I have setup a company and funded it from my personal account (both through cash and bank). I have recorded the receiving as owner’s equity and performed a journal entry to push it in opening balance.
Example: Created receipt → owner equity & then journal entry → equity to opening balance.
However, I now wish to have the personal funds under liabilities loan account. I am aware about how to create a loan in chart of accounts but want to know how to do the changes either in receipts or journal entry to properly reflect the loan, equity and opening balance.
Steps would be highly appreciated.
there is no journal entries involved in setting up the starting balance of owner equity.
you should create a capital account and under Settings set the starting balances for the capital account created.
read the guide on Starting balances.
According to your sequence of events, you should not be using starting balances at all. Starting balances are only used when migrating to Manager from a previous accounting system. You did not have a previous accounting system. You should have entered a receipt (which will debit whatever cash or bank account you put the money into) and allocated that receipt to Owner’s equity (which will credit your equity account). At that point, you are done.
If you have an Owner’s equity account, you should not have a capital account. If you have a capital account, you should not have Owner’s equity. The choice is yours, but may be influenced by local practices. It is one or the other, however.
There is no accounting need to create a loan. When you are the sole proprietor, any credit balance in an equity account, regardless of type, is owed to you by the business. That is the amount you have invested in the business. If you want to pay yourself back for your investment, you can do so whenever you have funds available on whatever schedule is convenient. That is a draw. Standard accounting practice is to consider loans to a proprietorship as being owed to outside entities.