How do I Record a Short Term Loan to the Firm?

  • Updated
Short term or temporary bank loans are expected to be paid back in under one year's time. 
If your firm has taken out a short term loan from the bank or any other third party entity:
  1. Navigate to the Accounting section and scroll down or select the Accounting Reports filter under the tab bar,  then click on Chart of Accounts.

  2. Click + in the action bar, then select New Account from the drop-down list.


  3. The New Account modal displays.

    • Create a "Short Term Liability - [EntityName]" account or optionally create a "Short Term Liability Principal Repayment - [EntityName]" account (contra liability account)
      • Select Short Term Liability from the drop-down list in the Account Type field.
      • Enter an Account Name, then select the checkbox if the account Is Sub-Account.
      • Enter an Account Number.
      • Select a Department from the drop-down list.

  4. Create a Journal Entry.

  5. Record the borrowing of the loan by debiting the Operating Bank Account that the money was deposited into and crediting the Short Term Liability Account.

  6. Record the repayment of the loan:
    • If a check is not needed in order to pay the loan:
      • Create a Journal Entry - Debit the Short Term Liability Account / Short Term Liability Principal Repayment Account and credit the Operating Bank Account that the money was taken out of.
    • If a check is needed to pay for the loan:
      • Create a check using the bank account the money is coming from and the Short Term Liability Account/Short Term Liability Principal Repayment Account created as the Assigned Account.
Please make sure to consult with your accountant.

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