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M
MMD3
February 12, 2021
Question

Recording a loan payment as an expense

  • February 12, 2021
  • 2 replies
  • 0 views

I use Quickbooks Desktop for personal finances and do not use it for tax reporting. I would like to be able to record loan payments that I make as an expense so that they show up on the P&L Report instead of the Balance Sheet. I realize that is not the proper way to do it but that is how I want it. Is there any way I can do this?

2 replies

M
Mark_R
February 12, 2021

I've got your back on recording loan payments as an expense, @MMD3.

 

You can simply write a check for your loan payment and associate it with an expense account. This way, the transaction will show on your Profit and Loss report. However, this won't track the payables of the loan, only the payment. Here's how:

 

  1. In your QuickBooks Desktop, go to the Banking menu and select Write Checks.
  2. Select the bank account where you want to pay the loan.
  3. In the Expenses tab, select an expense account from the drop-down.
  4. Enter the amount of the payment.
  5. Click Save & Close.

 

I'm adding this article to learn how to properly record loan payments in QuickBooks Desktop: Manually track loans.

 

Keep in touch if you need any more assistance with this, or there's something else I can do for you. I've got your back. Have a good day.

T
Thomas46
January 16, 2022

I set up an expense account for my mortgage principal payment and that does put it on the P&L and budget. My problem is that now the loan balance is not decreased. Is there another entry that can be made to make this happen?

M
Mich_S
January 16, 2022

Thanks for joining the thread and sharing your concern, @Thomas46.

 

I'm here to give additional insights about recording loan repayments.

 

The expense account you set up for your mortgage payment won't show on the P&L budget report. Instead, it will show on the Balance Sheet report given that it's a payment for a liability account. 

 

In addition, ensure to record the loan payments correctly by filling in the right information under the Expense tab. I'll show you how:

 

Here are some reminders before repayment:

  • QuickBooks records the interest payment as a company expense.
  • QuickBooks records the payment for the principal amount as a deduction to the liability account.
  • Once you complete all the payments, the value of the liability account will turn to zero.

 

  1. Open the Banking menu, then click on Write Checks.
  2. Click on the Bank Account you want to use to pay the loan.
  3. Review the Check NO. and Date.
  4. From the Pay to the Order of field, choose the name of the bank.
  5. From the Expenses tab:
    1. From the first line, choose the liability account you created in Step 1. Then fill in the payment for the principal amount.
    2. From the second line, choose the interest expense account. Then fill in the payment for the loan interest.
  6. (Optional) Memorize the check if you want QuickBooks to automatically fill in the payment at regular intervals.
    1. Choose Memorize.
    2. Fill in the fields as needed.
    3. Hit OK.
  7. Once done, click on Save & Close.

 

For more information on how to manage loan payments in QBDT, click on this: Manually track loans in QuickBooks Desktop.

 

It's always my pleasure to help you. Just fill me in for additional queries about this matter or QuickCooks. Stay safe!

BigRedConsulting
BigRedConsulting
February 14, 2021

Sure. Use an expense account on the payment and then it will show up on your P&L.

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