Loan Paydowns NJ | Principal vs. Interest on Your P&L
- Gregory Monaco, CPA
- 5 days ago
- 1 min read
Loan Paydowns NJ — How to Record Them Correctly
Many business owners see a “big payment” to their lender and assume it’s all an expense. It’s not. Here’s how loan paydowns NJ should appear on your books.
Principal vs. Interest: What Goes Where
Payment Component | Financial Statement | Why It Matters |
Principal | Balance Sheet | Reduces liability, not deductible |
Interest | Profit & Loss (Expense) | Deductible business expense |
Example
Monthly payment: $2,000
$1,500 → Loan Principal (Balance Sheet reduction)
$500 → Interest Expense (P&L)
How to Record in QuickBooks
Record the total payment from your bank account.
Split transaction: part to loan principal account, part to “Interest Expense.”
Each month, check the loan statement for the exact breakdown.
CPA Tip:
Recording loan paydowns NJ accurately prevents overstating expenses or missing deductions. Always reconcile loan balances during your monthly close.
Want Clean, Accurate Loan Reporting?
Work with Gregory Monaco, CPA LLC to review your loan balances, adjust entries, and tie out interest to tax returns.
We’ll keep your Balance Sheet and P&L perfectly aligned all year.
Gregory Monaco, CPA | Livingston NJ (serving NJ + virtual nationwide)
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