do i have to show where exactly my sbaloan goes to

by heather
(08083)

I'm getting an sba loan however I am using some of the money to pay off credit card that I used to purchase equipment for my business. DO I need to keep track of everywhere the money is going?

like show that the credit card got paid off and what equipment was purchased with the credit card?

======================================

You always need to show in your accounting what business cash was used and for what.

Is the credit card a personal card or a business card? If it's a personal card, then you would write yourself a check, and post it as a purchase of equipment.

If it's a business card, you would write a check to the credit card company, but still post the payment as a purchase of equipment.

If you got a business loan for $50,000, say, and you paid off a $5000 credit card ( for equipment) and used $30,000 to buy other equipment and the final $15,000 was used for cashflow, you would need to enter this in your accounting as such:

Cash in Checking(asset).....$50,000

Note Payable-SBA Loan (liability)........$50,000

--to record the SBA Loan proceeds being deposited into your business checking account.


Equipment(asset)............$30,000

Cash in Checking(asset)..................$30,000

--to record the subsequent purchase of equipment using the loan proceeds.

Equipment(asset).............$5,000

Cash in Checking(asset)................$5,000

--to record the purchase of equipment bought on a credit card.


Hope that helps!

Kathy

Click here to post comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Ask the Expert!.