An effective method for recording daily sales in QuickBooks Online, particularly for businesses like retail stores or coffee shops that use an external point-of-sale (POS) system, involves the use of "clearing accounts." This approach ensures that your accounting records accurately reflect your sales and makes bank reconciliation significantly easier by addressing the timing differences between when sales are made and when funds are actually deposited into your bank account.
Clearing accounts are temporary holding accounts used to manage funds before they are officially deposited into your bank. The primary reason for using them is to handle the different timelines for various payment methods:
Credit Card Payments: These are often batched and deposited by your merchant service provider a day or two after the sale.
Cash Sales: You might deposit cash at the bank every few days.
Check Sales: Checks may be deposited daily or weekly.
If you were to record all daily sales as going directly into your primary checking account, the deposits in QuickBooks would not match the actual deposits shown on your bank statement, leading to a complicated and messy reconciliation process. Clearing accounts solve this by holding the funds in a temporary account until the actual deposit is made.
The first step is to set up the necessary "bucket" accounts where the funds will be temporarily held.
Cash on Hand: This account tracks the cash you've received but have not yet deposited.
Account Type: Bank
Detail Type: Cash on hand
Undeposited Funds: This account holds check payments before they are deposited. QuickBooks often has a default account for this.
Account Type: Other Current Asset
Detail Type: Undeposited Funds
Credit Card Clearing Account(s): This account tracks credit card sales. It is highly recommended to create separate clearing accounts if different credit card processors (e.g., American Express, Visa/Mastercard, PayPal, Stripe) deposit funds separately.
Account Type: Other Current Asset
Detail Type: Other Current Asset
Sales Tax Payable: This liability account tracks the sales tax you have collected but have not yet remitted to the tax authority.
Account Type: Other Current Liability
Detail Type: Sales Tax Payable
Over/Short: This expense account is used to record any cash shortages or overages from the register at the end of the day.
Account Type: Expense
Detail Type: Other Business Expenses
Sales Income Account: This is your primary income account where the revenue from sales will be recorded. Most businesses will already have a sales account set up.
Account Type: Income
Detail Type: Sales of Product Income or Service/Fee Income
Next, you will create items that will be used on your daily sales receipt. Each of these items will be linked to the clearing accounts you just created.
Cash: Link to the Cash on Hand account. In the description, add a note like (-) as a reminder that this will be a negative entry on the sales receipt.
Checks: Link to the Undeposited Funds account. Also, add a (-) to the description.
Credit Card: Link to the Credit Card Clearing account. Use a (-) in the description. Create separate items for each credit card type if you have separate clearing accounts.
Sales Tax: Link to the Sales Tax Payable liability account.
Over/Short: Link to the Over/Short expense account. This can be a positive or negative entry.
Sales: Link to your primary Sales income account.
To streamline the daily process, create a recurring sales receipt template.
Navigate to Recurring Transactions and create a new Sales Receipt.
Name the template "Daily Sales" and set the Type to Unscheduled. This creates a template you can use without it automatically generating transactions.
Set the customer to a generic "Daily Sales" customer.
Add each of the products and services you created in Step 2 as line items on the template. Arrange them in a logical order, such as sales and taxes first (positives), followed by payment types (negatives).
Save the template. You can bookmark the template page for quick access each day.
Each day, you will use the template to create a new sales receipt summarizing the day's activity from your POS report.
Sales: Enter the total sales for the day as a positive number.
Sales Tax: Enter the total sales tax collected as a positive number.
Payment Methods (Cash, Checks, Credit Cards): Enter the total for each payment type as a negative number.
Over/Short: If your cash drawer is short, enter the amount as a positive number. If it is over, enter the amount as a negative number.
The Goal: The total of the sales receipt must be zero. This indicates that all sales have been accounted for by the payments received.
This final step is crucial for accurate bank reconciliation.
Credit Card Deposits: When you see a deposit from your credit card processor in your bank feed, you will record it as a transfer from your "Credit Card Clearing" account to your checking account. This moves the money out of the clearing account and into your bank account, and the balance of the clearing account should decrease accordingly.
Cash and Check Deposits: When you take cash and checks to the bank, you will use the Bank Deposit feature in QuickBooks.
Select the checks you are depositing from the list of payments in "Undeposited Funds."
Add a line item to the deposit to account for the cash being deposited. Select the Cash on Hand account and enter the amount of cash you are depositing.
This will move the funds from "Undeposited Funds" and "Cash on Hand" into your checking account, accurately reflecting the single deposit on your bank statement.
By following this method, your QuickBooks bank register will match your actual bank statements, making reconciliation a straightforward process.