dividing a line of credit into separate accounts

I'm pleased to have you here, Ericf1. Let's discuss how to track advance from the bank and transfer them between accounts.

QuickBooks Online offers a way to set up and track a line of credit so you can better manage your cash flow and decide when to spend, borrow, or transfer funds.

To record your advance from the bank, you can set up liability and expense accounts to accomplish it. 

Here's how you do it:

1. Go to the Gear icon, then select Chart of accounts.
2. Select New, then choose Other Current Liabilities from the Save account under dropdown.
3. Select Line of Credit from the Tax form section dropdown.
4. Enter a name and save.

For setting up an expense account. Refer to the steps below:

1. Go to the Gear icon, then select Chart of accounts.
2. Select New, then pick Expenses from the Save account under dropdown.
3. Choose Interest Paid from the Tax form section dropdown.
4. Enter a name.
5. Click Save.

For more details about the processes, please refer to this article: Manage a line of credit in QuickBooks Online.

You can record a transfer after to allocate the amount to separate accounts. Consider scanning this resource for reference: Transfer funds between accounts.

For thorough guidance in managing your accounts, you can seek an accountant's advice. If you don't have one, feel free to visit this page: Find a QuickBooks ProAdvisor.

Additionally, this material gives you information to efficiently organize and categorize your transactions in the program: Categorize online bank transactions in QuickBooks Online.

Just click the Reply button whenever you have other queries about credits. You're always welcome in the Community.

@Ericf1 

You can create subaccounts (LOC - Inventory, LOC - OpEx, etc) under your main LOC liability account and use those to track the purpose of the funds drawn on the LOC.  You would just assign the appropriate LOC subaccount to each deposit.  Then, when you make payments, you can assign the payment to the appropriate subaccount to reduce the liability.  I'm not sure about the benefit of doing that but presumably, you have your reasons.     

"If I sell inventory, I would like to credit the inventory sub account. If I am doing services, I would like to borrow from the operating sub-account, but then pay it back when I get paid for the service."

See above.  Once you have drawn on the LOC, there is no additional entry to be made.  Until you pay back the LOC, there is nothing to reduce/credit/transfer, etc. as the actual cash is in your bank account and you owe on the full LOC.  This can be tracked outside of QB but, from an accounting standpoint, I think the only option is to use LOC subaccounts.  Assigning the repayments to a specific subaccount (inventory, OpEx, services, etc.) is going to be messy IMO and probably inaccurate because the payment is coming from the same pile of cash that contains income from all three sources.  Just my $.02.