May i know the best practice to handle company loan (say RM 12k over a period of 12 months). Thanks
Hi Goh Kha Chai,
Thanks for the question. The following would be our recommendation on accounting for a company loan.
The first step would be to record and account for the new bank loan you've received. To do so, we'll use the deposit function (Transactions > Deposit).
You'll be required to first create a new account under your non-current liabilities as per the example below:
*Note: You may add additional info about your bank loan in the description field.
Once you've created the Bank Loan account, you are now ready to record the transaction.
Date*: To indicate the date you received the loan funds
Deposit To*: The bank account where the funds are kept
Account: Select the Bank Loan account you've created.
With that, you've successfully recorded the Bank Loan in your non-current liabilities and your Bank amount which can be reviewed in your Balance Sheet report.
The second part would be to record the repayment for the loan on a monthly basis. To do so, we'll use the withdrawal function instead (Transaction > Withdrawal).
You'll be required to first create a new category under your expenses as per the example below:
Once you've created the Loan Interest category, you are now ready to record the transaction.
Date*: Indicate the date the repayment is made.
Withdraw From*: Indicate the source of the funds for the repayment.
Account*: You'll need to do a little bit of calculation to separate the loan interest fee from the repayment.
In the example of RM12,000 over 24 months with a rate of 6.88% pa, the total repayment is RM568.80 [RM500 bank loan + RM68.80 loan interest].
With this, you'll effectively reduce the outstanding liabilities while also recording the expenses incurred from the loan interest.
Hope this helps!Comment actions
Actually i need help to setup for my staff personal loan, amount RM 10k and repayment monthly (i should have use "personal loan "as subject matter, sorry). but i supposed I still can use your clearly illustrated procedure for company car loan?.
Thanks again for your fast and good support as usual.
Yes, you may still use the guide to account for a car loan. As for a personal loan to an employee, it'll actually be the opposite whereby a withdrawal transaction will be used to record the loan as a non-current asset. As and when you receive the repayment from your employee, you'll use the deposit function to reduce the outstanding assets and any interest on that loan will be recorded under your 'other income'.
Would you like a full guide on this as well?
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