This article addresses the concept of maintaining your various types of business-related loans in your bookkeeping system.

Small businesses will typically be in debt and thus will need to maintain some sort of loan account in their bookkeeping ledgers. There are indeed various reasons why a small business would even carry a loan in the first place, but here are some of the more typical scenarios:

• Vehicle Loan
• Lines of Credit
• Overdraft
• Small Business Administration
• Construction
• Equipment
• Receivables

Maintenance on these loans in your bookkeeping should be typically completed on a consistent basis, such as monthly or quarterly or even annually, depending on the type of loan.

The following is a list of loans I would recommend to maintain at least on a monthly basis in your bookkeeping:

• Lines or Credit: these are never consistent as to exactly when you will need the money, but always try to reconcile these accounts when you do make draws and pay interest.
• Overdraft: same reason as lines of credit.
• Construction: draws are typically made for these types of loans, and as a home builder, you will want to know your home building costs as often as possible.
• Receivables: these are loans taken in exchange for your receivables. There are different types of receivables loans, but, in any case, you want your ledger updated often here as nothing is ever consistent in this type of loan world.

All of the remaining types of loans in the first list above, (vehicle, SBA and equipment) typically are a very consistent monthly payment plan and thus, can possibly wait until perhaps the end of the year to reconcile these types of loan accounts; these means that there will be an interest-recognition journal entry created to true up the loan account to, most likely, the December statements.

Note: AccuraBooks is a bookkeeping firm only, so please consult with your C.P.A. for verification and clarification about the contents of this article.