How to set up a line of credit in QuickBooks
QuickBooks allows companies to set up a line of credit accounts to track loans from banks. The configuration of a line of credit account is close to that of other accounts. Since Quicken does not accept a line of credit account, you must set up the account like a credit card. You just need to know the credit line’s start date and current balance to open an account.
What is a Line of Credit?
A line of credit works similarly to a bank loan in that it provides a set sum of money that can be used as required. QuickBooks helps you to report credit for refunds or vendor returns. There are many ways to record LOC, but the most straightforward is to create a journey entry. You must look for a business and make some general entries. After that, fill in the information such as the deposit date, etc. You may also schedule the expenditures in the future. A revolving account is referred to as a line of credit, and it allows businesses and consumers to borrow money.
This money is re-invested in the same monthly interest rate before the loan is paid off. Customers can also withdraw these funds again. The line of credit is a lifeline for small companies because it provides you with immediate support for payroll and day-to-day expenses management.
- Improve your savings and budgeting skills.
- Streamline the cash flow
- Money was spent on the necessity.
How do I set up a credit line in QuickBooks?
A line of credit can be tracked using two separate forms of accounts: principal and interest.
The steps to build a principal account in QuickBooks are as follows:
- Then select Chart of Accounts from the drop-down menu.
- Select the New choice.
- Choose current liabilities from the dropdown menu in the Account form section.
- Choose a Line of Credit from the dropdown menu of information forms.
- If desired, you can change the account’s name (optional )
- Save and then exit
- Select Yes after checking the transaction date.
An expense account is set up: The measures are as follows:
- Choose Chart of Accounts after you’ve discovered the settings.
- Create a new decision
- Expenses can be found in the dropdown menu of account forms.
- Now choose interest paid from the list of information types in the dropdown menu.
- Based on the provision, rename the account.
- Save and lock the window.
What is the best way to track down the line of Credit?
QuickBooks Online can be used to track payments on a line of credit. Credit card payment records allow reliable financial reports to be preserved. You have the option of transferring credit funds to another account. When you use your credit fund, you will be paid interest, which you must log in to the dedicated expense account. You can monitor the line of credit with the cheques after making a payment by following these steps:-
When you receive a cheque payment, you can record it by writing a check.
- To add a new check, click the “+” button.
- Below the supplier choice, there are hit tests.
- Fill in the payee area with the recipient’s name.
- In the bank account area, select the credit card’s associated bank account.
- Select the Line of credit from the category options and enter the sum you want to pay off.
- Now select the current interest rate in the category sector.
- It should be saved.
- Check the date and pick yes.
- You can pay with a debit or credit card.
Conclusion
To conclude, QuickBooks Desktop software helps you manage the finances of a particular organisation. So many features and functions surround the software that it has always stayed on top since its launch. The whole idea of this blog is to help you understand the concept of how can you set up a line of credit in QuickBooks Desktop software. I hope that this blog helped you and was worth your time.