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Home>>Become An Expert With QuickBooks Training & Certification How to Record Things in QuickBooks Desktop and Online? How to Record Loan Payable in QuickBooks Desktop and Online?

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Companies get loans in order to finance fixed investments for the purpose of acquiring land and buildings, procuring machinery, or initiating new products and services research. When the company receives the loan amount, there is certainly a record of a loan in QuickBooks, as it is a liability to the accounts. They always maintain a record of each loan taken as well, and the return is done to minimize such liability. If you are using QuickBooks as your accounting software for your business, you can record loan payable in QuickBooks easily.

How to Record Loan Payable in QuickBooks Desktop?

Cash and non-cash loans, such as those for vehicles or office equipment, are considered liabilities for your company. QuickBooks allows you to record how much was lent and all your payments so you are on top of it.

Note: These steps can be followed for both QuickBooks Desktop Windows and Mac.

1. Set up a liability account

When you record a loan in QuickBooks Desktop, then you’re required to choose the liability account for it. To set up a liability account for a loan in QuickBooks Desktop, go to Chart of Accounts, choose New, select the relevant liability type, and save.

Follow the steps mentioned below to set up a liability account for your loan:

Step 1: Navigate to the Chart of Accounts

First, go to the Lists menu, then choose the Chart of Accounts option.

Step 2: Choose a New Option

Now, right-click anywhere, then choose the New option.

Step 3: Choose the Relevant Account Type for the Loan

Choose the Other Account Types option, then choose the relevant account type for your loan:

  • Other Current Liability: Make use of this for short-term loans payable over one year.
  • Long-Term Liability: Make use of these long-term loans payable over a longer period.

Step 4: Enter the Information

After this, click on the Continue button. Then, enter the account name and number. Select the Save & Close button.

2. Set up the Vendor (Bank/lending company)

Make a new vendor for the bank or company for which you’re required to pay the loan. To set up a vendor for a bank or lending company in QuickBooks, go to Vendor Center, choose New Vendor, enter the bank’s details, and save.

Step 1: Go to Vendor Center

First, navigate to the Vendors field, then choose the Vendor Center option.

Step 2: Enter the Name of the Bank

Now, choose the New Vendor option and enter the name of the bank or company you wish to pay the loan to.

Step 3: Save the Changes

Enter the vendor information, such as phone number and email address (Optional). Once you’ve done this, choose the OK option.

3. Set up an expense account

Make an expense account so you can record interest payments or fees. To set up an expense account for interest or fees, go to Chart of Accounts, select New, choose Expense, enter the account name, and save.

Step 1: Go to the Chart of Accounts

First, navigate to the Lists menu, then choose the Chart of Accounts option.

Step 2: Choose a New option

Now, right-click anywhere, then choose the New option. Choose the Expense option, then Continue.

Step 3: Enter the Account Name

Then, enter the account name for the interest payments or fees. Choose the Save & Close button.

4. Record the loan amount

Now that you’ve your liability account for the loan, here’s how you can record the loan amount. To record a loan amount, go to Banking and select Make Deposits. If the Payments to Deposit window appears, choose Cancel to proceed.

Cash Loans

To record a loan amount, go to Banking and select Make Deposits. If prompted with the Payments to Deposit window, click Cancel to continue.

Step 1: Navigate to Make Deposits

First, go to the Banking menu, then choose the Make Deposits option.

Step 2: Choose Cancel

Now, if the Payments to Deposit window appears, choose the Cancel option.

In the Make Deposits Window

In the Make Deposits window, select the deposit account, verify the date, enter the loan amount from the liability account, and save the transaction.

Make Deposits Window in QuickBooks

Step 1: Go to Deposit To Menu