Lynda ArtesaniLegal Accountant and Data Migration Specialist at The Proper Trust

The DIY Loan Mistake - Counting Loans as Income

16 Sept 2025 · 1 min

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0:33

In this brief video, the speaker highlights a common bookkeeping error where freelancers or small business owners mistakenly record loan proceeds as income because the money appears as an inflow. He explains why this is problematic and emphasizes the need for proper accounting practices. He advises that, depending on the specific practice area, professionals should proactively track client-related costs and any advances taken on personal credit lines, and ensure that billing is set up correctly to reflect true revenue versus borrowed funds. The overall message is to adopt disciplined financial tracking and billing methods to avoid misrepresenting loans as earnings.

Chapters

I've seen the DIY moment where I've gotten a loan. Guess what? Guess where you put that loan? You counted it as income because it was money coming in. You didn't know how to record it correctly. Ah. So that's a problem. I think for best practices in these situations for tracking and managing client costs and advances on your own credit line, you have to be prepared depending on your practice area. You have to be prepared for what you're going to incur. And you have to get your billing just right too.