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Set up line of credit or equity accounts for online banking in QuickBooks

You want to set up a line of credit or equity account for online banking in QuickBooks.

Why this is happening

acceptable businesses have a revolving line of credit (RLOC) with their bank. You can easily set up an RLOC in QuickBooks.

 
You will first need to set up an RLOC account. This account can be of type credit card, other current liability or long term liability. Do not make it an accounts payable account. If you are unsure which type you want, consult your accounting professional.
 
Assuming it is GAAP-acceptible for your business entity, configure the account in QuickBooks as a credit card account.  This gives it the option for online banking with most financial institutions.
How to fix it

You can set up a new account to track your RLOC. Make sure to consider which type of account to use and then see setting up a new account.

  • To draw on the RLOC, i.e., borrow money from the bank, enter a deposit using the RLOC account as the From Account.
  • To pay down the RLOC, i.e. to pay back the bank, enter a check to the bank using the RLOC Account as the offset.
  • If interest charges are added to the RLOC, enter them via journal entry.

If you don't want to use a bank account to do this, try these steps:

Set up an Other Current Liability account:

  1. In your Chart of Accounts, create a new account using the type Other Current Liability. You’ll use this account to track all the money you spend in a mixed business and personal fund situation. If your company is a partnership, you may want to set up an account for each partner.
  2. Open the register on your liability account.
    • In the Chart of Accounts, browse to Activities > Use Register.
  3. In the Increase column, enter the amount you spent for your company and tab to the next line. If you also bought personal items in the same transaction, you don’t need to enter those items or amounts.
  4. In the Account field, select the appropriate expense account.
    • If the amount you are entering is for more than one expense account, click the Splits button (lower left). In the Splits window, associate the appropriate portions of the check to the appropriate accounts. (In the screen shot below, you’ll see how I did this in a sample company file.)
  5. If anything you bought is reimbursable by one of your customers, or if you want to associate the expense with a particular Customer:Job for a job report, choose a Customer:Job name.

Reimburse yourself:

If your liability account has a positive number, then your company owes you money. You can reimburse yourself in either of these two ways.

  • Write a business check for the money owed to yourself. Use Write Checks. Enter your name in Pay to the Order of and the amount owed to you. In the Account column at the bottom, select your liability account.
  • Reinvest the money in your company by moving it to an equity account. If you have only one equity account, as many businesses do, use that equity account in the following procedure. If you have several equity accounts or sub accounts, use the account you use to track investments, since you’re now investing this money in your company.

To transfer the money to an equity account:

  1. Choose Accountant > Make General Journal Entries.
  2. In the Account column, choose your liability account.
  3. In the Debit column, enter the amount remaining in the account.
  4. On the next row, in the Account column, choose the appropriate equity account from the list. (You can add this account if you don’t have one already set up for this purpose.)
  5. In the Credit column, enter the amount to be credited to this account (this will be the same amount as you entered in the Debit column).

It’s a good idea to zero out your liability account at the end of the year, since this liability is not relevant to your business’s financial health as a liability to a bank or credit card company would be. Also, if the company owes you at the end of the year, rather than you owing the company, your liability will have a negative balance, which would look odd on your balance sheet reports.

If this solution does not resolve the issue, please review other available QuickBooks support options for additional guidance. You can also read and post messages relating to your issue on the QuickBooks Community forums.

KB ID# INF13289
9/17/2014 10:39:38 PM
PPRDQSSWS401 9102 Pro 2013 9a6318