Let's make sure to record your loan and be able to track it correctly, Imran.
You'll have to set up your liability account so you can accurately track your loan in QuickBooks Online (QBO). To do so, follow the steps provided below:
- Go to the Gear ⚙ icon and select Chart of accounts.
- Select New to create a new account.
- From the Account Type ▼ dropdown, choose Non-current liabilities. If you plan to pay off the loan by the end of the current financial year, select Current liabilities instead.
- From the Detail Type ▼ dropdown, choose Bank loans or Long term borrowings.
- Provide an account with a relevant name.
- Choose when you want to start tracking your finances. In the Unpaid balance field, enter the amount in the account, and determine the as of date. Enter today's date if you want to start tracking immediately.
- Click Save and Close.
Once done, record the money you get from your loan affecting the Accounts Receivable (AR) and liability account. This will reduce the loan balance and will serve as credit or payment for the open invoice. Here's how:
- Click the + New.
- Select Journal entry.
- On the first line, choose the liability account you just created from the Account dropdown. Enter the loan amount in the Credits column.
- On the second line, locate your bank account from the Account dropdown. Enter the same loan amount in the Debits column.
- When you're done, Hit Save and close.
After that, receive the payment to link the journal entry to your invoice. However, if you plan to use your loan money differently, you can reach out to your accountant to guide you further since the process is complex and requires more knowledge when it comes to accounting.
In addition, QuickBooks offers a variety of reports that you can use to cater to your business needs. Learn how to customise them to get the right information for your business: Customise Reports In QuickBooks Online.
If you have additional questions about recording loans, please don't hesitate to reach out to us so we can help you.
