 QuickBooks Online 2023 Bank Feed Deposit Entered as Income for Cash-Based Business Get ready to start moving on up with QuickBooks Online 2023 Support Accounting Instruction by clicking the link below giving you a free month membership to all of the content on our website broken out by category further broken out by course then organized in a logical reasonable fashion making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files and more like QuickBooks backup files when applicable. So once again click the link below for a free month membership to our website and all the content on it. Here we are in our bank feeds practice file. We started up in a prior presentation using the 30 day free trial. We also have open the free QuickBooks Online sample company. If you want the two open at the same time we suggest using the incognito window or another browser. You can open incognito if using Google Chrome by selecting three dots in the browser. Incognito window typing into the search engine QuickBooks Online Test Drive. We're using the sample company to compare the accounting view, the view that the bank feeds practice file is in and the business view, the one the sample company is in to toggle between the two views, go to the cog up top and switch the view on down below. We're going to duplicate some tabs to put the financial reports in that being the balance sheet, the income statement by right-clicking the tab up top and duplicating it. We're going to right-click the tab up top and duplicating it and then we'll go back to the middle duplicated tab down to the reports on the left-hand side, open up one of the favorites, the balance sheet. Note that if you're in the business view by the way, you're in the business overview to get to those reports and then the reports on the left-hand side, that's where the location is under the business view. If we tab to the right, we can then go down to our reports again, open up the other fave that being the profit and loss, otherwise known as the income statement. Close the hamburger, change that range. I'm going to go from 0201, 0122 to 123122, run it to refresh it and tab to the middle, same thing. Close the boogie, scroll up and those ranges are a change in 010122 to 123122, run it to refresh it. There we have it and let's go to the first tab too and open up the bank feeds because that's what we primarily are working on. They're under the banking tab when using the accounting view and banking up top. If you were in the business view by the way, the bank feeds are located in the bookkeeping tab on the left and then they're in the transactions up top, bank transactions. Okay, so now we've entered information a lot for the decrease side of things. Now we're going to be looking at the increase side of things. You can look at the increases by sorting by amount on this side so I could sort by amount and that'll give us the increases or you could use some filtering options as well. But I think this method works good if you have multiple months in place. You might want to sort first by detail, right? So it's going to sort by detail and then sort by the amount and that will give you basically the dollar amounts on top in terms of the deposits and then secondarily sorted by the details. So you've got the same information kind of next to each other. So now we want to think about how can we construct the deposit side of things which from an income statement perspective would be recording the increase to income and an increase possibly to cash generally using the bank feeds. That could be a little bit more complex and different depending on the type of industry we're in. So let's take a quick look at the flow chart and recap the different kind of flows that we might have from the customer or revenue or sales side of things where at the end of the flow we expect cash to be going up although there's a couple different ways to be getting there. Right at the end of the day we expect cash to be going up but we might be on a cash base method. We might be on a cruel method. We might be completely dependent on the bank feeds to record the transactions. The easiest thing to do if we're trying to construct our bank feeds our financial statements directly from the bank feeds is to just rely on the bank feeds and wait till something is recorded in the bank which means it's a deposit it's an increase to the account and just simply record it with the deposit form as income. So that would be great if we can do that but we can only do that for particular types of industries usually it's like gig work or something like that because if you're getting paid by YouTube for example or some other platform you can just wait till it clears and then you can just record the deposit through the bank feeds with a deposit form the other side going to an income account. Note that you do lose a little bit of like more information that you usually get from a full service accounting system because the deposit form is not the natural form to use when recording revenue. QuickBooks is designed to use the sales receipt on a cash based system to record revenue and the invoice on an accrual based system to record revenue. So if you don't use those two forms you're not using the items in the same way or the customers in the same way therefore you have a little less detail for the subsidiary reports of breaking out sales by customer for example and sales by item the things that you sell but that might be well worth doing if it's the easiest thing to do in like a gig work situation. Now if you have a little bit more difficult of a situation let's say you have a cash register and a food truck or in a restaurant or something like that then you're usually going to record the sales with the sales receipt which is kind of recording it at the cash register and that's still a cash based kind of system because you're getting paid at the same point in time you're doing the work but you're usually not recording the cash receipt directly into the checking account here and the actual money usually isn't going directly into the checking account at that point in time and what will happen is you're going to get the money in whatever format you're going to get it credit card or let's just assume cash for the moment that's the easiest thing to think about and then you're usually at the end of the day going to want to compare the money that you've received to which in the cash register and then you're physically going to take that money and deposit it into the bank and you're going to want to make sure that when you deposit it into the bank in your bookkeeping system you do it in the same format as what is on what is in the bank so that then you can use the bank feeds to double check to help you to reconcile. So in this kind of system you're kind of forced oftentimes in other words not to wait till the transaction clears the bank in order to record the transaction because you want the internal controls of recording the transaction at the cash register point in time of sale and kind of double checking the sales reports to the cash as well as the same thing with the credit card statements and so on. So oftentimes we'll put money in here put it into an undeposited funds account in our accounting system and then we'll take it out of undeposited or whatever you want to call it a clearing account amounts to be deposited they call it something different online but same idea and then we'll take it out of there and put it into the checking account in such a way that we can match it to what's on the bank statement or in the bank feeds helping us with the bank reconciliation still a cash based system but it's more complex to do it because it's a full service cash based system instead of one in which we're completely reliant on the bank in order to construct the financial statements and that's because of the industry that we're in then we could be in an industry when we're in an accrual type of system meaning we're in the type of business where we have to do the work first and then send out a bill or invoice for the work done like a bookkeeping firm law firm like a landscaping or something and so that means that this transaction has nothing to do with cash so there's no way we can record it with the cash based system of just recording with the bank feeds so I have to hit the invoice which will increase accounts receivable the other side goes to sales at this point in time then we're going to receive the payment and then we can record basically the deposit so the way QuickBooks is usually designed to work is we enter an invoice accounts receivable goes up, sales is recorded we receive the payment generally we decrease accounts receivable record the other side into this clearing account called undeposited funds or funds to be deposited or whatever you want to call it because we want to make sure that we group the money that we're receiving in the same format as it will be showing on the bank so then in our accounting system record the deposit it might be comprised of one received payment or multiple received payments or multiple received payments and credit sales for example if we got multiple cash flows in that were cash I'm going to deposit them at one time I want to make the deposit in my system the same format that will match on the banks side so when they do come through with the bank feeds we're just going to match out to the bank feeds instead of recording the transaction through the bank feeds and then of course inventory as we talked about before also complicates the system because if I'm tracking inventory on a perpetual inventory system I have to use an invoice and a sales receipt to record the items of the inventory so we'll start to look at this and we'll start at the easiest method meaning you're in the type of industry that you can just record transactions with a deposit form and then we'll get into more complex methods and branch out from that easiest method and try to explain step by step why you would need to record something a little bit different depending on the method now if I go back to the income statement notice that our income line we only have two generic accounts at this point in time that's going to be sales and sales of product and income so we have a service income account we have a product income account that is normally like all you really want are the major groupings of income accounts usually mistakes that people often make which sometimes they're justifiable but generally as a general rule you don't really want to make income accounts based on your customers meaning I'm not going to make a separate income account per customer because usually if you're doing a full service accounting system one in which you're not using deposit forms to record revenue but you have sales receipts and invoices to record revenue you will have sub ledger accounts to break out your income by customer your income statement then can be the summary account and the other mistake people make is to have a separate income account for every inventory or service item they provide that's overkill as well you usually only want major groupings of the things that you provide because you can run subsidiary reports if using a full service system meaning you're using sales receipts and invoices not just deposits they can generate reports broken out by the things that you sell by product and service if you're using those service items however if you're not using sales receipts and invoices and you're in a gig work situation and you're getting paid by YouTube or like Amazon or like an audible thing or whatever you're doing then you don't have the subsidiary reports because you're not using the sales receipts and invoices as readily and you might just start naming your income accounts like YouTube income or Amazon income or something like that which is what we'll start to do here because that's going to be the general that's where most of our information come from from our practice problem and then we'll branch out from there so let's take a look at an example so let's first just look at some of these these income accounts that we have here are classic kind of things that people deal with and how we might deal with that as they come through the bank feeds so different kinds of deposits so first of all we've got this PayPal thing now PayPal used to be like an intermediary kind of platform where you would put it you would use PayPal just so that you can transfer the money into your checking account so if that's all you're using PayPal for then maybe you don't need to do bank feeds with PayPal maybe you can just wait until you transfer the money into your checking account and you can simply record it as income from whatever source whatever the source platform was as it comes into your QuickBooks you can only really do that or that would be best or easiest to do if you didn't have any other all your income was coming from the same place that's just going through PayPal and you're not using PayPal to pay like expenses and stuff because then you're using PayPal more like a checking account so that's one method that you can use but now PayPal is becoming more and more like a checking account so if you have multiple sources of income going through PayPal another method you might use is to set up PayPal as another checking account which it kind of is these days and therefore you would have bank feeds up top with another card of a PayPal account and you can then record your income and your expenses in a similar way as you would with another checking account and you would have just the inter company or inter bank account transfers between the PayPal account and your checking account when there's a transfer and we would record it that way so we'll talk more about PayPal later there's different integrations with PayPal you can kind of look at but that's what we'll actually set up a PayPal like checking account and use the bank fees to set up PayPal hopefully we'll try that in a future presentation now if you get paid by something like a Google like YouTube again this is like gig work kind of situation so in that case you might just make an account called Google income or YouTube income and you'd be using the name of the customer in essence in that case but that would be appropriate because I'm just recording the income directly from the platform that's given it to me and I'm not using invoices or sales receipts so we'll do that later if you get paid by like teaching platforms like a skill share or something similar thing you're just getting paid by a platform so you might just call it like skill share income if you're using something like a Stripe that's another intermediary kind of transactional tool similar to PayPal but Stripe is usually designed specifically as an intermediary tool and not so much as like another bank account so you might have different Stripe integrations that can help you pull more detail from your Stripe into your business account we might talk more about that in future presentations but that can get kind of complicated because do you want all that added detail in your system or not if you make sales on like a website do you want to have all your customer detail information pull into QuickBooks or would it be better to summarize that information in QuickBooks and have all that other detail in Stripe or wherever you have it coming from so one method you can use what we'll just do here is we'll just imagine all of our Stripe income is coming from like a website or something like that you could wait till it comes into your checking account and simply record it as whatever it's coming from you could say it's website income or whatever and then all the added detail that's coming through Stripe instead of having it within QuickBooks you can then pull that from the Stripe page and then your QuickBooks is not weighted down with all that added detail but maybe you want all that in QuickBooks which means you might use some integrations to help pull it into Stripe which we're not going to get into here but we might dive into in its own kind of presentation or course then Audible is another one if you get money from Audible then again you could just that's like you're just getting paid by a platform for royalties or whatever so then you could just record it as income as it comes as it comes through possibly just calling it Audible income and then and then so Amazon same kind of thing if you sell stuff with Amazon it gets a little bit more complex and you might need to integrate with Amazon so there's tools that you can use that are apps that help you to kind of integrate your transactions with Amazon but if you're just getting paid by it for like Amazon Prime or like video you know royalties or something then you might just call it when it comes through Amazon Amazon income because it's just another platform that is coming through Amazon might have multiple different things that they pay you for which you can usually see as differentiated with their transaction detail interest obviously might be just you just record that basically as interest income so let's imagine that I'm going to record one of these in place that are like the easiest thing like Stripe I'm going to imagine it's coming from a website and I'm just going to record it as like website income so this would be like the easiest way to do it right I'm just going to say all right Stripe is here they're trying to record it as a transfer I'm not going to record it as a transfer it's recording it as a transfer because it's coming from another another like what you might think of as a bank type of account if you were to try to integrate with Stripe but I'm just going to record it as a category again you could use apps to try to integrate QuickBooks is trying to come up with new integration apps but sometimes that's a little bit of an overkill so you want to really think about before you you know set up those integrations do you need them what what added information what stuff do you need in QuickBooks versus outside do you need to bloat the QuickBooks to have that added information or is it good enough to have that in the Stripe area so in any case I'm going to say there is that the customer or vendor again you might just call it Stripe I'll just call it Stripe which is not exactly correct because of course the customer if it was coming from a website might be that it's coming from multiple customers that that are from the website but if I'm selling like five dollar items and I have thousands of sales so I really want all the customers coming through in the QuickBooks that's you know one of the questions you want to have before you do the integration alright and then we've got the category so I'm going to just set up a new account as I go because it's going to be an income type of account and I only have you know these generic income accounts here and I'm going to say I want to get detailed basically in my gig work in terms of which platforms are paying us so I am going to set up an account by in essence who's paying us which is a deviation from the general rule in a full service accounting system if I was using a sales receipt or an invoice so that's going to say this is going to be an income account and I'm going to say just other primary income and I'm just going to call it website income with it with the imagination I'm just making this up that this stuff is coming from a website sales or something like that so that's what I'm going to put it for instead of just saying stripe income right because what's the stripe is there collecting income for a particular thing generally would be the idea and so I'm going to save it and now of course save it and close that we could make a rule for that now so let's make a similar process I'm just going to make the rules as we go on the deposit side similar to what we did on the expense side I'm just going to call it stripe rule again and this time it's a money in rule instead of a money out rule you can have a particular account or all accounts we're going to say that it's going to be any or all it doesn't matter because I'm only going to have one condition we'll talk about multiple conditions more later I'm going to say I want it from the bank text I like that better in the memo typically and then I'm just going to say it contains and I just want stripe as long as it says stripe then I'm good to go with it so I'll keep the stripe and then deposit type category website income stripe and so I'm not going to auto add it I'm going to want to check them as we go so I'm going to go ahead and save that so same thing we did now I've got these rules that are set up here let's go up top and I can filter now by the recognized items so the ones that are recognized and here are the stripes so let's just try to add like just some of the stripe stuff so one way we can do that if I just try to select these ones I'm going to say that I'm going to put my cursor here and then I'm going to scroll down to the end of the stripe stuff so I'm going to say right there I'm holding shift and I'm going to select all of them and there they are so I'm going to keep this other stuff because I might use that for some other thing I don't think I'm going to need these ones so I'm just going to add these just to clean them out here so let's go ahead and then I'm just going to accept all of that and pull that in to the system so then if I go into my book my balance sheet and go into my checking account we have a positive number now and so now we've got all these items that are recorded on the deposit side that are in the website income if I go into any of those it doesn't take me back to the bank feed screen but rather to a deposit form the form typically used for an increase to the checking account now notice the checking account is a filterable form because there's a lot of transactions so if I just want to see the deposits I could go in here and I can size and filter the transactions by transaction type let's say and let's say we just want the increases which are the deposits and run that and boom so now we've got our stripe deposits in there and then the other side if I go back was on the income statement so in the income statement let's run it to refresh it it's going to be now we've got this website income just a generic kind of income account that we're going to put everything from stripe that goes into and boom so it pulls in all that stuff and everything that's going in there is with a deposit now again remember in a full service accounting system anything that increases an income account is usually going to be an invoice type of form or a sales receipt type of form a cruel invoice sales cash based method we're using a deposit so again that's fine because that's the method we're using but it's not really what the system is kind of designed to do so we're losing a little bit of added detail by doing that because I can't run like a sub ledger by customer or by or by item but I did add the customer as just stripe income so if I went to the tab the first tab for example and I go into my hand boogie and I go down to the sales then and then I go into my customers now I've got my stripe items down below so I could like see the detail in that way or at least I have my customer that has been added so again it's not notice there's no detail in it because the deposit forms are not usually the form that you use to record the customer information usually it's going to be an invoice and then a receive payment form right so it's so you get to track the customers but it's not giving you the same kind of detail that you would have if you use the full service you know system for the for the cycle of the sales cycle spit it out ok if you're in the other view they get paid and paid view it would be in get paid and paid that's where your customers are at that's what I'm trying to say so there is that so next time we'll keep on building these and we'll do the same thing we'll say we've done the easiest thing just using the deposit and waiting until it clears the bank and then we'll start to start to move away from that to the more difficult components say entering a sales receipt how do the bank feeds fit in there there's actually two nodes it could fit in there as you could try to hit the bank feeds to connect to the sales receipt or you can use it to match the deposit and then we'll move to the invoice where you could have three nodes that you can connect the bank feeds to you could enter the invoice and try to connect the bank feed to the invoice you could enter the invoice receive the payment try to connect the bank feed to the payment and then you could enter the deposit and try to connect the bank feed to the deposit so we'll talk about all those different possibilities just so you're kind of aware of them but most of the time people that are using a full service accounting system will probably do the whole system themselves record the deposit on their end the bank feeds then to verify the deposit that they have made using the bank feeds as a reconciliation tool as opposed to a recording of the financial transaction tool alright let's just open up a trial balance and see where we stand at this time we're going to duplicate this won't let me duplicate it I'm going to hit the hamburger reports down below and let's type in trial balance trial balance boom and let's run from 010122 123122 and run it this is what we've been constructing thus far just in terms of the bare bones mainly from data drawn directly from the bank feeds notice you've got your assets up top and then your liabilities then your equity and then your income statement all kind of in one place