How To Set Up Loan In Quickbooks

Introduction

In that location are times when a business concern volition need to borrow coin in society to get funds to buy things essential for running their business. That can exist for things like existent estate, equipment, or inquiry & development. This money comes in the form of a loan, and it is a liability that your company must pay off.

If your company gets a loan, it tin can be managed in QuickBooks Online. QuickBooks Online lets you easily continue track of how much you owe. You lot can monitor short-term and long-term loans, also as continue track of the loan deposit amount and loan repayments.

Another situation that QuickBooks Online can handle is when you want to give a loan to a customer. They may need a loan to help pay off an invoices, or they may need a loan for any other reason.

In this article, we will look at making and managing loans with liability accounts. Nosotros'll also look at how to make loans to other businesses.

Defining Liabilities

Allow'south starting time past defining what a liability is. A liability is money that you currently owe to other people. Another give-and-take for liabilities is debts.

Liabilities come up in many different forms. They can be rent, outstanding bills, credit card debt, owed taxes, and loans.

There are ii classifications of loans in QuickBooks Online: current liabilities and long-term liabilities.

Current liabilities are curt-term debts that are expected to be paid within a twelvemonth. These include bills, deferred salaries, sales and payroll taxes, and short-term loans.

Long-term liabilities are debts that are not expected to be paid off in only a yr. These include mortgages and big loans.

As an example, if yous need to take out a loan for a automobile, you may have v years to pay it off. The loan is a long-term liability and the car becomes an asset.

At present that you have an idea well-nigh dissimilar liabilities, permit's look at how you tin fix a liability account in QuickBooks Online.

Setting Upwardly a Liability Account

Let's now take a look at how to gear up a liability account. A liability account is an account for things that y'all owe.

Start by going to your Nautical chart of Accounts by clicking the gear-shaped Settings button in the Header at the top of the screen. The link to the Chart of Accounts is nether the Your Visitor heading.

One time at the Chart of Accounts, click the New push button to create a new account.

[Effigy: Creating a new account]

Now, the Account panel volition popular up and you lot tin enter in details about the loan account. From the Account Type menu, you lot can select either Long Term Liabilities or Other Current Liabilities. Choose Other Current Liabilities if you lot intend to pay off the loan in the current fiscal year.

For this example, nosotros'll choose Long Term Liabilities.

[Figure: Selecting the business relationship blazon]

When y'all select Long Term Liabilities, the Detail Blazon and Name will change to Notes Payable automatically. Y'all tin change the name to something more relevant, like Car loan. Y'all tin likewise optionally enter a description in the Description field.

You volition then have to make up one's mind if the loan is a sub-business relationship. You may want to make it a sub-account to go along your accounts more organized.

So, make up one's mind the date that y'all want to commencement tracking your account in the dropdown that says When do you lot desire to outset tracking your finances from this account in QuickBooks? The options available are First of this year, Beginning of this month, Today, and Other. For this example, we'll cull Today.

[Figure: Selecting the first date for tracking the loan]

In one case you've selected the appointment, y'all volition need to enter the residual on that appointment. This should exist a negative amount. When you have finished setting upward the liability account, click the Salve and Close button.

Recording the Loan Coin

Once you have received loan money, you may want to put it right into your bank account. Nosotros tin do this by creating a new journal entry.

To make a new journal entry, click on the New button in the left-side Navigation Pane. From the New panel, select Periodical Entry from the Other column.

[Figure: Adding a journal entry]

On the offset line of the journal entry, choose the liability business relationship that yous just created for the Account field and enter the corporeality of the loan in the Credits field.

On the second line of the journal entry, select the bank business relationship for the Account field and enter the loan corporeality into the Debits column.

[Effigy: Entering the loan amount into a periodical entry]

Click the Salvage and Shut button to finish calculation this entry to the account.

Now that we've prepare up the loan in our books, we can look into how we record repayments to the loan.

Recording Loan Repayments

In that location are many different ways to record loan repayments depending on which method of payment you desire to use. For example, two ways that you lot can pay back with are checks or ACH deposits.

Let's take a look at how to pay dorsum with checks. Offset by clicking on the New push in the left-side Navigation Pane. So, select Check from the Vendors category.

[Effigy: Making a check for a loan repayment]

Enter a check number if y'all are sending a cheque, or enter Debit or ETF in the Check field if yous are using direct withdrawal or an ETF.

In the Category Details for each bank check, select the liability business relationship for the loan on the offset line in the Category column. Enter the payment amount in the Amount category.

[Figure: Recording a loan payment]

On the 2d line, in the Category column, enter the expense account for interest. Put the interest amount paid in the Amount column.

If there are any additional fees, enter them on additional lines using the advisable accounts and amounts.

Later on y'all're finished, click Save and Close.

Now that yous've seen how to record a loan that you have received, let'due south wait at how you lot can grant loans to others.

Granting a Loan to Another Visitor

Y'all may desire to grant a loan to other companies for several reasons. For example, you may give them a loan so that they can pay off an invoice. Additionally, yous may want to requite them a loan considering you can earn interest and you trust that they will pay y'all back.

Nosotros'll beginning past because the first scenario in which they demand a loan to pay off invoices.

Granting a Loan to Close Open up Invoices

If you're going to create a loan shut open up invoices, start by creating a new account in the Chart of Accounts. You lot can get to the Chart of Accounts by clicking on the Settings icon in header and then choosing Chart of Accounts from the Your Company category.

At the Chart of Accounts, click the New button to start making a new account. In the Account console that pops up, offset select either Other Current Avails or Current Assets from the Business relationship Blazon dropdown.

Use Other Electric current Assets if the loan will exist repaid inside the current fiscal year. Use Electric current Assets if the loan will be repaid after the electric current fiscal year.

For this example, we'll use Other Current Assets. Other Current Assets has many different options that show upward in the Detail Blazon dropdown, including: Allowance for Bad Debts, Development Costs, Employee Cash Advances, Inventory, Investment - Mortgage/Real Estate Loans, Investment - Taxation-Exempt Securities, Investment - U.S. Authorities Obligations, Investments - Other, Loans to Officers, Loans to Others, Loans to Stockholders, Other Current Assets, Prepaid Expenses, Retainage, and Undeposited Funds.

For this loan to a customer, we'll select Loans to Others from the Detail Type dropdown.

[Figure: Setting up a Loan to Others]

Enter a memorable name for the loan in the Name field. You tin then click Salve and Shut to finish creating the loan, as we will enter the loan amount by using a journal entry.

Inbound the Loan Amount with a Periodical Entry

You lot can enter the loan corporeality and create a credit in Accounts Receivable for the client. The credit volition then be practical to open invoices.

To get-go making the Journal entry, Click the New button in the left-side navigation window. Then, select Journal Entry under the Other category.

[Effigy: Starting a Journal Entry]

You will need to enter information on 2 lines in the Journal Entry. On the commencement line, select the customer's loan account from the Account dropdown. Next, enter the amount in the debit field.

On the 2nd line, select the Accounts Receivable account from the Accounts dropdown and enter the customer'southward name in the Proper name cavalcade.

[Figure: Filling in the Journal Entry for a client loan]

To finish, click the Salve and Close button.

Now that you've seen how to create a loan to give a customer credit for their invoices, let's see how you can create a loan which allows customers to do whatever they please with it.

Creating a General Loan for a Customer

To make a full general loan for a customer, y'all will desire to create a new account for it, merely as yous did in the previous practise. So, become back to the Nautical chart of Accounts. You lot can get to the Chart of Accounts from the Accounts tab in the left-side Navigation Pane.

At the Chart of Accounts, click the New button to starting time a creating a new business relationship. In the Account console that pops up, choose Other Electric current Avails for the Account Type. This blazon of loan should be paid back before the stop of the fiscal year.

In the Account Details dropdown, cull Loans to Others. Next, add a proper name that accurately describes the loan. You tin now click the Relieve and Close button at the lesser. You will have created a loan like to the previous one.

Now, you tin issue a cheque for the loan to give to the customer. Do this by clicking the New push in the left-side Navigation Pane. Then, choose Checks under the Vendors heading.

In the Cheque console that pops up, cull the business relationship that funds the loan in the Banking concern Account dropdown, such as your Checking of Savings account. Next, enter the account that y'all fabricated to rail the loan every bit the off setting account in the area beneath the check and also enter the amount.

[Figure: Writing the check to the customer]

Then, click the Salve and Close push.

At present that yous've set up the account and issued the loan, let's hash out how you can tape customer payments.

Recording Customer Loan Payments

Your customer should before long start repaying the loan amount that yous sent to them. This loan may also exist including interest in additional to the principal corporeality. QuickBooks Online does not automatically count involvement, so exist sure that y'all do this separately.

To start recording customer payments, you lot will record a new bank deposit. Click on the New button in the left-side Navigation Pane and choose Banking concern Deposits from the Other category.

Select the Business relationship where you want the payment to go to in the dropdown. At the bottom of the grade in the surface area called Add Funds to This Deposit, enter the details about the loan repayment. For the Received From field, enter the customer'southward name. For Account, cull the loan account that you created. In Memo, enter a notation to help later when you lot demand to recognize this transaction. In Payment Method, select the mode that the client paid y'all. Ref # is for the bank check number and Class is used if y'all are using Class tracking. Lastly, enter the amount paid in the Amount department.

[Effigy: Enter loan repayment information in the bank eolith]

On the second line, you tin can enter the interest payment from the client, if whatsoever. On this line, choose your Involvement Income account for the Business relationship field and make full in only the interest corporeality in the Amount field.

When finished, click the Save and Close button at the bottom.

At present that you've seen how to record a customer's payment, let's look into creating recurring invoices and so customers are reminded when to pay.

Sending Recurring Invoices

In previous lessons, nosotros've learned how to both send invoices too every bit add items in Products and Services. In this section, nosotros will use both of those concepts. To start sending recurring invoices, you volition outset want to ready an item that uses the customer'south loan receivable account.

Creating an Item for the Loan

Outset, navigate to the Products and Services List. This tin be plant by clicking the gear-shaped Settings icon in the Header and choosing Products and Services under the Lists heading.

[Figure: Navigating to Products and Services]

At the Products and Services list, click the New button and and so choose Service. In the panel that slides in, enter a descriptive name for the loan and in the Income Account dropdown, select the customer's loan receivable account.

[Figure: Calculation the service item]

Then, click the Salvage and Close button to end this step.

At present that you have an item, it's fourth dimension to create the recurring invoice.

Making a Recurring Invoice for Loan Repayments

To commencement making the recurring invoice, click on the gear-shaped Settings icon in the Header and choose Recurring Transaction under the Lists heading.

At the tiptop of this list, click the New button and then select Invoice from the dropdown.

[Figure: Adding a recurring invoice]

At the Invoice course, select the customer's name from the Customer dropdown. Then, select the particular that you previously made for the loan from the Product/Service dropdown.

In the Edit Schedule area, enter the schedule that you want the loan to exist paid past. When washed, click the Save Template button.

Yous volition now be set upward to send recurring invoices. In the side by side section, we'll take a expect at what to exercise when we receive those payments.

Receiving the Payments

When the customer sends in a payment, you tin use the Receive Payment tool to record it. This is like to what we have already covered in a previous lesson on receiving customer payments.

To offset this, click the New push button in the left-side Navigation Pane and cull Receive Payment nether the Customer heading.

In the Receive Payment form, enter the details about the payment. Make sure that you deposit the funds into the Undeposited Funds account.

[Figure: Receiving a customer's loan payment]

Click the Salve and Close button when y'all are washed.

Now that you have received a payment, permit'due south next await at adjusting the loan remainder later on receiving it.

Entering the Deposit and Adjusting Loan Residue

Yous tin can take the invoice and utilise it to adjust the loan residue while adding the interest back into the loan and posting the interest income.

First of all, get-go making a new banking concern deposit by clicking the New push button in the left-side Navigation Pane and choosing Bank Eolith under the Other heading.

Select the payment you received and in the Add Funds to This Deposit department, select the loan business relationship that you lot created for the customer from the dropdown. Then, enter the interest as a negative number. On the second line, cull the involvement income account and enter the interest as a positive number in the amount.

[Figure: Adjusting the loan for interest]

Click the Save and Close push button to finish the process.

You've now seen how to manage many facets of receiving and making loans.

Conclusion

In this commodity, you saw how you can manage loans that y'all have received and those that yous accept given out to others. You've seen that QuickBooks Online has many means to manage these loans, such as sending out recurring invoices for loan repayments and calculating loan balances after deposits.

Source: https://www.universalclass.com/articles/computers/how-to-manage-loans-in-quickbooks-online-version.htm

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