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Title: How to Enter Business Loan Fees in QuickBooks Online – A Step-by-Step Guide
Managing your business finances accurately is crucial, especially when dealing with loans and associated fees. If you’re using QuickBooks Online, one of the most common questions you may have is how to enter business loan fees in QuickBooks Online properly. Whether it’s origination fees, interest charges, or processing costs, tracking these expenses correctly ensures your books stay clean and your taxes accurate.
In this guide, we’ll walk you through everything you need to know about entering loan-related fees in QuickBooks Online. We’ll also share tips to avoid common mistakes, improve your record-keeping, and stay audit-ready.
Why It’s Important to Track Business Loan Fees Accurately
When your business takes out a loan, you’re not just receiving money—you’re also entering a financial agreement that includes fees, interest, and repayment terms. Recording these correctly is important for:
- Accurate expense tracking
- Correct loan liability reporting
- Clean profit & loss statements
- Better cash flow forecasting
- Tax deductions on allowable fees and interest
That’s why understanding how to enter business loan fees in QuickBooks Online is vital for small business owners and bookkeepers alike.
Types of Business Loan Fees You May Encounter
Before we dive into the steps, it’s helpful to know the common loan-related fees and where they typically go in your chart of accounts:
- Origination Fee – A one-time fee deducted from the loan amount.
- Processing or Underwriting Fees – Administrative charges.
- Interest Charges – Periodic costs based on the loan balance.
- Late Payment Fees – Charged if repayment is delayed.
- Prepayment Penalties – If you pay off the loan early.
Each of these should be recorded appropriately in QuickBooks Online either as an expense or part of the loan liability adjustment.
Step-by-Step: How to Enter Business Loan Fees in QuickBooks Online
Let’s break down the process based on different scenarios:
1. Entering a Loan as a Liability
First, set up your loan account in QuickBooks Online:
- Go to Settings > Chart of Accounts
- Click New
- Choose Liability as the account type (usually “Long-Term Liabilities” unless it’s under 12 months)
- Name the account (e.g., “Business Loan – ABC Bank”)
- Save and Close
2. Recording the Loan Deposit (Net of Fees)
If your loan amount was $50,000, but you only received $48,000 due to a $2,000 origination fee:
- Go to + New > Bank Deposit
- Select the bank account receiving the funds
- Enter the total loan amount ($50,000) under Received From
- Choose the liability account you just created
- Use “Other Current Liability” or the correct liability type
- Add a second line:
- Received From: The lender again
- Account: Loan Fees (Expense account)
- Amount: Negative $2,000 (the origination fee)
- The net deposit will show $48,000
???? Tip: Make sure you have a specific expense account in your chart of accounts for loan fees.
3. Creating a Loan Fees Expense Account
If you don’t already have one:
- Go to Settings > Chart of Accounts
- Click New
- Category: Expenses
- Detail Type: Bank Charges or Other Business Expenses
- Name: “Business Loan Fees”
- Save
This keeps your fees separate from general bank charges, helping with more detailed reporting.
4. Entering Monthly Interest or Processing Fees
If your lender charges monthly interest:
- Go to + New > Expense
- Payee: The lender’s name
- Payment account: Bank or credit account used
- Account: Interest Expense or your designated expense account
- Amount: Enter the interest charged
- Date: Match your statement or payment date
- Save and Close
Repeat the process for any processing, late fees, or penalties, but be sure to classify each correctly.
5. Making Regular Loan Payments
Loan payments typically consist of both principal and interest. Here’s how to split and enter them:
- Go to + New > Expense or Check
- Payee: The lender
- Account: Your bank account
- Line 1:
- Account: Loan Liability account (for principal)
- Amount: Enter the principal portion
- Line 2:
- Account: Interest Expense account
- Amount: Interest portion
- Line 3 (Optional):
- Account: Business Loan Fees (if a service fee is added)
- Amount: Enter fee
- Save and Close
???? Pro Tip: Use your amortization schedule to track what portion of each payment is principal vs. interest.
Common Mistakes to Avoid
❌ Recording the loan as income – Loans are liabilities, not revenue
❌ Forgetting to track fees separately – Blending them with the principal inflates your liability
❌ Misclassifying interest as principal – Leads to inaccurate tax reporting
❌ Not creating a custom account for loan fees – Makes tracking and deductions harder
Final Thoughts: Why Knowing How to Enter Business Loan Fees in QuickBooks Online Matters
Learning how to enter business loan fees in QuickBooks Online ensures your records are clean, organized, and compliant with tax laws. Proper categorization of loan deposits, fees, and interest allows for better financial analysis, cash flow tracking, and reporting.
Whether you’re managing a startup or an established small business, QuickBooks Online makes it easy to stay on top of your financial obligations. Just remember to record everything accurately, review your statements monthly, and consult an accountant for tax-specific advice.
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