Easy accounting for loans
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Easy accounting for loans
Here's how to use transactions to enter a loan into Wave and record payments to it.
Accounting for receiving your loan:
Under the Accounting tab in the left-hand navigation menu, select Chart of ...
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This does not seem to work when doing a transfer from a Checking account to a Loan account. It does not recognize that to total outgoing is equal to the split.
Hey there @BluJ
Would you mind kindly elaborating on what the real-world use case scenario would be here? Any additional info would be super helpful in trying to help you account for a loan. Thanks in advance!
How do I account for the loan if it was issued a couple years before I began using Wave?
Below are the details:
I am new to Wave, so setting everything up now. I am entering all transactions from 2019 onward, so Jan. 1, 2019 is where my accounting in Wave will begin. I received a loan in 2017 for 25,000€ for farm machinery and have been making monthly payments. I paid the loan off early, in 2020. There was a fee of 300€ charged for paying the loan off early.
1) How do I set this loan up?
2) How do I register the monthly payments?
3) How do I register the interest?
4) How do I register the 300€ early payment fee?
Hey there @Ginja
The same principles should come into play except for your dates which will need to reflect when the loan was received.
Have you entered in your transactions as far back as 2017? If you don't wish to do this you can just enter the balance of the loan from when you created your Wave account in in 2019. Click Add income to create a transaction for the remaining balance of that loan. For the Account you’ll add the checking account the loan proceeds were deposited into, and for the Category you'll select Transfer from Bank, Credit Card, or Loan, select the new loan account you just added, and click Save.
The monthly payments with interest would be made by splitting the payment transactions as such:
I have a vehicle loan of $76 000 which includes the interest. The repayment is made in 60 equal payments which include interest. If I split my repayments in transfer to loan and interest expense... at the end of the 60 months my loan will not be paid off. Do I have to exclude the Interest when I add the Loan account?
Hey @Simon_Pierre1985! While we are able to tell you how to do something in Wave, we aren't able to necessarily tell you the right way of doing it when it comes to the principles of accounting.
I would highly recommend reaching out to a registered CPA to ensure that you don't get incorrect advice on how to do your accounting here!
When I try to split the amount of principle and interest from both the Created Transfer Log (on Checking account) and from Loan Account Payment Log side, I keep getting an Error Message "Transfer account should have an equal amount of debit and credit in the transaction currency." The transactions are downloaded from a linked account. How can we fix this?
Thank you,
NK
Hi @NKIM , thanks for reaching out. Am I right in thinking that you mean you have created an expense from the Checking account, categorized it as a transfer to the Loan account, and are trying to categorize the transfer? If so, this isn't possible, as the category is the transfer. So, you have two options.
I have tried given steps but i still get error saving message. I dont know what to do anymore.
Hey @Shaz2020 and welcome to Wave's Community Forum! Sorry to hear that you are unable to save something within Wave. Are you able to clarify what it is that you are attempting to do when you see this message? Additionally, can you provide a screenshot of the actual error code? This would be helpful for us to know when we look to help you troubleshoot this. Thanks in advance!
@BarsinA If I do as you suggested: "Click Add income to create a transaction for the remaining balance of that loan. For the Account you’ll add the checking account the loan proceeds were deposited into, and for the Category you'll select Transfer from Bank, Credit Card, or Loan, select the new loan account you just added."...wouldn't this create a deposit into the bank account that the loan proceeds were deposited into? If so, this would cause an issue during reconciliation, bc the actual loan deposit was made in earlier years, prior to me using Wave, and I am not going to add transactions for those earlier years into the system (just entering starting balances for each account as of 2019). Could you clarify?
Hi @Ginja , thanks for getting back! To confirm: yes, what @BarsinA described is correct. If you need to record the loan in Wave, you need to also record the loan deposit so that the system has a record of where the funds are coming from. You can back-date the transaction to when it occurred/the year it occurred if that helps you. You can still do this while only entering starting balances for prior years.
Just a note: For "Personal" accounts, Interest Expense does not exist as a category by default. You'll need to create it yourself.
Hello
How do I add my line of credit that I use quite frequently. Do I have to manually enter the amounts?
Hey @Marmush , maybe someone else in our Community can advise on this, but because lines of credit do fall into more complex accounting methods, I'd recommend reaching out to an accountant or CPA as I wouldn't feel comfortable advising you wrongly on how to handle this.
Is there no way to make a recurring rule such that you don't have to manually enter loans? This seems extremely cumbersome.
Second this unless I missed this function somewhere! Ability to automatically follow an amortization schedule would be handy and save time vs recording each payment manually.
Hey @GoodTaste
At this time, we do not have this type of automation available in Wave.
We're always looking for feedback from our customers on how we can improve our software with every update we make. So we appreciate you reaching out about this and you should know that our developers are always parsing through archived tickets looking for feature updates requested by our users. Don't hesitate to reach out if you have any other improvements you think we could make to our system!
Just purchased equipment worth 25000. Paid 15000 deposit via a withdrawal from my checking account. Borrowed 10000 from the equipment supplier. So the 10000 loan was never deposited into the checking account. In this case how do I enter the initial 10000 transaction.
Hi @Mowerman , because the 25k expense still needs to be accounted for as leaving your finances, you can categorize it to the Cash on Hand account. This will cover it as an income and expense that didn't actually touch your bank account.
This worked wonderfully for me! I have my loan account in and have the repayment figured out. Thank you for the help! One last question though. How do I account for or what do I do with the purchase expense. Ex: Bank puts 38,000 in checking account. We buy the dump truck for 20,000 and then spend the rest of the 18,000 on repairs and equipment for the truck. Which all of those amounts/expenses ran through the account as well.
Ok, so I'm reading a lot of Q&A that I understand... however, what about accounting for a mortgage loan on a building/property purchase using a bank? The money from the loan doesn't actually get debited to my checking account, the loan proceeds are sent/given directly to the seller/other bank... but now I have a long term loan liability that I need to account for and reflect under long term loans; the only thing I need to reflect is the liability and then the transactions for paying the loan down/off (and interest if I want to track it separately, etc.).
Hey there @KatMN !
You would account for the expenses the same way and categorize them accordingly. With that being said, I recommend reaching out to a professional accountant for the most accounting advice.
Hey @CP_PASTOR !
We have a great article in our help centre that walks you through the process of Creating a Loan Account in Wave, and the accounting for receiving and repaying the loan funds.
As always, if you need advice more tailored to your business's specific needs we recommend you get in touch an accountant or bookkeeper who can provide information based on your business’s situation. The Wave Pro network connects you with accountants and bookkeepers who are familiar with Wave – you can check that out here: https://www.waveapps.com/pro-network/
Hey @JKais !
It looks like one of our support agents assisted you with this via your ticket request. If you have any other questions, feel free to continue your email thread.
I need help. I crowdfund money to farm and at harvest, I pay with interest (profit share farm income). Hence all the invoices I technically loans not an income. How do I capture invoices as loans instead of income for sales?
Hey @Nana_Prempeh , I'm afraid that our invoices are not set up to capture loans instead of income. I'd advise that you read a little bit more about how to account for loans in our Help Center article in the first post in this thread if you haven't already.
@AlexL I read about how to account for loans in the Help Center. However, if I use that method, there is no way of notifying the person providing the loan (sponsor/bank/funder) about the receipt and capture of the loan in our accounts. Is there a way to notify the loan provider without creating an invoice in Wave?
Hey @Nana_Prempeh ,
Thanks for taking a look at our Help Centre Article!
As it turns out, you're only able to send Receipts through Wave when the payment is connected to a specific Invoice, not when only transactions are created. This means that it's not possible to notify loan providers through Wave when a payment has been made, without creating an invoice I'm afraid.
hello, I have a question. If I have a loan from Square but they take the payment from each transaction that I do. How can i record it if they take take money from each transaction? how do you split it in an income transaction? and if its correct how do you split it becuaes when I try to do it only shows discount and fees but no expenses?
thank you.