Accounting for loans

In accounting a loan is treated much like an overdrawn bank account. On the assumption that you are just setting up QuickFile and have a loan of £10,000 (outstanding), you would create a new “Loan” type bank account in Quick File to represent this.

Set the opening balance of £10,000 (minus).

If this is a brand new loan you don’t need to set the opening balance, instead locate the deposit for the loan on your current account and tag this as a bank transfer to the loan account. This will have the same effect as moving the loan account into an overdrawn state so it will show as a liability on your balance sheet.

Now whenever you make payments against this loan from your main bank account, tag the transactions as bank transfers to the loan account.

Then select the loan account.

Obviously part of the repayment is likely to be interest, to account for the interest go into the loan account and enter the amount of interest (as money out), you can do this whenever you like, not necessarily when you make repayments. Now tag that amount as something else not on the list.

Tag this to loan interest paid.

When the loan is repaid this account should balance out at zero. Until that point it will show as a liability on your balance sheet. You can also use a the reverse process for tracking loans made by you or your company to other entities.

Hope that helps!