Conquering the Loan Monster: How to Tame Your Loan Repayments in QuickBooks
Ah, loans. Those financial lifesavers that sometimes feel more like alligators snapping at your heels. But fear not, brave entrepreneur! Taming your loan repayments in QuickBooks doesn't have to be a tear-jerking saga. It can, in fact, be a hilarious (okay, maybe mildly amusing) adventure.
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| How To Record Loan Repayment In Quickbooks |
Step 1: Setting Up the Loan Lair (a.k.a. Creating a Liability Account)
First things first, you need to create a lair for your loan in QuickBooks. This lair, also known as a liability account, will track how much you owe the loan monster. Think of it as a cage for the beast, except way less dramatic and with better ventilation.
To create this account, head to the Chart of Accounts (think of it as your financial zoo) and click on New. Choose Non-current Liabilities if your loan is a long-term resident, or Current Liabilities if it's a short-term visitor. Name your account something descriptive, like "Loan from Uncle Bob for That Time I Bought a Unicycle."
Tip: Read mindfully — avoid distractions.
Pro Tip: Don't name your account "Loan Monster's Lair" unless you enjoy explaining yourself to your accountant.
Step 2: Feeding the Beast (a.k.a. Recording the Loan)
Now, it's time to feed the beast (a.k.a. record the loan). This can be done in two ways, depending on what you did with the loan money.
QuickTip: Skim for bold or italicized words.
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Scenario 1: You deposited the loan directly into your bank account.
- Go to New and select Journal Entry.
- In the first line, choose your loan account and enter the loan amount in the Credits column (think of it as a credit card swipe for the loan monster).
- In the second line, choose your bank account and enter the same amount in the Debits column (this shows the money flowing into your account).
- Click Save and Close, and bam! You've fed the beast (and hopefully avoided any angry roars).
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Scenario 2: You used the loan money for something specific.
- Follow the same steps as above, but instead of selecting your bank account, choose the expense account you used for the loan (e.g., equipment, building improvements).
Step 3: Taming the Beast (a.k.a. Recording Repayments)
Finally, the moment we've all been waiting for: taming the beast (a.k.a. recording your repayments). This can be done using checks or journal entries, depending on your preference.
Using Checks:
QuickTip: A careful read saves time later.
- Go to New and select Check.
- In the Payee field, enter the name of the lender (e.g., Uncle Bob, the bank).
- In the Category field, select your loan account.
- Enter the payment amount.
- Click Save and Close.
Using Journal Entries:
- Go to New and select Journal Entry.
- In the first line, choose your loan account and enter the payment amount in the Debits column (this shows the money leaving your account).
- In the second line, choose your bank account and enter the same amount in the Credits column (this shows the payment being made).
- Click Save and Close.
Remember:
QuickTip: If you skimmed, go back for detail.
- If you're paying interest on the loan, be sure to record it separately in a finance charge expense account.
- Consistency is key! Always use the same method for recording your repayments to keep your books organized and avoid any unwanted surprises from the loan monster (or your accountant).
With these steps, you've successfully tamed the loan monster and recorded your repayments in QuickBooks. Now, go forth and conquer your finances, brave entrepreneur! Just remember, even though loans can sometimes feel like a burden, with a little humor and the right tools, you can keep them under control.
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