Episode 7 – Polymath Video Tutorial Series: Changes to QuickBooks Online – Create a Deposit

create a depositThis episode of our 13 part QuickBooks Online Harmony tutorial series covers how to create a deposit.  When you create a deposit in QuickBooks Online, it includes batching multiple payments together so that your deposit matches what happened in the real world.  This episode also covers how to account for merchant service fees that may have been removed from your deposit when using a merchant service provider.



Make sure to check out all the other great videos in the Polymath QuickBooks Tutorial Series:


Welcome, viewers, to this Polymath bookkeeping instructional video. I am Ingrid Edstrom of Polymath LLC and Ashland Bookkeeping Services, and we have reached the episode that we have been promising you since episode four. Today we will be creating deposits so that you can take your money to the bank. If you’re just joining us make sure to check out the other videos in this series. If you don’t see any money in your QuickBooks to create a deposit with, make sure to check out episode four, how to create a sales receipt, and episode six, how to receive payments against your invoices.

[expand title=”Continue reading…”]The most important thing to remember about batching deposits is that whatever happens in your QuickBooks has to match what happened in the real world, i.e. your bank statements. Meaning, if you take two checks to the bank and deposit them together then those two checks need to be entered each into QuickBooks separately and then batched together into a single deposit. Before you come back to any deposits you have to receive the money for your customers. Funds received can either be entered through sales receipt transactions or by entering payments against customer invoices. When you direct these transactions to the undeposited funds account they will show up in the make deposits window that you see here on your screen. If you don’t understand how to do that, go ahead and stop this video and watch episodes four and six before you continue.

To access the undeposited funds window you first click on the plus sign, also known as the create menu, at the top of your screen, and select bank deposit. Once you’re in the deposit window you will select the name of the bank account where you’ll be depositing the money, enter the correct date of the deposit, and check off each of the payments that you’re taking to the bank that day. You can use the payment method to help ensure that you’re not batching incorrect payments together. For example, you would not want to select a credit card or PayPal payment to go to the bank with your cash and check deposit.

Once you’ve selected your payments the window will total your deposit for you and the resulting amount should match the total on the receipt that you received for your bank. This will make it so that your deposit in QuickBooks will match your bank statement.

Many of our clients use either a merchant service provider to process credit cards or PayPal. Sometimes these systems remove processing fees from individual transactions before depositing the net amount into your bank account. We have seen many people make the mistake of simply adjusting their customer payments to reflect the actual amount received to the bank, and that’s not the correct way to enter that information. In order to have accurate reports of your product and sales to your customers you need to record the full amount that they page you in your sales transactions. You can later deduct the fee when you create the deposit.

To do this, simply add a line under the add new deposit section at the bottom of the deposits window. Use the appropriate expense account for merchant service or PayPal fees. You may call it something slightly different in your charter of accounts but this is where you keep track of all of the fees that you pay to accept credit cards or other online payments.

You will then put in a negative number that is equal to the amount of the fees that the merchant service provider deducted from that transaction. By doing this you’ve recorded the correct income from your customer, the correct fee expense for your vendor, and your deposit will equal the actual amount that went into your bank account.

You can now take your sales through the entire process. You know how to enter sales receipts and invoices, receive payments against your invoices, and batch all of the funds received to create a deposit to go to the bank. In our next episode we will jump into creating estimates. I’m Ingrid Edstrom of Polymath LLC and Ashland Bookkeeping Services. Thanks for watching and stay tuned for more videos coming regularly.

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