How to tag bank transaction of a loan

[BidderGroup]

Please can you tell me how to tag a loan.
The loan will have no interest paid on it.
I have already tagged the payment of machinery to an invoice for the total amount that came out of the bank account but I can not figure out how to allocate the loan.

Also the invoice for the purchase includes VAT I’m not sure if this has any relevance to the loan.

[QFMathew]

Hi @BidderGroup

To log a loan and it’s repayments, please take a look at these posts:
http://community.quickfile.co.uk/t/how-to-record-loans-correctly/4294
http://community.quickfile.co.uk/t/how-do-i-log-a-loan-and-repayments/8438

If you need any further help, please let me know.

In terms of VAT - are you VAT registered? If not, VAT shouldn’t be recorded. Otherwise, just record it as part of the purchase as you normally would.

[AnythingLegal]

Carrying on from this I took a loan to pay a VAT liability - what would be the way to record this please?

[QFMathew]

Hi @AnythingLegal

Was the loan taken out by your company, or by you personally?

[AnythingLegal]

loan taken out by the company

[QFMathew]

You would record this as another type of loan as per the posts above.

For reference, my colleague posted this guide a while back:

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. [image] Set the opening balance of £10,000 (minus). [image] 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…

[AnythingLegal]

thanks for this - it is helpful as I have been recording previous loans incorrectly!

however is there a way to record it to show that it is for payment of VAT liability?

[QFMathew]

To record a VAT payment, you would tag an outgoing payment as Tax Payment to HMRC, and select VAT Liability from the dropdown list.

I would assume that the money from the loan went straight into your current account, in which case you would essentially have 3 transactions:

1. In the loan account, you would have the “money out” transaction equal to the loan value (to show the loan as a liability). This would be tagged as a transfer to your current account

2. You would have the matching money in transaction in your current account - this would be automatically created and tagged from the above transaction

3. Lastly, you would have the money out transaction from your current account tagged as a VAT payment.

The last 2 points should mirror your actual bank account (the loan funds being paid in, and the VAT payment going out).