Ryan Vaughn shows how to record personal credit card payments and business loans in QuickBooks. For a personal American Express card, add it as a vendor and categorize as a distribution. For an SBA loan, create a long-term liability account and split payments between principal and interest, using Opening Balance Equity for loans from prior years.
Here I have a payment to an American Express card that is not on the books because it's a personal card. We really want to avoid doing that. It would be better to transfer the money to a personal account and then pay off the credit card or pay down the credit card. But in this case, we didn't do that, so we're going to click categorize. I'm going to go ahead and just add American Express as a vendor, and then this is technically a distribution because it's a payment to a personal card. All right, and here I have a loan payment. The loan is not yet on the books, and I'm going to show you how to add that. So we can go ahead and just categorize this payment and put it directly to the loan. So let's say it's in payment to SBA, and it's possible that The payments are interest only at this point. A lot of them are, in which case we can just leave it as an interest expense, but we would still want to have that loan on the books. We're going to call this SBA loan, assuming that that isn't an interest-only payment, and the account type here should be a long-term liability. And we can name it whatever it is. So if it's SBA loan like it is here, we'll name that SBA loan. If it was, let's say, an auto loan for a vehicle that we are— that is a business vehicle, we would put maybe note payable and then whatever the bank name is for that vehicle. I'm just going to save and close here. Now let's just say for the sake of this video that this is a principal and interest payment. So I'm going to have, let's say, $500 is principal and then $79 is interest. So I'm going to change the category here to interest expense for $79. And apply and accept. Now what's going to happen is that payment, that $500 that went to principal, is now going to reflect as a— it's going to show that that SBA loan has a negative balance right now. So if I were to go to my balance sheet, you can see SBA loan has negative $500. If there was a deposit on my bank account to show where that loan started, let's say it was a $50,000 loan, we would have $50,000 somewhere here on that received line and we would record that to the SBA loan. Now let's say I am starting my books at the beginning of the year but really I took out this loan last year. You'll want to work with your accountant or create a journal entry To make sure that that's properly recorded for last year. So if I, for example, had received that loan December of last year, I would make a journal entry. And let's say I received them on 12/31 of last year. Let's do a loan for $50,000. And usually we would see that hit the bank account, but that's going to throw off our balance for the purposes of this video. So what I'm going to do is put it to opening balance equity. Truth be told, I hate using this opening balance equity account Because it's not telling the best story. For the sake of this video, we're going to use it, but usually you want to know where that loan went. Maybe you used the funds to pay directly for a certain product, or if you use it to buy a vehicle, for example, the account here would be, you know, the vehicle itself. We're going to use opening balance equity for today, but it's really an account that we should avoid using. Okay, so then let me just show you. So that now changed my balance to a positive balance, which is what we want to see. So we have the $50,000 minus the $500 payment, giving us a balance of $49,500. Okay, let's go back to adding these transactions.
