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How to enter a loan and record its payments in QuickBooks Online
A loan payment is not an expense. Part of it reduces what you owe and part of it is interest. Recording it as one expense line overstates your costs and hides the loan balance. Here is the clean way, starting with entering the loan.
Updated 2026-10-06. Steps refer to QuickBooks Online and link to Intuit’s own help articles.
| When the loan is paid off | Account type | Detail type |
|---|---|---|
| By the end of the fiscal year | Other Current Liabilities | Loan Payable |
| Not within the fiscal year | Long Term Liabilities | Notes Payable |
Enter the loan as a liability account
Go to All apps, then Accounting, then Chart of accounts, and select New. If you will not pay the loan off within the fiscal year, create a Long Term Liabilities account with the Notes Payable detail type. If you will pay it off by the end of the fiscal year, use Other Current Liabilities with the Loan Payable detail type. Name it plainly, such as Truck loan or Line of credit.
Then the opening balance. For a new loan that was deposited to your bank, Intuit says to leave the Opening Balance at $0. For a loan you have partly paid back, pick the date you want to start tracking from and enter the balance on that date. Select Save.
Record the money you received
If you entered an opening balance other than $0 and the bank feed also shows the loan deposit, Intuit’s article adds a journal entry: debit the loan account for the opening balance amount and credit Opening Balance Equity for the same amount. If the loan was deposited into your business bank account, the bank feed will also show the deposit. Match that deposit to the loan, not to income. A loan deposit recorded as a sale is one of the most expensive mistakes a first-year business makes at tax time.
If you are unsure how to enter the opening balance for your situation, ask your accountant before the first payment goes through. It is a two-minute question now and a long cleanup later.
Split each payment between principal and interest
For each payment, create a check or expense from the bank account. Put the principal portion against the loan liability account and the interest portion against an interest expense account. Your lender’s statement or amortization schedule shows the split for each month.
The loan account balance now goes down with every payment and should match the lender’s statement. The interest expense account collects what the borrowing actually cost, which is what your accountant needs for the return.
Check it once a quarter
Compare the loan account balance in QuickBooks with the balance on the lender’s statement. If they differ, a payment was probably recorded as a plain expense or the split was wrong. Fix it in the month it happened. This is also the check a lender or buyer will do first if you ever apply for more credit or sell the business.
If you use QuickBooks Desktop
The idea is the same. Intuit’s Desktop article uses an Other Current Liability account for a loan payable within a year and a Long Term Liability account for one payable over more than a year. A cash loan goes in as a deposit with the loan account in the From account column. Each payment is a check with two lines: the principal to the loan account and the interest to an expense account.
Questions
Is a loan payment an expense in QuickBooks?
Not all of it. Part of each payment reduces what you owe and part is interest. Put the principal against the loan liability account and the interest against an interest expense account.
What account type do I use for a loan in QuickBooks Online?
If you will not pay the loan off within the fiscal year, a Long Term Liabilities account with the Notes Payable detail type. If you will pay it off by the end of the fiscal year, Other Current Liabilities with the Loan Payable detail type.
What opening balance do I enter for a loan in QuickBooks Online?
For a new loan that was deposited to your bank, Intuit says to leave the Opening Balance at $0. For a loan you have partly paid back, enter the balance on the date you want to start tracking from.
Is a loan deposit income?
No. When the loan deposit shows up in the bank feed, match it to the loan, not to income.