Record a loan for an asset in QuickBooks Online (2024)

by Intuit• Updated 2 days ago

Learn how to record a loan for an asset in QuickBooks Online.

While running your business, you might need a loan to purchase new assets like vehicles, equipment, buildings, or machinery. In QuickBooks Online, you can record loans and loan payments, set up an asset, and record depreciation of assets. Here’s how.

Note: These instructions cover how to set up loans for assets. Trade-in, down-payment, fees, and taxes are considered when assessing the original value of a purchase. Consult your accountant on how to account for these variables.

Set up a liability account

To record a loan for purchasing new assets like a car or a truck, set up a liability account first.

Go to Settings , then select Chart of accounts (Take me there).
Select New.
Select Other Current Liabilities if to be paid in full within one year. Select Long Term Liabilities if to be repaid in more than one year
Name the account. For example: If you’re buying a truck, create an account called Loan - Truck.
Leave the opening balance blank.
(Optional) Add a description to add extra information about this account.
Select Save.

Create a journal entry for the loan

To apply the loan to the proper asset accounts, create a journal entry.

Select + New.
Select Journal entry.
For the first line under ACCOUNT, select your new liability account.
Enter the amount of the loan under CREDITS.
For the next line, select the appropriate asset account under ACCOUNT.
Note: We populate the DEBITS column automatically based on the amount in the CREDITS column.
Select Save or Save and close.

You'll notice that the debit and credit are the same value. Whenever you make a journal entry, these two values should cancel each other out. This happens because we take money from one account and apply it to another. We increase or credit the loan/liability account and increase or debit the right asset account.