payment issued by the companies by creating a separate account.
How To Specify The Journal Entry?
Here are easy to follow and do it yourself steps to which you need to adhere:
- In the first step, navigate to the company tab and there is an option available to make General Journal Entries, hit on the same.
- After that, hit on the Date and mention the entry number.
- Now, click on the loan asset account and debit it on the first line, and credit it and the liability account on the 2nd line.
- And in the end, you are suggested to go to the Save and Close option.
Why You Must Add A Loan On QuickBooks Accounting Software Online?
Unlike QuickBooks Desktop, QuickBooks Online is not underpinned with a loan manager feature. That’s why you have to enter the loan amount manually into QuickBooks accounting software to manage and set up the loan payments. That is the reason that it is important to have sufficient knowledge on the topic of how to add a loan on QuickBooks Online.
What is The Use of Setting Up a Loan in QuickBooks Accounting Software?
There are various benefits of setting up a loan in QuickBooks accounting software for the users. Here are a few mentioned below:
- It helps to calculate the amortization schedule for the remaining borrowed amount.
- It also helps the user to track the current due installment by measuring the remaining loan balance as well.
What is The Procedure to Record a Loan in QuickBooks?
QuickBooks can record both non-cash cash asset loan methods to keep the record of loans. Below are a few steps mentioned to track the cash loan in QuickBooks accounting Software:
- In the first step, select the Banking section and then select the Make Deposits button.
- After that, click on cancel when the Payments to Deposit is visible while opening in a window and mention the details also within the window.
- Now, go to the deposit tab and select the account where you are required to deposit the loan and amend the date.
- Accordingly, you can specify the memo.
- Now, go to the form Account section and select the liability account.
- After that, navigate to the amount section.
- Now, mention the loan amount.
- In the last step, select the Save and Close option, and you are done.
How to Create a Liability Account Before the Payment?
If the user wants to keep the track of the loan only in QuickBooks accounting software then the user is required to build a liability account.
Below are a few steps are given which will help the user to know how to make a liability account to keep track of the loan payments on the QuickBooks desktop.
- In the first step, you are required to open QuickBooks accounting software.
- After that navigate to the lists and select the chart of accounts.
- Now, you need to select new and select the appropriate account.
- When there is a short-term loan involved (a loan that can be paid in one year) then the user is required to take the Current Liability Account.
- However, when the user has taken the long-term loan which is for more than one year they need to opt for the Long Term Liability Account.
- Post that, you are required to click on the Continue button.
- Accordingly, mention the name and the number of the account.
- Now, click on save and close.
How to Create The Vendor’s Account in QuickBooks Accounting Software?
A vendor account allows you to meet the payment requirement of the bank and company. Below are a few steps are given which you are required to follow to set up the vendor’s account.
- In the first step, you are required to go to the vendor’s section and select the vendor center now.
- After that, click on the New Vendor option and mention the vendor name and contact information.
- Once the above-given steps are completed you are done.
How To Create The Expense Account?
The expense account consists of all interest payments of the loan in QuickBooks. Here are a few steps which you need to adhere to create the expense account.
- In the first step, navigate to the List section
- After that, select the Chart of Accounts tab as highlighted in the below screenshot.
- Now, click on option New and then on the Expense button.
- Now, you are required to select continue, and here you are required to mention the account name.
- After that, click on Save and Close option, and you are set for tracking payments of loans on the QuickBooks desktop.
What Is The Procedure To Record The Non-Cash Asset Loan In QuickBooks Accounting Software?
Here you are required to create a New Asset Account and for that, the user needs to adhere to the below-mentioned steps:
- In the first step, navigate to the List section
- After that, select the Chart of Accounts and click right on the space.
- Now, select the appropriate account according to the requirement
- Fixed Assets: You are required to select this option if the loan asset is categorized into long-term assets.
- Other Current Assets: Select if for the assets that the user can convert into cash hassle-free.
- Other Assets: This option is useful when the given above does not meet the requirement.
- After that, select the Continue option.
- Also, mention the number and name of the asset account.
- In the last step, just select the Save and Close option.
Is There Any Other Way To Track The Loan Amount In QuickBooks Accounting Software?
If you are looking for another way to enter the loan payment then you can try the automation method. This is helpful for all the users who make the payments repeatedly.
- In the first step, move the mouse towards the Banking tab and click on the write Checks option as highlighted in the below-highlighted screenshot.
- After that, select the dropdown section and click on the Banking account which you use.
- Also, attempt to examine the Date and Check the number.
- After that, navigate to the pay to the Order of section and select the bank name.
- Post that, you are required to go to the expense option. You are required to choose the liability account from the first line of loan repayment.
- Also, hit on the interest expense account from another line.
- Just hit the save and close option once you are done with the above steps.
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