When setting up an account to document a line of credit in QuickBooks, you need to:1 pointSet up an S-Corp to ensure you can accurately enter data in QuickBooksSet up two separate accounts, one for the principal and an expense account for interestSet up an account for the person responsible for paying the line of credit down
Question
When setting up an account to document a line of credit in QuickBooks, you need to:1 pointSet up an S-Corp to ensure you can accurately enter data in QuickBooksSet up two separate accounts, one for the principal and an expense account for interestSet up an account for the person responsible for paying the line of credit down
Solution
To set up an account to document a line of credit in QuickBooks, you need to:
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Open QuickBooks and go to the "Lists" menu. Select "Chart of Accounts."
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In the lower left corner, click on the "Account" drop-down menu and select "New."
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In the "Add New Account" window, select "Other Account Types."
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From the options, select "Long Term Liability" if the line of credit is a long-term loan (more than a year) or "Other Current Liability" if it's a short-term loan (less than a year). Click "Continue."
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Enter the account name (for example, "Line of Credit"), description, and the opening balance (the amount of money you initially borrowed). Click "Save & Close."
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Now, you need to set up an expense account for the interest. Go back to the "Chart of Accounts," click on the "Account" drop-down menu and select "New."
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In the "Add New Account" window, select "Expense" and click "Continue."
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Enter the account name (for example, "Interest Expense") and description. Click "Save & Close."
Remember, you don't need to set up an S-Corp to enter data in QuickBooks, nor do you need to set up an account for the person responsible for paying the line of credit down. The responsibility for repayment should be tracked outside of QuickBooks.
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