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Neffy_20
April 6, 2023
Solved

Tracking Business Expense paid with Business Loan

  • April 6, 2023
  • 2 replies
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Hi! 

I recently received funds from a Business loan. I am using these funds for Business expenses.

My question is, what is the best way to log the expenses that I am making using the funds from the business loan or do I log them like I normally would? 

I was just a little confused because I learned that the loan would not be recorded as an income so I wanted to double check before I assume.

Thank you! 

 

Best answer by SirielJeaB

Hello, @Neffy_20. It's great that you've always chosen the Community forum for your QuickBooks inquiries. I'd be delighted to share the process of tracking business expenses paid with a business loan.

 

It's efficient to record a loan in QuickBooks Online, Neffy_20. Let's begin setting up a liability account to record what you owe. Here's how:

 

  1. Select the Gear icon, then click Chart of Accounts.
  2. To create a new account, hit New.
  3. Choose Long Term Liabilities from the Account Type.
  4. Select Notes Payable from the Detail Type dropdown.
  5. Fill out the other necessary fields, then click Save and Close.

 

Once done, record the money you got from the loan. Please follow the steps below:

 

  1. Click the + New icon, then select Journal entry.
  2. Choose the liability account you just created from the Account dropdown on the first line. In the Credits column, enter the loan amount.
  3. Choose your bank account from the Account dropdown on the second line. In the Debits column, enter the same loan amount.
  4. Click Save and close when done.

 

You may want to read the detailed process and information. Check out this article: Set up a loan in QuickBooks Online.

 

I've also included the following article that contains information on how to record, edit, and delete expenses in QuickBooks Online: Enter and manage expenses in QuickBooks Online.

 

I'm always available at any time if you need further help with any QuickBooks-related concerns. Don't hesitate to click the Reply button below or post in the Community again. Take care!

2 replies

S
SirielJeaBAnswer
April 7, 2023

Hello, @Neffy_20. It's great that you've always chosen the Community forum for your QuickBooks inquiries. I'd be delighted to share the process of tracking business expenses paid with a business loan.

 

It's efficient to record a loan in QuickBooks Online, Neffy_20. Let's begin setting up a liability account to record what you owe. Here's how:

 

  1. Select the Gear icon, then click Chart of Accounts.
  2. To create a new account, hit New.
  3. Choose Long Term Liabilities from the Account Type.
  4. Select Notes Payable from the Detail Type dropdown.
  5. Fill out the other necessary fields, then click Save and Close.

 

Once done, record the money you got from the loan. Please follow the steps below:

 

  1. Click the + New icon, then select Journal entry.
  2. Choose the liability account you just created from the Account dropdown on the first line. In the Credits column, enter the loan amount.
  3. Choose your bank account from the Account dropdown on the second line. In the Debits column, enter the same loan amount.
  4. Click Save and close when done.

 

You may want to read the detailed process and information. Check out this article: Set up a loan in QuickBooks Online.

 

I've also included the following article that contains information on how to record, edit, and delete expenses in QuickBooks Online: Enter and manage expenses in QuickBooks Online.

 

I'm always available at any time if you need further help with any QuickBooks-related concerns. Don't hesitate to click the Reply button below or post in the Community again. Take care!

Rainflurry
Rainflurry
April 7, 2023

@Neffy_20 

 

The funds received from the loan are deposited into your bank account with your other cash on hand.  Therefore, all expenses paid using cash are recorded in the same way.  You can use Tags if those funds are restricted for certain uses (inventory, etc). 

 

Also, there is no need to use a journal entry to record the loan received as @SirielJeaB suggested.  Just make a deposit and assign the deposit to the loan payable liability account. 

 

N
Neffy_20Author
April 7, 2023

Thank you for your response.

I recorded the loan using a journal entry, does it make a difference if I record it this way vs  making a deposit and assigning it to a loan payable liability account?

How would I record payments in QuickBooks once I start paying off this loan?

I have it set up on autopay and it drafts from my business account monthly starting this month. I do have my bank account connecter to QuickBooks, so I do pull my transactions from there. 

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