Considerations for Long-Term Liabilities:

1.       Long-Term Liabilities typically have interest added by the Lender every month. This interest isn’t included when you add the loan to your books since it isn’t included in the amount you borrowed.

2.       You should receive an Amortization Schedule from the Lender. This breaks down all your future payments by month, and into principal vs interest. The Lender may not proactively send this to you, but you should be able to access it online on their website.

3.       You or your bookkeeper should be completing a Journal Entry at the end of every month to adjust your payment so you’ll be able to see what you paid toward the principle and what went to interest. This should be done using the Amortization Schedule.

4.       The Current amount for the loan is the balance due in the next (rolling) 12 month period. Each month that balance will need to be updated using a Journal Entry because the amount of interest should change, which will change the total balance due in the next year.

Sound confusing, it certainly can be! If you’re tired of doing this on your own and you want someone to help you, submit a form on my Contact page today and we’ll schedule a complimentary consultation call!

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