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Line of Credit

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We have a $10K line of credit. The accounts were not previously setup correctly. Research in QB on the web indicates it can be a current liability or credit card or bank account. I set it up as a liability. Problem is when linking to Chase, the only options to connect the account to are credit card and bank account. Are there preferred ways to do this? Any help is appreciated.

SteveChaseAnswer

I am in the same situation it looks like. I have a Chase Line of Credit that I did as a credit card account in the desktop version. Now that I have converted to QBO I need to get this acount set up properly. I haven't attempted just yet to link it to the Chase bank feeds. My question is that it really doesn't give you a opening and closing balance at each month so how would I go about reconciling it. I presume journal entry like @jgtexas suggests is the way to go at the end of each month.

ChrisAccountifi

Hi! Set it up as a bank-
True, it's a liability but you do a journal entry at month end to set up the liability. Reverse it in the next month and repeat.

S

Suarez-L

Can you please help me?? How do I record money coming in and out of the LOC to balance with my bank statement? We make payments to LOC from our checking account. But to reconcile the LOC, I am so confused and lost. I need help !!!

SteveChaseAnswer

I am in the same situation it looks like. I have a Chase Line of Credit that I did as a credit card account in the desktop version. Now that I have converted to QBO I need to get this acount set up properly. I haven't attempted just yet to link it to the Chase bank feeds. My question is that it really doesn't give you a opening and closing balance at each month so how would I go about reconciling it. I presume journal entry like @jgtexas suggests is the way to go at the end of each month.

ChrisAccountifi

Hi Steve,

It shouldn't take too long to sort this out. I'm happy to jump on a call with you today to get it straightened out.

My office line is 204-500-1100

Best

Chris

vpcontroller

If you're using bank feed (sync with your bank account), you should use Credit Card type in QuickBooks which is also the current liability in the Balance Sheet. You can name account as Line of Credit if you want. It makes so much easier to transfer funds between accounts.
Forget writing Journal Entries. Those days are gone. Or someone is not up to speed.

J

jgtexasAuthor

thank you @vpcontroller. That's what I will do!

qbteachmt

A LOC is your liability, not a Bank type of account. As Bank, it will always be Negative, since you are confusing Asset account with Liability activity.

The data entry tools for Credit Card accounts are nice, which is why people use that as the function for LOC, since these are both Liability. This works fine when you are allowed to Draw against the LOC, not running it through your real Bank account, such as a Construction Loan when payments on your behalf are made directly by the Bank.

But it also matters if your drawing on the LOC results in deposits to your regular Checking. If so, you only need Liability, because you are depositing and paying to and from checking and there are no details for any data entries for the LOC running balance.

SteveChase

Your last paragraph you said here... "But it also matters if your drawing on the LOC results in deposits to your regular Checking. If so, you only need Liability, because you are depositing and paying to and from checking and there are no details for any data entries for the LOC running balance." actually hits the mark for what I have. It has me thinking what to do if I already set up the LOC as a credit card. I have not yet attempted any bank feeds but I do get the bank feeds into the regular checking.

I am learning so much in this conversation thread. Thank you everyone for the comments.

C

CG1

I am trying to set up a line of credit account in my chart of accounts, can you please help me with the setup?

G

GregC

Greetings:

When I set up a client with QBO Plus about four years ago, I was able to link a line of credit account to the bank and it would update with automatic bank feeds. The line of credit still works with bank feeds, and it's in the Chart of Accounts as Account Type: Long Term Liabilities, Detail Type: Other Long Term Liabilities. Now, the client has a new LOC with another bank, and when I attempt to link it, the drop down list is restricted to only Bank type accounts. How can I link the new LOC in bank feeds?

Thank you.

G

GraceC

Hello there, @GregC.

At this time, linking a liability to your bank is unavailable in QuickBooks. In the meantime, the banking features are only intended for credit card and bank accounts. That said, it needs to be recorded manually by adding creating a liability account on the Chart of Accounts.

To give you more insights on how online banking works, you can refer to this article:

How to use Online Banking, Connect Bank Accounts, and Review your Bank Feed in QuickBooks Online

Post again if you have any other questions. I'm always here to help. Have a good day!

G

GregC

Hi, Grace, and thank you for your reply.

Right now, I have a client whose LOC I linked in bank feeds. Please see the attached file that contains screen shots of the account set up in the COA, and the same account in Banking.

I did it a few years ago, so why not now?

Sincere regards,

Greg

K

kliksys

I have a line of credit for $2000, I access and use this line via a visa card. I've set up 2 accounts, a LOC under chart of accounts > Other Current Liability > Line Of Credit. I've also gone ahead and set up a Credit Card Account to handle expenses I use the money for. I've transferred $1000 as a draw to my business bank account and $1000 to the credit card account I set up. My line of credit now shows $4000 ( as I'd set up an initial balance when I opened the account of $2000 )

My Questions Are

1) Should this have been a -negative number or left blank?

2) Is the above setup correct?

3) How do I get the line to reflect the correct amount of $2000 after the fact?

Thanks for your assistance

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