Overview
This article will explain how to create a loan account, in the scenario where the SMSF makes a loan to a member of the SMSF, In Addition to how to record repayments to the loan.
To record a loan to a member, you can use one of the two accounts below:
- 74200 - Loans to Associated Entities (In house loans)
- 74200 - Loans to Associated Entities (In house loans) - Unitised
Instructions
Step 1: Create the investment account
- Navigate to the Chart of Accounts
- Select Add Account > New Investment
- For the Investment Type select either Loans to Associated Entities (In-house loans) or Loans to Associated Entities (In-house loans) - Unitised.
- If you select 74200 Loans to Associated Entities (In-house loans) - Unitised, you will first need to create a security before setting up the loan account. For information on how to create a security press here.
-
After entering all the details for the new Investment Account press Save, to create the account.
Step 2: Recording transactions related to the loan
The following examples demonstrate how to record common loan transactions. Please note that you may choose to record these transactions differently within Simple Fund 360 depending on your situation.
Recording the initial loan transaction
| Account Name | Debit | Credit |
|---|---|---|
| 74200/Loans to Associated Entities (In house loans) | 1,000,000 | |
| The Loanee | 1,000,000 |
Recording Initial Payments
| Account Name | Debit | Credit |
|---|---|---|
| 74200/Loans to Associated Entities (In house loans) | 50,000 | |
| 60400/BankAccount | 50,000 |
Recording Interest Payments
| Account Name | Debit | Credit |
|---|---|---|
| 25000/Interest for the loan | 1,000 | |
| 60400/BankAccount | 1,000 |