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fv0515
December 23, 2022
Question

How do you record a loan we GAVE to someone? Since its a loan given, it can be considered as Loan Receivable. I'm just unsure how to record the loan we gave out.

  • December 23, 2022
  • 2 replies
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    2 replies

    R
    Rea_M
    December 23, 2022

    Hello there, @fv0515.

     

    Let's set up a liability account and create a journal entry so you can record the loan you gave to someone in QuickBooks Online (QBO).

     

    Start by creating a liability account to ensure accuracy when recording the loan. Depending on the repayment time frame, the Account Type can be Other Current Liabilities (to be paid in full in one year) or Long Term Liabilities (to be repaid over more than one year). However, I still encourage you to consult your accountant before doing the process below. They can provide expert advice tailored to your business needs.

     

    Whenever you're ready to set up a liability account, follow these steps:

     

    1. Go to Settings ⚙.
    2. Select Chart of accounts.
    3. Click New.
    4. In the Account dialog, select either Other Current Liabilities or Long Term Liabilities from the Account Type drop-down list.
    5. In the Detail Type drop-down list, select either Other Current Liabilities or Long Term Liabilities.
    6. Enter a Name for the account.
    7. Leave the Unpaid Balance field blank.
    8. Select Save and Close. 

     

    Once you're done, create a journal entry to record the loan and expenses for year-end reporting and tax purposes. Then, when you're ready to record payments made for the loan, please see Step 3 in this article: How to record a company loan from a company officer.

     

    Also, you may want to check out one of our Help pages as your reference to guide you in managing your business growth and transactions in QBO: QuickBooks Learn and Support. It includes help articles, Community discussions with other users, and video tutorials, to name a few.

     

    Please feel free to leave a comment below if you have other concerns about recording loans and income/expense transactions in QBO. I'm always ready to help. Take care, and I wish you continued success, @fv0515.

    Rainflurry
    Rainflurry
    December 24, 2022

    @fv0515 

     

    @Rea_M's advice is incorrect.  It's not a liability.  You record a note receivable as an asset.  Set up an asset account called "Note Receivable - <Name of Lendee>" or something similar.  Then, assign that asset account to the payment made.

      P
      pvtmadness
      August 5, 2023

      This seems to be the standard response from QB moderators. I don't have a problem with the 'canned' nature of what they post, but none of them seem to understand the question.  Loans from the company to an officer, etc are common as are loans from a principal to the company.  Is there a standardized Intuit response outlining the steps to set up a loan FROM the company TO an officer or other person?

      M
      Maybelle_S
      August 5, 2023

      Thanks for joining the thread, pvtmadness. I’ll help you with this concern on how to set up a loan from the company to an officer in QuickBooks Online (QBO).

       

      To accurately document a loan, it's essential to establish a liability account. The choice of the Account Type depends on the repayment schedule: it can be categorized as either Other Current Liabilities (if it will be fully paid within a year) or Long Term Liabilities (if the repayment extends beyond one year).

       

      Here’s how:

       

      1. Go to the Accounting menu and choose Chart of Accounts.
      2. Select New.
      3. Click Liabilities at the tap.
      4. In the Save account under drop-down arrow, select either Other Current Liabilities or Long Term Liabilities, depending on the type of loan and its repayment time frame.
      5. From the Tax from section drop-down arrow, select either Other Current Liabilities or Long Term Liabilities.
      6. Enter the Account name and Description.
      7. Hit Save.

       

      After that, create a journal entry to record the loan. I'll guide you on how to do it.

       

      1. Go to the +New button.
      2. Under Other, select Journal Entry.
      3. Enter the amount of the loan and log the proper amounts to the appropriate expense accounts. In journal entries, the total of the Debit and Credit columns must be equal.
      4. Select Save and Close.

       

      Once done, record all payments made for the loan.

       

      1. Go to the +New button.
      2. Under Vendors, select Check.
      3. From the Account dropdown list, select the liability account you created for this loan.
      4. Enter the Amount of the payment.
      5. Select Save and Close.

       

      I also suggest seeking guidance from your accountant to choose the correct account to use. It's to ensure that your books are accurate.

       

      We value your business and are committed to ensuring you record the loan properly. Let me know if you have other questions. I'm here to support you on your journey to financial success.

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