08/25/2026
A business loan is not income. It's a liability that you'll repay over time.
Here's how to record it correctly:
1. Create a loan liability account.
Set up a Long Term Liability or Other Current Liability account (depending on the loan terms).
2. Record the loan deposit.
When the loan funds are deposited into your bank account, categorize the deposit to the loan liability account, not income.
3. Record your loan payments correctly.
Each payment includes:
- Principal, which reduces the loan balance
- Interest, which is recorded as an interest expense
4. Reconcile your loan account regularly.
Compare your QuickBooks loan balance to your lender's statements to ensure they match.
5. Keep all loan documents.
Save your loan agreement, payment schedule, and monthly statements for your records.
Recording business loans correctly helps keep your Balance Sheet accurate, your financial reports reliable, and your books tax ready.
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