How to record a deposit with Credit Card fees in QB Online

Do you use QuickBooks Online? Do you wonder what in the world to do? Where to start, what steps to take and what process to do? You’re not alone; it’s not intuitive or self explanatory at all. I feel your pain.

How to record a deposit with Credit Card fees in QB Online

I’ve created this handy dandy little infographic and included a few tips to make your life easier. Just pin this image or bookmark this post, and you never have to wonder what to do again (until they rearrange something, but most likely the process will stay the same;)

One of the reasons I favor Xero over QuickBooks Online is that Xero completes this transaction and bank reconciliation process in two simple steps.

In QuickBooks online, when you make a sale to a customer or buy something from a vendor, use this procedure to record the transaction and the money in your bank.

Since the Sales Process is more involved, here is a step by step tutorial that also includes what to do with those merchant processing fees that are taken out before the money is deposited into your bank. If you use PayPal, Etsy or a Credit Card Processor, you have to know how to account for the fees they take out and this shows you how.

Sales Process for QuickBooks Online + Merchant Processing Fees + Bank Transaction Matching

 

Use the “+” drop down menu in the top center of the Web Page:

 

1. Under Customers, select Invoice (if delayed payment) or Sales Receipt (if instant payment) and create a new sale entering all the valid data (Customer Name, date, item, taxes, etc) & save. If you created a Sales Receipt, skip to step 3, because the Sales Receipt acts like a Receive Payment transaction.
2. Then, back on the main page, go back to the “+“..and under Customers, select Receive Payment to enter the amount the customer actually paid you, which should be the invoice total.
3. Make sure you select that the payment is Deposited to “Undeposited Funds“
4. Back to the “+” menu, under Other, select Bank Deposits.
   1. Here you will find and select the sales that make up the deposit total.
   2. If you have credit card fees, bank fees, merchant processing fees or other deductions or additions that change the total deposit, scroll down to the bottom where it says “Add New Deposit”
      1. If it’s fees that lessen the total amount deposited, then you enter a (-) negative number. Select the Merchant Fees Cost of Goods Sold account or your Bank Fees Expense account.
      2. Make sure the actual deposited amount now matches the Sales transaction in QuickBooks less the fees.
5. After the funds have been deposited to the bank and the transaction has time to process to show up online, go to the Transactions Tab on the Left hand menu bar of QuickBooks Online.
   1. Select the Bank Account you deposited the funds to.
   2. Match the Deposit in QBO to the deposit that came through your bank account.

Then, at month’s end, go to your Bank Register and Reconcile the Account to your Bank Statement. This is an easy step because if you’ve maintained matching the incoming bank transactions to what you have recorded in QuickBooks, then all of the “cleared” transactions will already be selected for the date range of the bank statement and the beginning and ending balance. Therefore there shouldn’t be a difference between what you’ve cleared in Quickbooks and what cleared your bank that month. Simply press Reconcile if this is the case.

Fun, right? This is why I don’t use QuickBooks, but in case you have to use it because you’re in Canada, or if you feel you should use it because they are the ones connected to your AmEx and almost all banks have export files specifically for QB, then I’ve created this post for you.

Definitely befriend the QBO help community, and thankfully, they do have a great help center both by chat and by phone. Click Here for QuickBooks Support

Cheers to Efficiency!