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How to Set Up a Loan in QuickBooks



Entering loans in QuickBooksOne of the most common mistakes we see in QuickBooks involves the setting up and paying of loans.  Many QuickBooks users don’t set the loan up at all and just expense the total payment.  Intuitively, this may make sense, but it is incorrect.

The loan should be set-up as a liability account on the balance sheet.  The payments should be split between the interest and loan principle.  The interest would be charged to interest expense and the principle to the loan liability account.  You may have to set-up the loan as a new general ledger account.  This is done in the chart of accounts by right clicking and choosing “New Account”.  Be sure to use either a current liability or a long-term liability as the type of account.

As an example lets say you borrowed $10,000 and your first monthly payment is broke down as $900 principle and $100 interest.  After setting up the account, you would record the deposit of $10,000 and use the loan account as the category.  The payment would be split between $900 to the loan account and $100 to the interest expense account.  This will drop the amount due on the loan to $9,100.

By entering the loan this way your balance sheet will be correct, and your expenses will not be overstated causing a surprise at tax time.

Interested in learning more about QuickBooks? Register for our QuickBooks Seminar at a location near you, learn more >

QuickBooks Seminars 2012



QuickBooks Flyer

Does QuickBooks give you a headache? Let our Certified QuickBooks ProAdvisors teach you the ins and outs of this complicated program. We are offering two class levels – one designed for beginners and one for intermediate users.

Beginners

Never opened QuickBooks before? No problem. We’ll teach you what you need to know to get started. From setting up a company to processing payments to sharing files with your accountant, you’ll be up and running in no time.

Intermediate

Have you been using QuickBooks for a while but need to sharpen your skills? This class is for you. We’ll walk you through everything from customizing forms to creating reports and graphs to share with your team.

Things to Know

  • Each class will be from 8 am to noon on the assigned date. Registration begins at 7:30 am.
  • If you have QuickBooks 2012, please arrive no later than 7:30 am so you have time to install the sample material.
  • Each class will be taught by a Certified QuickBooks ProAdvisor.
  • The cost to attend is $125. Please register on-line at hscompanies.com.

Class Schedule + Locations

Fremont

Beginner — 9/25/12
Intermediate — 10/24/12

H&S Fremont
711 W. Main St.
Fremont, MI 49412

Grand Rapids

Beginner — 10/3/12
Intermediate — 10/25/12

Country Inn & Suites
3251 Deposit Dr. NE
Grand Rapids, MI 49546

Mount Pleasant

Beginner — 9/27/12
Intermediate — 10/30/12

Comfort Inn & Suites
2424 S. Mission St.
Mt. Pleasant, MI 48858

Muskegon

Beginner — 10/2/12
Intermediate — 10/23/12
H&S Muskegon
4985 S. Harvey St.
Muskegon, MI 49444

To learn more, download our QuickBooks Seminar flyer.

QuickBooks Tips From A QuickBooks ProAdvisor

QuickBooks is a powerful tool for tracking your businesses’ financial situation. The program is most effective if it’s set-up properly from the start. Below are some of the things our QuickBooks ProAdvisor, Scott Brewer, suggests you consider when configuring the program.

Questions to Ask Yourself

  • Are you going to invoice customers?
  • Are you going to track the bills you owe?
  • Do you collect sales tax?
  • Do you track inventory?
  • Do you accept credit cards?

 

This is just a small sampling of what needs to be considered when setting-up the program. How you answer these questions will help to determine how you configure QuickBooks. After the initial set-up is completed you’ll want to make sure you understand how to properly use the program and enter information.

Among other things, it’s important to remember entries need to be in the correct areas each time they are entered. “One of the most common mistakes I see,” said Brewer, “Is making changes to transactions for the prior year, after the tax returns have been filed.” To avoid this, he suggests setting a closing date, which can be done through the “Accounting Preferences” screen.

There are lots of great QuickBooks resources on the web. Our favorite is the Intuit Community forum.

Alternatively, if you’d prefer someone to help you, H&S Companies’ QuickBooks ProAdvisors can help! We’ll come to your business, walk you through the program, and help you get on the right track towards balanced books. Want to learn more? Contact Scott today.

Scott Brewer
616.735.3043
scottb@hscompanies.com