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BC1207
January 4, 2023
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Business van purchased with a personal loan

  • January 4, 2023
  • 1 reply
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Back in September 2022 I took out a personal loan for £12,000 to buy a van for my plumbing and heating business. What is the best way to account for this purchase? My business bank account will be paying the monthly repayments of the loan. Thank you for your help

Best answer by GeorgiaC

Hi BC1207, you can record the loan using a liability account - if the loan is long-term (repaid in 12 + months) this would be considered non-current. To create the account, navigate to the Cog > Chart of Accounts > New > Select the relevant liability account and detail type on the drop-downs and enter the total amount in the 'unpaid balance' field. To record the repaying the loan, enter an expense (+ New > Expense) with the business bank account that the repayments were made from in the 'payment account' field and the liability account selected in the 'category' field, with the total amount entered and no VAT selected. 

The purchase of the van can be entered with a separate expense. Firstly, create an account for the van (Cog > CoA > Select 'Tangible assets' as the account type and 'Vehicles' as the detail type, and rename if desired). Then enter the expense, with the bank account that the purchase was made with in the 'payment account' field, and the asset account in the 'category' field, with the total amount and relevant VAT code selected. 🙂

1 reply

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GeorgiaCAnswer
January 4, 2023

Hi BC1207, you can record the loan using a liability account - if the loan is long-term (repaid in 12 + months) this would be considered non-current. To create the account, navigate to the Cog > Chart of Accounts > New > Select the relevant liability account and detail type on the drop-downs and enter the total amount in the 'unpaid balance' field. To record the repaying the loan, enter an expense (+ New > Expense) with the business bank account that the repayments were made from in the 'payment account' field and the liability account selected in the 'category' field, with the total amount entered and no VAT selected. 

The purchase of the van can be entered with a separate expense. Firstly, create an account for the van (Cog > CoA > Select 'Tangible assets' as the account type and 'Vehicles' as the detail type, and rename if desired). Then enter the expense, with the bank account that the purchase was made with in the 'payment account' field, and the asset account in the 'category' field, with the total amount and relevant VAT code selected. 🙂

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BC1207Author
January 5, 2023

Thank you for your help, this has been really helpful!

With the expense payment for the van, it came from a personal debit account. How do I put my personal debit account into the ‘payment account’ field?

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AbegailS_
January 6, 2023

Hi there, @BC1207. 

 

I can help you with how to handle these in QuickBooks Online.

 

Recording personal expenses affect your business records. Though, we encourage QuickBooks users not to mix personal expenses to your business. However, I can walk you through on how to record it properly in your QuickBooks Online.

 

Here's how:

 

  1. Click the + New button, then select Expense or Cheque.
  2. Choose the payee from the drop-down.
  3. Select the appropriate bank account you used in the Payment account drop-down.
  4. In the Category details section, choose the category of the purchase.
  5. Enter the necessary information and the amount.
  6. Click Save and close.

After recording the personal expense, you can reimburse the company when you're ready. For more guidance, feel free to check out this article: Pay for personal expenses from a business credit card or bank account.

 

To learn more about mixing business and personal funds, you can read this article for detailed information: Mixing business and personal funds.

 

Tag me directly if you need more help with handling your accounts in QuickBooks.

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