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QuickBooks accounting software not just allows you to organize bookkeeping and accounting records but also enter vehicle purchases such as car loans. In addition, you can record the depreciation cost and track vehicle mileage. If you are planning to record a vehicle purchase, learn with us how to book a car loan in QuickBooks Online.
Through this simple guide, we will teach you easy ways to enter, record, or set up the vehicle purchase or car loan in QuickBooks Online. Let’s dive in.
Setting Up a Car Loan in QuickBooks Online
Car loans or vehicle purchases can be recorded in two different ways. You can either save it as a loan or as a fixed asset in your QuickBooks account. If required, you can add your vehicle to the business vehicles list and track expenses. However, you have to create a fixed asset account in order to track items. This will also assist you in tracking and tally business health. Users should know both the business miles and total miles to deduct vehicles accurately on a tax return.
As stated earlier, you can set up the vehicle loan as a loan and fixed asset. Here, we will explain both the procedures one after one. Let’s read ahead.
How to Set Up a Car Loan in QuickBooks Online with a Simple Loan Method?
To record the car loan, one has to create a Liability account. After that, you can continue creating the Journal Entry(Import Journal Entries into QuickBooks) for your car or vehicle loan. Let’s know more about how to book a car loan in QuickBooks Online.
Prepare a Liability Account
- Launch “QuickBooks Online” on your computer.
- Now, navigate to the “Gear” icon located on the top.
- Then, choose the “Chart of Accounts” menu.
- Here, select the “New” option located on the top right.
- When you see a new window, you can choose either “Long Term Liabilities (More than One Year)” or “Other Current Liabilities (One year)”.
- Based on your preference for “Long Term Liabilities” or “Other Current Liabilities ”, you can select the “Detail Type”.
- At this point, you need to add the relevant name to your account. Make sure you choose a name that will be easy to recognize vehicle loan, e.g., car loan or bank name.
- Thereafter, you can skip the “Unpaid amount” section. Although, you need to fill this in later.
- Now, you can review all the details that have been specified. Once done, click the “Save” button.
Create a Journal Entry
- Select the “+New” button.
- Then, click on the “Journal Entries” option.
- Now, you can pick the liability account which you have created before. To select the liability account, you need to click on the “Account” drop-down menu.
- After that, move to the “Credit” field and add the amount of the car loan.
- Once done, click on the “Asset” account that you wish to link with your loan amount.
- Then, add the loan amount again. But, this time, this should be in the “Debit” field.
Now you have learned how to record car loan in QuickBooks Online. All you have to do is create a liability account and enter the loan amount while creating the journal entry. Along with this, you have to enter the documents, registration fees, and down payments. Also, make sure that the debit and credit equal to 0 in the Journal Entry.
Tip: In case you want to record the depreciation, you can follow the same steps we have discussed above. Just make sure that you select the Depreciation Account in the place of the Loan Term Liability account.
How to Enter a Car Loan in QuickBooks Online using Fixed Asset?
By creating the Fixed Asset, you can also set up the vehicle loan in the QuickBooks account. Once you create the Fixed Asset, you can enter the information for purchasing a car. This will help you to successfully set up the car loan in QuickBooks. Have a look at the following steps to learn how to book a car loan in QuickBooks Online:
Make a Fixed Asset Account
- Log in to your “QuickBooks” account.
- Then, click on the “Chart of Accounts” menu.
- Click the “New” button.
- Here, you can choose the “Fixed Asset” option using the “Categories” drop-down menu. In case you don’t find the fixed asset account then click on any other closest account to continue.
- After this, you can add the name and enter a brief description for your account. Make sure you use easy names that can be recognized later, e.g., Car or Truck. You can even create a sub-account depending on the name of the car model.
- Now, moving on to the “Details Type”, enter the details for your newly purchased car.
Add the Details for Purchased Vehicle
- To track the depreciation of your car, you can click the “Yes” or “No” button depending on your choice.
- In case you choose the “Yes” button, QuickBooks will create a depreciation sub-account automatically for your vehicle.
- At this moment, you can add the amount of the car in the “Original Cost” section. In case you are only recording the loan then you can skip this field and leave it blank.
- After you add all the relevant details, you can click the “Finish” button.
Once you are done following these steps, you can easily set up the car loan in QuickBooks using the Fixed Asset. All you have to do is to create a fixed asset account and enter the car details such as the original cost of a car.
If required, you can enter the vehicle list in QuickBooks from the Customer & Vendor Profile List. In addition, you can set up and track the mileage of your vehicle in QuickBooks.
To Wind Up
Recording the car loan in QuickBooks is pretty easy. All you have to do is create a liability account and journal entry to add the loan amount in the credit and debit fields. You can even use fixed assets to learn how to enter car loans in QuickBooks. For that, you have to create a fixed asset account and record the necessary details related to your vehicle. We hope you find this guide easy to understand.