Recording a Personal Loan to Your Business in QuickBooks Online (USA)
If you, as the business owner, take a personal loan and transfer the funds into your business account, the money represents either:
- An owner/shareholder loan payable (the business owes you back).
- An owner contribution (you invested your own capital permanently).
The correct classification depends on whether you expect repayment.
Step 1: Decide Based on Your Intention
| Your Intention | Record As | Account Type | Typical For |
|---|---|---|---|
| You plan to be repaid | Shareholder/Owner Loan | Liability → “Loan from Owner” or “Due to Shareholder” | S-Corp or Corporation |
| You don’t expect repayment | Owner Contribution | Equity → “Owner’s Contribution” or “Paid-in Capital” | Sole Proprietor or Single-Member LLC |
Step 2: How to Record in QuickBooks Online
Option 1: Record as Owner (Shareholder) Loan
Use this if the business will repay you.
- Create a liability account:
- Settings → Chart of Accounts → New
- Account Type: Liabilities
- Detail Type: Loan from Shareholder or Other Current/Long-Term Liability
- Name: “Loan from Owner” or “Shareholder Loan Payable”
- Record the deposit:
- + New → Bank Deposit
- Received From: Your name
- Account: “Loan from Owner”
- Amount: e.g., $20,000
- Result in books:
- Bank balance increases
- Liability increases
- Repayments can later be recorded as checks or expenses → Account: Loan from Owner
Option 2: Record as Owner Contribution (Capital Investment)
Use this if you do not expect repayment.
- Create an equity account:
- Settings → Chart of Accounts → New
- Account Type: Equity
- Detail Type: Owner’s Contribution or Paid-in Capital
- Name: “Owner Contribution”
- Record the deposit:
- + New → Bank Deposit
- Received From: Your name
- Account: “Owner Contribution”
- Amount: e.g., $20,000
- Result in books:
- Bank balance increases
- Equity increases
- No repayment expected
Step 3: Loan-Related Expenses
Personal loans are in your name, not the business. Therefore, the business cannot deduct:
- Personal loan interest
- Personal loan origination or bank fees
If you personally pay interest and choose not to seek reimbursement, keep it off the books. If the business reimburses you, record it as an Owner Draw, not as a business expense.
Example Transactions
| Transaction | Debit | Credit |
|---|---|---|
| Deposit $20,000 to business (if loan) | Bank | Loan from Owner (Liability) |
| Deposit $20,000 to business (if contribution) | Bank | Owner Contribution (Equity) |
| Business repays $5,000 (if loan) | Loan from Owner | Bank |
| Business pays your personal loan interest | Owner Draw | Bank |
Best Practices
- Sole Proprietor / Single-Member LLC: Use Owner Contribution for simplicity.
- S-Corp / C-Corp: Use Shareholder Loan and document repayment terms if applicable.
- Keep personal loan records separate from QBO; the business is not the borrower.
- Consult your accountant before year-end to confirm classification for tax purposes.