When I connect to a bank loan account, how do I categorize it?

Hi there, VC bookkeeper.

QuickBooks Online doesn't have the option to connect bank loans. I suggest to manually enter the loan transactions in QBO. Before doing the steps below, I recommend contacting an accountant to help you categorizing the transactions.

Here's how to enter loan transactions:

First, set Liability account to record the loan:

1. Click the Gear icon and select Chart of Accounts.

2. Click the New button.

3. In the Account Type drop down list, select Long Term Liabilities. Take note that if you plan to pay off the loan by the end of the current fiscal year, select Other Current Liability. Otherwise, select Long Term Liabilities.

4. From Detail Type drop down arrow, select Notes Payable.

5. Give the account a relevant name, like "Loan for a car."

6. Enter the full loan amount as a negative amount in the Amount field. Since the future payments to the bank are a liability for your business, the amount should be negative.

7. Click the Save and close button.

One done, you can now record the money you got from the loan. please follow these steps:

1. Select the Plus icon and the choose Journal Entry.

2. On the first line, select the liability account you've created. Then enter the loan amount in the Credits column.

3. On the second line, select the appropriate asset account from the Account drop down. Then enter the same loan amount in the Debits column.

After that, please check this article for additional information and follow step 3 to finish the process: Set up a loan in QuickBooks Online.

Please check this article on how to assign multiple categories to a single transaction: Assign, categorize, edit, and add your downloaded banking transactions.

Please know that you're always welcome to post if you have any other concerns. Wishing you and your business continued success.

Thanks for the feedback, @cmontenegro.

I'm going to pass this along to the Product Development Team about bringing in a feature to allow categorization with a loan transaction in the Banking Feed of QuickBooks Online, as I can see how this be beneficial by saving time and work. You can visit our Blog to see recent updates to our products, as well as seeing what's coming in the future.

If you have any further questions or concerns, please don't hesitate and reach back out! I'm here to help in any way that I can. Have a beautiful day.

Thanks for joining this thread, @MJHFAB. Let me provide an update about this matter.

As mentioned by my colleagues above, editing account type as liability isn't possible in QuickBooks Online (QBO). A liability account can't work as a bank account in QBO, thus, you can't make a transaction that has a liability as a bank account.

At times, we roll out enhancements based on our customer's requests. That being said, I suggest sending a recommendation to our product developers. They'll review this idea and might consider updating it in the future.

Here's how:

1. Go to the Gear located at the top.
2. Under Profile, click Feedback.
3. Enter your recommendation and select Submit.
   
   

You can also utilize this link to check the status and keep you in the loop on our progress of your request: Customer Feedback for QuickBooks Online.

I also encourage you to visit this resource that will guide you in managing your accounts in QuickBooks: Set up and add accounts to your chart of accounts.

As always, leave a comment below if you have any other questions about categorizing credit card as a liability account in QuickBooks. I'm here to help always. Take care!