How to Setup Line of Credit in QuickBooks Online

A line of credit is referred to as a revolving account that permits organizations and customers to borrow some amount of money. This money is used to replay in identical monthly interest till the loan is paid off. Moreover, customers can redraw these amounts. A line of credit acts as a lifeline for small business organizations because it provides instant funding that is required for payroll and daily expenses management.

List the major advantages of a line of credit in QuickBooks

• Boost savings & expense management
• Simplify cash flow
• Spent money on the requirement.

Steps to set up the line of credit in QuickBooks Online

To set up and track a line of credit in QuickBooks Online, create a liability account for the principal under “Other Current Liabilities” and an expense account for interest under “Interest Paid.” The following are the steps to set up a principal account in QuickBooks Online.

Step 1: Set up a liability account

• Locate setting and then hit Chart of Accounts
• Click on New option
• Find the dropdown menu in the Account type section and choose current liabilities
• Discover the dropdown menu listed with detail types, choose a Line of Credit
• You can rename the account name if you want (optional).
• Hit Save & then close.
• Check the transaction date and then select Yes.

Step 2: setup Expense account

• Discover settings and then choose Chart of Accounts then New.
• Find out expenses on the dropdown menu listed with account types
• Now choose interest paid from the detail type list displayed in the dropdown menu
• Rename the account on the requirement
• Hit the save & close button.

Step 3: Track line of credit

The payments of a line of credit can be monitored with QuickBooks Online. The records of credit card payments permit maintaining accurate financial-based reports. If you want to transfer credit funds into another account, you can do it. Whenever you have used your credit fund there will be some sort of interest that will be charged that you need to record in the dedicated expense account. After making a payment, you can even track the line of credit with the cheques, and the steps are as follows:-

On receiving payment via cheque, you can record it by writing a cheque.

• Click on the “+” to add the new cheque
• Hit cheques, which are located below the supplier option
• Fill the name in the payee field
• Choose the bank account associated with a credit card in the bank account field
• Under category options, hit on Line of credit and fill the amount that you wish to pay down
• Now choose the interest paid presently in the category field and save it.
• Verify the date and hit Yes
• With a Debit or Credit card.

Read More: Setting up Chart of Accounts in QuickBooks

Conclusion

We hope that this blog covered major details related to the setup of a line of credit in QuickBooks Online. If you still face any difficulty performing any of the steps or want to know more information regarding QuickBooks functional error. Contact the team the QuickBooks support via chat or call +1800-816-6849. They will carefully address all your queries and provide you with better assistance in a single call.