USA Pre-LLC expenses


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Hi Wonderful Accounting friends.

I just started a business (an LLC) and have had quite a few expenses before starting up. How do I get paid back for these in quickbooks?
2nd question. I would like to Loan my LLC $20,000 @ 7% interest, where do I enter that?

Thanks for the help. This newbie just wants to get it right :)

Joseph
 
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Steve-LevelUp

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The loan is an easy one. Ensure the loan agreement is documented and clear, including interest, repayment terms, etc.

Next, you can create a journal entry.
Debit Cash $20,000
Credit Loan Payable $20,000

At the end of every period, you would record the necessary interest expense (eg, monthly = $20,000 x 7% / 12 = $116.67).
Debit Interest Expense $116.67
Credit Loan Payable $116.67

If you pay the interest monthly, then recording the payment.
Debit Loan Payable $116.67
Credit Cash $116.67.

If you do not pay monthly, then the interest accumulates, and the next months interest charge would be on the original loan, plus all accumulated unpaid interest to date (also called compounded monthly).

I hope that helps.
 
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