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How to Best Record Your Deposits

depositAnyone that has used QuickBooks for very long knows that there is more than one way to get to most screens and more than one way people get their data entered. I would like to discuss the best way to enter deposits and then follow-up with another way you might be doing it now, and why you shouldn’t be. Look below for the QuickBooks software version you use to find detailed directions.

 

In Desktop: (using Quickbooks 2014, other years may vary slightly)

From the home screen, click Receive Payments.recv

Select the customer in the drop down box for Received from, enter the Payment Amount and Date of payment. The reference field is to enter their check number or Visa/ACH transaction number. Select how they paid (cash, check, etc). You can also add a new method such as ACH by selecting More, Add new payment.

Select the account the payment is going to Deposit to, undeposited funds or checking. Undeposited funds holds your payments or checks together and allows you to show a single deposit as you dskpmtdeposit into the bank. So, if you deposit on the second day with 10 checks, you would have one deposit total in QuickBooks summarizing each of those payments. If you select to deposit directly into the checking account, each payment or check will show separately in QuickBooks and for your bank reconciliation. Most businesses don’t deposit one check at a time and so undeposited funds makes reconciliation easier.

Select the invoice to apply the payment to, this can be a partial payment or apply to mulitiple invoices. In the far right column, indicate the payment amount on the invoice. If you wish to apply a partial payment, you can enter a lower dollar value. If you wish to apply to multiple invoices, simply enter the payment amount on each applicable line. Verify the amount applied at the bottom and hit the save button.

In QuickBooks Online:

Click the Quick Create (Plus sign) at the top, in the left column Customers go down to Receive Payment, select the customer in the drop down box, enter the Payment Date, and Payment Method. You have the option to add a new method at the top of the list. The reference no. is to enter their check number or Visa/ACH transaction number.

Select the account the payment is going to Deposit to, undeposited funds or checking. Undeposited funds holds your payments or checks together and allows you to show a single deposit as you deposit into the bank. So, if you deposit on the second day with 10 checks, you would have one deposit total in QuickonpmtBooks summarizing each of those payments. If you select to deposit directly into the checking account, each payment or check will show separately in QuickBooks and for your bank reconciliation. Most businesses don’t deposit one check at a time and so undeposited funds makes reconciliation easier.

Enter the Amount received. Select the invoice to apply the payment to, this can be a partial payment or apply to mulitiple invoices. In the far right column, indicate the payment amount on the invoice. If you wish to apply a partial payment, you can enter a lower dollar value. If you wish to apply to multiple invoices, simply enter the payment amount on each applicable line. Verify the amount applied at the bottom and hit the save button.

 

If you would like to tell a customer their balance due:

Click the Receive Payments icon in the home screen, select the customer from the drop down box, place a check mark to the left of all invoices to select them. This will total them and show the amount due in the box below. You can continue to receive the payment from them filling in the appropriate information as indicated above and changing the amount if necessary.

 

Common Errors:

Some people enter the customer payments directly into the check register or the Record Deposits window. This can be a problem for three reasons. The first is that they cannot use undeposited funds when doing this so every payment will show separately. This can make bank reconciliations difficult. The second is that the wrong account may be selected, often an income account which overstates income. Third, the invoice cannot be selected for the payment to be applied so the invoice stays open. Neither of these processes is recommended.

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