Here's how to use transactions to enter a loan into Wave and record payments to it.
Accounting for receiving your loan:
- Head to Accounting > Chart of Accounts.
- Scroll down to Liabilities & Credit Cards and select Loan & Line of Credit.
- Edit the name so you can easily recognize the loan. Click Save.
- You need to create a transaction that indicates the availability of the loan funds, so head to the Transactions page. Click Add income to create a transaction.
- Under Account, choose the bank account the loan was deposited into. Under Category, choose Transfer from Bank, Credit Card, or Loan, then, select the new loan account you just added. Click Save.
If you’ve connected your bank account to Wave, it will import the deposit transaction showing the loan funds available in your checking account. Instead of creating a new transaction, you can simply categorize the imported transaction to your new loan account.
You’ve accounted for your loan in Wave!
Accounting for loan repayment:
You'll need to create a new expense transaction or, if your bank account is connected, categorize the imported transaction. For example, if you made a loan payment of $100, where $5 of the payment was interest and $95 was principal, you can categorize the expense this way:
- Head to the Transactions > Add expense. Under Account, choose the bank account you paid the loan off from. Select the Date of the payment, and enter $100 into the Total amount box. Or, find the imported expense transaction in the bank account, and select it to open the transaction details pane.
- Below the Category dropdown, click the Split this withdrawal button.
- In the Category 1 dropdown menu, select the loan account, and enter $95 into the Amount box.
- In the Category 2 dropdown menu, select Interest Expense, and enter $5 into the Amount box.
- Click Save, and you're done!
We hope this article gives you the basic info you need to start tracking your loan in Wave! As always, however, if you need more specific information we recommend you get in touch with an accountant or bookkeeper who can provide information based on your business’s situation. You can check out our in-house accounting services here.