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Where do I log loan payments?


#1

I am paying off a couple of loans for my business. Now the money is off my bank account. but i dont know under which account to log it.


#2

If you have loans, you should have created an account for them. There are a couple of possible approaches. You can create a bank account named for the loan, but a bank account is normally an asset account, so you will have to remember to use negative numbers. That is, the balance of the account should be negative. A more traditional approach would be to create a liability account. That way, when you credit your payment from your regular bank account, you would debit the liability account and the loan balance will decrease.


#3

Thanks for the reply. Just one more thing, If I create a liability account, can I make it to automatically add intrest every month or will I have to add it manually?


#4

Do it manually. From your bank account, use the Spend Money function. Allocate the first line to the loan account as a payment of principal. Add a second line allocated to interest expense.