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In this QuickBooks Pro 2017 training video tutorial for beginners, we’ll continue with setting up the chart of accounts in QuickBooks Pro.

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Hey. Welcome back. Let’s go ahead and finish up talking about the Chart of Accounts, so this is part 2. When we left off we were talking about liabilities. I want to go ahead and set a couple of those up for you so you can see how liabilities work.

We’re going to go ahead and use a car payment as an example. We’ll set up the loan for the automobile. I’m going to right click and choose New and something that might be a little confusing is they have a loan option here but if you choose this it assumes a short term liability. So if you know that you have three years left to pay on the vehicle you’re looking for a long term liability. The ones that are not on this list are listed here. So you can see long term liability. And I’ll choose Continue.

Now you can name the account anything you like. I’m going to say Auto Loan. If you wanted to name it your bank name you can certainly do that. If you happen to have a couple of loans at the same bank then you might want to put the last few characters of the account number at the end, whatever works for you.

You do need an opening balance and this is going to be the balance that you owed as of the start date of your company file. So if you still had three years left to pay on the vehicle you want to get that particular figure. Let’s say that it’s $15,000 and again we’ll use our start date or end date in this case as October 1 and we’ll click OK and Save and Close. And now you’ll see you have an Auto Loan and if you look over here it’s a long term liability and you owe $15,000.
Every time you make a payment to pay this auto loan make sure you put it to this account. Something I see often is people will make their car payment and they’ll put it to an expense account. That is incorrect. Your car payment is a liability for your business. And don’t you want this to come down anyway so you know the balance that you owe?

One thing I just want to point out as well. If you notice the account right below it is called Opening Balance Equity. And you can see it’s got a negative number. Any time you create an account like our checking that we did where we had a positive number that number is positive. But when you owe something that’s a negative. So don’t freak out if you see this because that’s actually what your books look like.

So that’s how you’re going to set up all your long term liabilities. Let’s talk next about credit cards.
These are credit cards your company uses to purchase items for the business. It has nothing to do with accepting credit cards for payment from customers. You want to set up each credit card account separately so you can track the expenses on each one. Let me go ahead and set up one for you. I’m just going to right click and choose New. Notice Credit Card is on the list. I’ll choose Credit Card and I’ll Continue.

Now you can name the account anything you want again. You do need an opening balance. Get out your credit card statement from the first month of your company file, the month you started, and put in the ending balance there. I’m going to say $2,356.89 and I’ll pick 10/1 and click OK. And now when I Save and Close you’re going to see that you have a credit card account and you owe $2,356.89. Every time you make a payment towards the credit card put it to this account.

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