Company Loans

If your company has a bank loan, to ensure your accounts are accurate, you need to record this. You can do this by recording the receipt of the loan, the repayments you make and any interest charges you pay.

To create the loan nominal ledger accounts

If you haven’t already done so, you must create a nominal ledger account for the company loan as a liability and another for the loan interest payments as an overhead. If you’ve already done this, then please refer to the following section.

  1. Click Settings, then Business Settings then in the Financial Settings section click Chart of Accounts.
  2. Click New Ledger Account and complete the following information:
Included in Chart Leave this selected.
Ledger Name* Enter a name for the account, for example, Loans.
Display Name* Enter the display name, for example, Loans.
Nominal Code* You can enter any nominal code here as it’s the category that determines where it appears on your balance sheet. If you want to use a number within the default liability range, enter a code that’s not already in use between 2000 and 2999, for example, 2301.
Category * Choose Current Liability.
Category Group This defaults to Liability and you can’t change this.
VAT Rate Choose No VAT.
Visibility Leave the defaults selected.
  1. Click Save. Click New Ledger Account and complete the following information:
Included in Chart Leave this selected.
Ledger Name* Enter a name for the account, for example, Loan interest paid.
Display Name* Enter the display name, for example, Loan interest paid.
Nominal Code* To use a code in the default overheads range, enter a code between 6000 and 9999, for example, 7903.
Category * Choose Overheads.
Category Group This defaults to Expenditure and you can’t change this.
VAT Rate Choose No VAT.
Visibility Leave the defaults selected.
  1. Click Save.

*Field compulsory.

To record receipt of the loan

In the following example, the loan amount is £5000.

  1. Go to Banking, click the required bank account, then click New Entry and from the drop-down list click Sale / Receipt.
  2. Click the Other Receipt tab and enter the following information:
Date Received* Enter the date you received the loan.
Amount Received* Enter the total amount you received.
Reference If required, enter a reference.
Details Enter any additional details as required.
  1. Enter the information required to record the loan, for example:
Ledger Account Details VAT Rate Total
Loans (2301) Bank loan received No VAT 5000.00
  1. Click Save.

You’ve now recorded receipt of the loan.

*Field compulsory.

To record the loan repayment

Each time you make a repayment, you must record this in Accounting. The loan repayment appears on the Balance Sheet Report and reduces the balance on the Loans nominal ledger account. The interest appears on your Profit and Loss Report and increases the value on the Loan interest paid nominal ledger account.

In the following example, the loan repayment is £212.50 per month, which is split into £200 for the loan repayment and £12.50 interest payment.

  1. Go to Banking, click the required bank account, then click New and from the drop-down list click Purchase / Payment.
  2. On the Other Payment tab enter the following information:
Date Paid* Enter the date of the repayment.
Amount Paid* Enter the total amount you’re paying, which is £212.50.
Reference If required, enter a reference.
Details Enter any additional details as required.
  1. Enter the information required to record the loan repayment, for example:
Ledger Account Details VAT Rate Total
Loans (2301) Loan repayment No VAT 200.00
Loan interest paid (7903) Loan interest No VAT 12.50
  1. Click Save.

You’ve now recorded your monthly loan repayment and interest payment. You should repeat this procedure each month until you’ve repaid the loan.

*Field compulsory.