The credit line serves as a lifeline for small business organizations because it provides you with immediate financing that is needed for payroll and management of everyday expenses. By setting up the line of credit in QuickBooks, you can easily simplify your cash flow, boost your saving & expense management.
Table of Contents
- 1 What is a Line of Credit in QuickBooks?
- 2 How to Set Up Line of Credit in Quickbooks?
- 3 How to Line of Credit in QuickBooks?
- 4 How to Record a Payment Amount to Your Line of Credit in QuickBooks?
- 5 How to Organize Bill Payments when funds go directly from the line of credit to the vendor as an Accounts payable bill?
- 6 FAQs
What is a Line of Credit in QuickBooks?
How to Set Up Line of Credit in Quickbooks?
To set up a line of credit accounts you have to set up 2 accounts.
These two accounts are:-
- Principal account
- Expenses account for interest
These accounts are also used for tracking the line of credit in QuickBooks.
Follow the below instructions:
1. Step One: Setup Principal Account
- Discover the Settings option
- Click on the Chart of Accounts button
- Hit on the New tab
- Now locate the dropdown menu named Account Type
- After this discover the dropdown button which says detail type
- Choose the Line of Credit option
- Modify the account name
- Hit on Save and close button
- Give a click on the Yes option if you double-checked the date of the transaction
2. Step Two: An Expense Account for The Interest Set Up
- Click on the Settings option and then choose Chart of Accounts
- Hit on the New button
- Discover the dropdown menu which says Account Type
- Hit on Expenses
- Locate the Detail type dropdown option
- After this, you have to choose Interest Paid
- Alter the name of the account
- Choose Save and Choose button
How to Export QuickBooks Customer List in Just 7 Easy Steps?
How to Line of Credit in QuickBooks?
1. Step One: To record Quickbooks Line of Credit that is extended to a company
Follow step by step method:
- Click on the (+) plus icon, and click on Bank Deposits.
- Now, make sure that you deposit the proper deposit of the account.
- Now, to add funds in the deposit section, scroll down to the bottom of the screen.
- Now, add other funds in the deposit section and then scroll down to the bottom of the screen.
- Now, click on the credit card account from the drop-down menu that you have just made.
- Now, enter the deposited amount into your bank account.
- Click on save.
2. Step Two: How Interest Charges Can be Recorded by Financial Institutions That Are Applied to QuickBooks Line of Credit
- Click on the (+) plus icon, and click on Expense.
- Now, make your payment method a credit card.
- Now, go to the top left side of the monitor, and click on Line of Credit card.
- Now, select the financial institution name which is the top left of the monitor.
- Now, click on the payee field.
- Now, click on the interest expense account from the Account drop-down list and then enter the amount of the interest charged.
- Click on Save.
3. Step Three: Pay the bills where funds are directly transferred to the supplier/vendor from the QuickBooks Line of Credit.
- Go to the navigation menu which is on the left, click on expanses and then click on vendors.
- Now, click on the vendor’s/supplier’s name.
- In the bill, click on the make payment option to record the payment.
- Now, click on the LOC credit card account, and click on the drop-down list of payment accounts.
- Enter payment details and then click on the save.
How to Record a Payment Amount to Your Line of Credit in QuickBooks?
You can easily track all the payments which occur in the bank or on a line of credit. Follow the below information to record the payment on the credit card.
1. Paper Check Payment
- Locate the +New option
- After this discover the below suppliers
- Hit on the Check button
- Discover the payee field to choose or fill the financial institution name
- Go to the Bank Account field
- Choose the bank listed in the drop-down list
- Discover the Category details tab, choose a line of credit from the field named Category Type
- Fill the amount
- you need to pay down the principal
- Now again click on the category details option
- Choose Interest paid from the field named Category
- Write the amount you need to pay down the interest
- Hit on the Save option
- Click on the Yes button in case you have double-checked the date
2. Credit Card or Debit Card Payment
In case you are doing a payment to the bank via credit card or debit, you can easily record the repayment via expense or label the expense. Moreover, you can categorize the expense according to interest and principal.
How to Organize Bill Payments when funds go directly from the line of credit to the vendor as an Accounts payable bill?
Here are the steps you have to follow:
1. Step One: Write Vendor Bill
- Locate Home Page Screen
- Choose Create +Sign
- Hit on Bill under Vendors header
- Hit on Vendor
- Select Date
- Below the Accounts Details column you have to click on Account = Purchases Expenses account
- Fill the amount
- Hit on Save and Close option
- It will create Accounts Payable balance
2. Step Two: Enter The Journal to Display Payment to The Vendor by LOC
- Open the Home page screen
- Hit on Create + icon
- Click on the Journal entry below other
- Fill the date
- Now locate the initial line hit on the drop-down arrow named account and then choose Accounts Payable
- Now locate below the Debit column and fill the amount you have paid to the vendor
- Write a memo
- Below the Name option hit on the drop-down arrow and then choose the vendor you have done the payment
- Now discover the second line below the name section hit on the drop-down named Account and then choose the line of credit account
- Fill the amount you have done the payment to the vendor below the credit column
- Write a memo and then hit on Save and close button
3. Step Three: Link The Bill Payment to The Vendor Credit Paid through LOC
- Open the Home page window
- Choose Create + Sign
- Click on Pay Bills below Vendors header
- Below pay to the order of, choose the name of the vendor
- Now below choose an account for the bank you have to choose Bank clearing Account you can also add a new account if required. This account will always contain a a zero balance
- The window will refresh and then it will display a matching amount below Credit and Bill Payment information
- Hit on the checkboxes to match the amounts
- You have to clear the amount field zero
- After this hit on Save and close option
Need Professional Help?
We are a very authentic and genuine third-party service provider of QuickBooks. You can get in touch with us via Live Chat Support which is available on our website. You can also call us on our Toll-Free Number smbaccountants.com to get your resolution sorted out in no time. If your credit card is not processing with Quickbooks then you can contact us and we will help you out.
FAQs
-
How does the line of credit work in QuickBooks?
Line of credit is almost identical to the process of bank loans i.e. It allows for a certain amount of funds that can be used as needed.
-
How do I set up the line of credit in QuickBooks?
The line of credit can be tracked by setting up two accounts i.e. One account is for the interest is basically an expense account and the other account for the principal.
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How do we track the line of credits in QuickBooks?
Through QuickBooks online, payments on a credit line can be tracked. Credit card payment records allow detailed financial-based reports to be preserved. You can do it if you want to transfer credit funds into another account.
