How I diagnose undeposited funds in QuickBooks Online
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- čas přidán 8. 07. 2024
- As part of my continuing series on how I diagnose QuickBooks Online, I'm going to show you how I diagnose the Undeposited Funds account.
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Thank you for your wonderful explanation! You made my life so much easier. You are great! :)
Happy to help!
Thank you so much for this video! It was so incredibly helpful!!
You're so welcome!
Thanks a lot, this is very resourceful!
Glad it was helpful!
Thank you so much, Veronica, for sharing this valuable knowledge.
Thanks for watching!
Veronica doing a great job in explaining things in a clear and concise way. And more important, her solutions in QBO make sense and are practical. I really like her approach in cleaning up QBO. Thank you for your great contribution Veronica!
You're very welcome, Tristan!
Super helpful, thank you!
You're welcome!
What would you recommend if my Balance Sheet has a balance in Payments to be deposited but there are no transactions listed on the Bank Deposit? TY in advance
Thanks Verinica. I follow all of your videos. What is another way other than creating a negative balance in sales and products? The reason is that I am accountable to a nonprofit board of directors who would demand explanations for all of this.
The alternative is to clean up Undeposited Funds by correctly recording each deposit. You would have to get supporting documentation from your client for every deposit made so that they can be recorded correctly. If it were my client, I would try my best to clean up Undeposited Funds by correctly recording each deposit - especially if they are a non-profit.
Other option is to enter negative income amount in the deposit form to offset the deposit and skip journal entry
Thanks for sharing. Yes, you could do that as well.
Your explanation was well received and timely. How about amounts that are from previous years and those years tax filing is complete. How do you handle this?
I normally consult with the client's tax accountant to determine the best way to approach making these adjustments - especially if a tax return was already filed.
What would you suggest you list it under if not the "sales of product income"? Can I create a "overstated income" category?
Normally, you would use the income account that the business uses the most, since presumably their income was duplicated.
Help! I am not locating the "Blog post - See link below" for this video to see how to correct each individual undeposited item. Thank you.
Hi Larry. Here's the link to the blog post 5minutebookkeeping.com/how-to-clean-up-undeposited-funds-in-quickbooks-online/
My version of QBO does not have the + sign that you refer to to access bank deposit. So how would I do what you are suggesting?
Hi. I don't know which version you are using. But, the + sign was moved from the center of the screen to the top left hand corner. It says +New.
My undeposited fun’s is very old going back to 2010. Payments have been deposit to the bank but remain on undeposited funds. The amount on the Balance sheet shows as a minus. Awaiting for your advise.
I'm not sure why the balance sheet would have a negative balance. It sounds like someone recorded a journal entry to Undeposited Funds.
I am having this same issue. I 1st generated a bank deposit for the tear of the undeposited funds and that made my current balance have more income. Watched your tutorial, which is great. I made the dummy account, checked the balance and I have more income in my indeposited funds?? The first time it made my bank account have more funds and 2nd time it made the undeposited fund have more? I'm afraid to even do anything else? Help!!
I would sort them (Undeposited Funds) by amount in case some were just misapplied to see if anything matches up and fix them. Is that a good idea?
You could do that if QBO allows you to sort by amount.
I am attempting to follow the steps by creating a dummy bank account. However, due to journal transactions attempting to clean the account there is a negative total. Any advice on how to clean this?
You may want to figure out what the journal entries were and why they were recorded. You may also need to assess whether the dummy bank account method is the best way to adjust undeposited funds in this particular situation.
Hi came accross your video, found very informative and helpful. I have one question, after using method #1 ( dummy account), once you deactivate the dummy account, what happens to the transactions and payment received in undeposited funds against those invoices. Do the transactions get deleted off the system??
Thank you
Transactions are not deleted when an account is made inactive in QBO. They will remain there.
Does this method of creating a Dummy Bk Acct and then entering a JE to clear out the Dummy Bk Acct by debiting Sales and crediting the Dummy Bk Acct assume that the Undeposited Funds were duplicate deposits, or perhaps duplicate Sales? It reduces Sales - correct? I would only use this method if I had reconciled the bank account within the dates of the Undeposited Funds successfully OR if I had researched the Undeposited Funds and was absolutely 100% positive and could prove that they were dupes. IRS would love to discover reducing Sales without proof.
I totally agree with you. The reason you would reduce sales is because sales are assumed to be duplicated. This method should be used with caution and is dependent on a specific situation.
My QuickBooks is a total mess! I have a small business & have tried to hire locally but not successful...most have a good understanding of desktop with no real help to my operation. Do you have a resource that can get me on-track?
I specialize in QBO cleanups. You can learn more about my services at vmwasek.com
Apparently there are hot discussions lately, and qbo is running ads on client's dashboard about them offering "quickbooks live"
Yes. It's a hot topic right now. We'll see what Intuit ends up doing. I see it as an opportunity and not a threat.
I have sales payments automated and deposited directly to an account in Singapore dollars. I cannot make bank deposit to this account with my default US$ currency in QB. How do i go about cleaning up the undeposited funds? Can i just make a transfer instead to my Singapore $ account for reconciliation purpose or is that a no no?
Hi Shem. Unfortunately, I don't work with a multi-currency version of QBO and don't know the answer to your question.
My client's Undeposited Funds go back to 2006 or 2007. He just started using QuickBooks Online Simple Start to start recording his accounting. His connected apps have brought in these balances in. I need to know how to set him up proper and take care of the undeposited funds situation.
If he just started using QBO Simple Start, I don' t know how he would have Undeposited Funds going back to 2006/2007. If connected apps did that, you would need to disconnect the apps and delete the transactions imported by the apps. Then you would need to see whether it makes sense to connect the apps to QBO since it sounds like they're just dumping data into QBO.
So the actual amount they earned from consulting would be $253,697.96, taking the consulting amount and subtracting it from the negative sales of product income?
Hi Mandy. It's been a few years since I did this video and I don't recall the example I showed in the video.
What is dummy bank?
It is a temporary bank account set up in QBO.
Hi Veronica. I have a question concerning your suggestion of making a Dummy Bank account to transfer the many years of Undeposited funds to for a clean up. If I use that method to clean up years of Undeposited funds, how can I get the wrong amount in the QuickBooks balance, right or even close ? I have a negative balance in QuickBooks of -$79,000 that I realize is the majority of the Undeposited funds money I moved to the Dummy account. This is not my real time bank balance but the QuickBooks balance. Will I ever be able to clean that out too. I hope you reply to my question. Love your videos. Thank you.
Hi Jackie, in the video I discuss that the dummy bank account balance should be 0 after making all the entries. I believe also that I mention that this method works best if you're cleaning up current year undeposited funds. Adjustments to prior years should be carefully reviewed because they may affect prior years' tax returns already filed.
I definitely have a balance in undeposited funds but nothing in my bank deposit. How can that be? How can I clean up the undeposited funds if nothing is showing in bank deposit?
Check the Undeposited Funds register from the chart of accounts. If it shows a balance, it's possible that the file was converted from QuickBooks Desktop to QuickBooks Online at some point in the past. If that is the case, sometimes balances get stuck in Undeposited Funds and there is no way to remove them, unfortunately. I've seen this happen a few times.
@@5MinuteBookkeeping Thank you.
OMG ... your image is flipped. LOL
I wonder when you use this dummy acct,,,,,,,,,,,if funds are in undeposited doesnt that mean fund did not get to the bank account...........if and invoice was made and payment came in the sales should be fine? In your example you say to journal says.........so it is not duplicated..............?
Hi Thomas, I'm not sure I fully understand your comment. However, the purpose of the Undeposited Funds account (if used correctly in QB), is to be a temporary holding account until the funds are deposited in the bank. Unfortunately, most untrained users in QBO completely bypass the Undeposited Funds account and record amounts received directly to Income. The dummy bank account method is one method to clean up Undeposited Funds if there are no records to substantiate the deposits made in the bank account and if there is no way to know how to apply amounts received to unpaid customer invoices.
You lost me when you debited Sales of Product Income and credited the Dummy bank account. And I don't understand why you have that negative number for Sales of Product Income on the P&L, and how that won't screw things up.
Greg. The method you are referring to is one way to clean up Undeposited Funds (and actually my least favorite). I prefer to clean up every transaction one-by-one. However, in some cases, clients don't have any supporting documentation for the customer payments they received and we use the Dummy bank account method. This method requires judgment - it shouldn't be used in all situations.