If you want to be sure that QuickBooks is keeping track of all of your transactions accurately, you should enter your bank accounts into the program, even if you don't use online banking. That said, you should also record every dime that goes in or out of your bank accounts.
In this article, we are going to focus on managing your bank accounts using QuickBooks. Please note that this article assumes you have already set up your bank accounts when you set up QuickBooks.
Depositing Money that's Not from Customers
There will be times you will receive money from sources who aren't customers. That means there will not be an invoice or a sales receipt. This kind of money could be in the form of a rebate check, a refund from a vendor, capital from an owner or partner, or a loan.
Entering these types of deposits is easy to do. You are simply going to use the register from the appropriate bank account.
Go to Banking>Use Register, then select the bank account.
The account register window then opens, and a transaction line will be highlighted for you to enter the transaction. In this case, the transaction is a deposit.
Now, let's enter the deposit.
First, change the date of the transaction if necessary to reflect the actual date of deposit.
Press tab and go to the Number field.
If a check number appears, delete it. You can also just wait until you enter an amount in the Deposit column because, at that point, QuickBooks will delete the check number for you.
Next, press tab to move over the next three columns until you get to the Deposit column. Enter the amount of the deposit.
Now, go to the Account field and assign the deposit to an account.
It is a good idea to put an explanation of the deposit in the Memo field.
When you are finished, click the Record button.
Assign an Account to a Noncustomer Deposit
If you are depositing your own money or money from owners/partners into the business, then that money should be posted from a capital account – or an equity account.
However, if you are depositing money from a loan, you should post it from a liability account from the loan.
If it is a refund from a vendor, you can post it from the expense account that was used to pay the vendor. Use common sense when choosing what account to assign a deposit. You can always ask an accountant for help as well.
Depositing Money from Customers
If you have invoices out to customers and receive payments for them, documenting those deposits in your QuickBooks checkbook can be a little more detailed than the process we used earlier in this article. That doesn't mean it is difficult, however, because we are going to walk you through step by step.
Naturally, you will start off by recording the customer's payment. You do that by going to Customers>Receive Payments or Customers>Enter Sales Receipt. When you do that (or if you have already done it), QuickBooks will make a note that you have undeposited funds. Now, let's learn how to deposit them.
Go to Banking>Make Deposits. A dialogue box will appear that tells you that you have undeposited funds. It will list the checks you have received, but haven't yet deposited. Put a checkmark beside the ones you want to deposit. Click OK.
Next, pick the checking account that you want to use to record deposits. Go to the Deposit To field to do this.
Go to the Date text box and enter the date that you will deposit this money into your bank account.
Go ahead and add any other deposits you want to add to this bank account that doesn't come from customers.
If you want to add a memo about this deposit, you can do that as well.
If you want cash back from the deposit, go to the Cash Back Goes To field, select the account, create a memo, then enter in how much you want to get back.
Click Save and Close when you are finished to close out the window. If you have more deposits, click Save and New.
Transferring Funds from One Account to Another
There will be times when you want to transfer funds from one bank account to another. It is very common to do. You use the Transfer Funds Between Accounts window in QuickBooks to do this.
Go to Banking>Transfer Funds.
Now, fill out the fields. You will be asked for the date, the bank account you want to transfer funds from and the balance of that account. Then, you will be asked for the bank account you want to transfer funds to and the balance of that account. Finally, you will be asked for the transfer amount.
Click Save & Close when you are finished. If you want to do another transfer, click Save & New.
NSF Checks. We don't want it to happen. We'd rather it didn't happen. But sooner or later, it is going to happen. You are going to get a check from a customer returned by your bank, and it is going to be marked NSF, or non-sufficient funds. You probably know by now that this means your customer didn't have the money in the bank to cover your check, but just in case it was worth mentioning.
In earlier versions of QuickBooks, you would have had to chase your tail all over the program to make changes related to the bad check. You would have had to go into your bank register, create credit memos, and the list goes on. However, the Bounced Checks feature in QuickBooks makes it easier to take care of a bounced check.
To do this, go to the Customer Center. Select the customer under the Customer & Jobs tab, then look for the transaction that relates to the bounced check located in the right pane.
Double click the transaction.
The payment screen appears.
Click the Record Bounced Check button under the Main tab.
You will then see the Manage Bounced Check Window, as shown below.
Enter the fee that your bank charged you for the bad check, as well of the date of the charge. Then, assign an expense account to that charge. You can also add a class if you want.
Next, specify how much you will charge your customer as a "bad check fee."
When you click Next, you will see the Bounced Check Summary that will show you all the work QuickBooks has done for you. If you have used previous versions of QuickBooks, you might remember that you had to do all this yourself. QuickBooks does it for you.
As you can see in the snapshot above, QuickBooks will go back and mark the invoice unpaid. It will also deduct the amount of the bounced check and the NSF fees from your bank account, as well as create an invoice to cover the bad check fee to the customer.
A bounced check indicator will then appear on your customer's payment to let you know you used the bounced check feature.
Working with Petty Cash
Most businesses keep petty cash on hand to cover things like lunch for employees or last minute office supplies. You will want to set up a petty cash account in your chart of accounts if one is not already there.
Here's how to create one:
When you create a petty cash account in your Chart of Accounts, the account type should be Bank.
If you number your accounts, you should use a number for your petty cash account that places it near your other bank accounts.
The opening balance of a petty cash account should be left at zero when you set it up. You can record the balance when you make the first deposit.
Putting Money into Petty Cash
When you put money into petty cash, most of the time you will transfer the money from your bank account (or write a check). Here's how you do it.
Make sure you have created the name Petty Cash in your Other Names list. You can open this by going to Lists in the menu bar.
Now write a check from a bank account to Petty Cash, then post it to the petty cash account.
Recording Petty Cash Expenses
To record expenses paid for by petty cash, open the Write Checks window. Select the petty cash account as the account. It is easier to use the Write Checks window to do this as opposed to the petty cash register because you can tie the expense to a customer or class if you need to.
Setting up a Second Bank Account
You have already set up one account in QuickBooks, but let's say you want to set up another bank account after you have gone through the interview process.
To do this, go to Lists>Chart of Accounts.
Next, click on the Account button and select New from the dropdown menu.
Put a check beside Bank, then press the Continue button.
Add your account information into the appropriate fields. Click Save & Close.
Balancing a Bank Account
As you know, when you reconcile (or balance) a bank account, you compare what you have written in your register with what the bank's saying you have actually deposited and spent. The same principle holds true with QuickBooks.
To start balancing your account, go to Banking>Reconcile. You will see the dialogue box shown below.
If you have more than one account, you will have to choose which one you want to balance.
Now, enter the date of your bank statement in the Statement Date field.
QuickBooks will now show you an amount in the Beginning Balance field.
Next, enter the ending balance from the bank statement in the Ending Balance field.
Enter the service charge your bank assesses you and the date the service charge was assessed.
Then, assign the charge to an account. QuickBooks has a default Bank Service Charges account that you can use for this.
If your account earns interest, enter the income from it in the Interest Earned field. Of course, then you will need to assign an account to it.
Finally, click Continue. You will now see the Reconcile window.
Marking Checks and Deposits That Have Cleared
With the reconcile window open, you can start to mark which checks and deposits have cleared the bank.
Here's how you do it.
Find the first deposit that's cleared. Mark it as cleared by putting a checkmark next to it.
If there's a deposit missing in your QuickBooks statement that appears on your bank statement, you need to register it. You will have to close the Reconcile window by clicking Leave, then open the register and enter it.
Once you have gone through the deposits, it is time to do the checks that you wrote. Follow the same steps that you did for the deposits by putting check marks by those that appear on your QuickBooks statement and your bank statement. Again, if there's a check that's cleared on your bank statement, but is not showing in QuickBooks, you haven't registered it yet. You will have to click Leave, register your check, then come back.
Sometimes you might realize that you entered a wrong amount for a check in QuickBooks. You can easily correct it by editing the transaction. Double click the listing in the Reconcile window. This will open the original transaction window. Make the changes, then close the window. QuickBooks will ask you if you want to record the changes. Answer Yes.
If the difference between QuickBooks and your bank statement doesn't equal zero, you will see a window letting you know there's a discrepancy. You can then return to reconcile, leave reconcile, or enter an adjustment. When you have finished, click the Reconcile Now button.
You will now be able to run the Reconciliation report.
Print the Reconciliation Report
Once you have a balanced reconciliation, QuickBooks will congratulate you and offer to print a copy of the reconciliation report.
Note that QuickBooks saves the report no matter what, so it is up to you whether you want to print it. You can print three types of reports: Summary, Detail, or Both. Click Display to display it on the screen or Print to print it.
If you want to print both reports, choose the printer that you want to print the report. If you select either but not both of the reports, the Print Reports dialogue box offers the following options:
Print the report to a printer.
Print the report to a file. You can choose between ASCII text (unformatted text), Comma Delimited (a comma is put between each column. This is helpful if you want to use the file in a spreadsheet), or Tab Delimited (almost like comma delimited except a tab marker is used instead of a comma).
Setting Up a Credit Card Account
To set up a credit card account in QuickBooks, go to Lists>Chart of Accounts.
Click the Account button in the lower left hand corner of the window. Select New.
Choose the Credit Card option, then click Continue.
Give the account a name in the Account Name box.
Now, enter the card number.
Next, click the Save and Close button. You will be taken back to the Chart of Accounts window. The credit card account you just created will appear there.
Enter Credit Card Transactions in the Register
If you want to work with a credit card account to add debits or credits, you are going to use the Chart of Accounts window again. Go to List>Chart of Accounts.
Double click on the credit card account that you want to work with. You will see the Credit Card Register. This is what you will use to record transactions.
Enter Credit Card Charges in Banking
You can also record transactions by going to Banking>Enter Credit Card Charges. The Enter Credit Card Charges window will open.
To record a transaction this way:
Use the Credit Card dropdown menu to select the appropriate credit card.
Select either Purchase/Charge or Refund/Credit.
Enter the name of the establishment where the card was used in the Purchased From field.
Enter the date the transaction took place.
You can also fill in a reference number. Use the number found on the credit card statement.
Next, fill in the amount of the charge.
For general expenses, use the Expenses tab. If the item was purchased for inventory or a customer, use the Items tab.
We used the Items tab.
Click Save & Close when you are finished.
Note : Don't use credit card accounts to record transactions for debit cards. Debit cards are nothing more than plastic checks, so use your checking account for this.
Editing Credit Card Charges
If you made an error entering a credit card charge and need to go back and change it, you can easily edit it with QuickBooks.
Simply go to Lists>Chart of Accounts, then double click the credit card account you want to edit.
Now, select the transaction that needs to be removed or changed, and right click on it.
You can choose to void, delete, or edit the transaction, as highlighted above.
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