I have a client which is a small S Corp with just one owner. The owner has a Shareholder Loan account to track her personal money paid for business and/or business account paid for her personal expenses.

The SH Loan account balance as of 12/31/2023 is more than $25,000, and I have a suggestion diagnostic from ProConnect: The program detected an open account debt with a loan balance at the beginning of year greater than $25,000. Open account debt with a prior year-end balance of more than $25,000, should be classified as a formal note at the beginning of the tax year and must be separately tracked. US - Ref #57034

My questions are:

(1) what's the proper way to convert the open account shareholder loan to a formal note in QB and in ProConnect?

(2) After making the beginning balance as a formal note, do I need to leave it as is and start to separately track current year shareholder loan in the Shareholder Loan account (open acct debt)?

MANY THANKS!