Loan concluded? Here’s how to record received amounts and repayments in PIA Go!

Receiving a loan: it is not income

When a loan is credited to your account, it may be tempting to record it as income. However, this is not correct.

A loan is not turnover. It is an amount that you will have to repay. From an accounting perspective, this amount therefore represents a liability.

As such, receiving a loan should not appear in your profit and loss account.

How to record the receipt of the loan?

In PIA Go!, the process is simple.

• open the “Payments” menu
• click on “New payment”
• select the category “Other payment received”
• enter the amount and clearly specify in the description that it is a loan

The amount will then appear in your bank balance, without being included in your profit and loss account. You therefore avoid paying taxes on an amount that you will have to repay.

When repaying: distinguish between capital and interest

When you start repaying your loan, an important distinction must be made between two elements:

• repayment of the capital, i.e. the amount borrowed
• interest, which represents the cost of financing

This distinction is essential. Only the interest can be recorded as a business expense. Repayment of the capital is not a deductible expense.

Step 1: record the repayment of the capital

The repayment of the capital must be recorded as a payment.

In PIA Go!:

• open the “Payments” menu
• click on “New payment”
• select the category “Other payment made”
• enter the amount of the capital repayment

As with receiving the loan, this transaction simply updates your bank balance. It has no impact on your profit and loss account.

Step 2: record the loan interest

Interest must be recorded as a standard purchase.

In PIA Go!, proceed as follows:

• open the “Purchases” menu then “New purchase”
• choose as supplier type:
“Private individual (or institution without VAT number)”
• enter the amount of the interest in “Amount excluding VAT”
• select 0% VAT
• choose “Financial expenses” as the type of purchase

The interest will then appear correctly in your profit and loss account and can be deducted for tax purposes.

Why no VAT number?

Banks and credit institutions do not charge VAT on interest related to a loan. These transactions are therefore recorded without VAT, even if your lender is a financial institution.

PIA Go! helps you correctly record your financing

Taking out a loan may be necessary to grow your business. However, it is important that these transactions are correctly recorded in your accounts.

PIA Go! allows you to easily handle the receipt of the loan, repayments and interest, so that your accounting remains up to date and compliant with tax rules.

Do you have doubts about how to record financing? PIA experts can support you with practical advice tailored to your situation. The level of support depends on your subscription.