Awesome! I love your explanations. It helps so much to know the reason behind the method. If I don't know 'why' it doesn't stick. Thank you for making this!
Thank you for this feedback! I sometimes fear that I ramble on and make videos too long for certain topics but also know that I personally learn best when being presented with the "why" and am glad to hear that this teaching method is working for others as well
Hi Gunnar, Thank you so much for this video, VERY helpful. I own a liquor store in Minnesota & I have multiple tax rates for example, 6.875% General rate, 2.5% liquor, .5% County, etc. can I still use 1 Daily Sales Receipt? If so, can you help?
You should be able to, if in your POS system that sales tax is entered correctly and you can run a clean report to find the sales tax collected in order to translate over into these entries. And yes, I’d be glad to help, if interested, feel free to book a one-on-one training/consulting session using this link!: calendly.com/essentially-intentional/training-with-gunnar-1-hour
Hi Gunnar, Thank you for this video. Super informative and helpful. 'm trying to figure out why my sales receipts are not auto populating in the bank deposit like shown in your video.
HI Harris Thank for the great video. I got confused with Tax as here QBO will recognise the full amount in tax while we only received Tax for the Cash sales Thanks
I'm glad it helped. With this sales entry method, one of the main benefits is the flexibility. If you set this up and are entering the numbers correctly then you should be able to enter whatever tax collected amount that you want & QBO should not be calculating any sales tax at all because you'll be creating zero-dollar transactions. With this method you will be tracking cash sales tax collected with an External POS system and entering that number in manually, again with this method QBO should not be calculating the sales tax at all. Make sure to create a separate Sales Tax Collected Product & link it to the associated Chart of Accounts account and add it to the Sales Template as a positive amount. Your entry could look something like this: (+) Total Sales: $100 (+) Sales Tax Collected: $10 (tracked via cash sales from an external POS system) (-) Cash Payment: -$70 (-) Credit Card Payment: -$40 Making a zero dollar transaction where QBO has nothing to calculate the sales tax from.
Great Video, well explained. I have Sales on Account as well and am not sure of the best way to record them through this daily sales process. My detailed tracking/aging of A/R from Sales on Account and monthly invoicing of those sales is managed out of the POS. I really just want Quickbooks to have the total AR Balance on the trail balance. When Setting up Products and Services for Cash, Check, Credit Card, I also tried to set one up for Account Sales and tried to link it to Accounts Receivable. However the System will not allow Accounts Receivable to be linked. My work around was to create an Other Assets Account that I called "Receivable form Customers" that seemed to work but I am wondering if there is a better way to do this. Thanks.
Yes, that should work. QBO doesn't like you messing around with the default Accounts Receivables account. But, if like you said, you just want a total AR asset outstanding balance on the Balance Sheet then creating an Other Current Asset account for this should work perfectly fine. As long as you are tracking the customer payments accordingly (lowering/crediting) that same Current Asset account on the backend. The downside to this method is a lack of AR reports and tracking per customer (you can get creative and do this with the asset account you created if you really wanted to) that comes default with the QBO reporting, but if this information is available to you in your external POS system then this shouldn't matter to you anyway.
For someone who was in banking I find accounting extremely challenging with debits/credits being opposite, etc. I’m new to the whole accounting concept and QBO. I currently do not have my banking transactions or my POS trans automatically downloaded to QBO. As long as I set up the Products and Services correctly could I take my daily z-out from the POS and enter all the items in one sales receipt versus two? I’ll start with all the Sales +/- and make sure that’s a zero before then entering all the products sold that day?
It's hard to say for sure without further diving in but its sounds to me like you should be able to do it this way no problem. The key I think would be sure to manually enter all the actual bank deposits to clear out your clearing accounts and ensure that your bank reconciliations are correct. Even though your banking transactions are connected to QBO I would still recommend putting in all the bank transactions into QBO to ensure 1. The clearing accounts are properly cleared and 2. You have the ability to complete monthly bank reconciliations which I highly recommend
I'm glad it helped! There are a couple ways to handle discounts. The following is how I usually handle it for my clients: In the Chart of Accounts, a Discount Account will be created under "Income". Then, a Product/Service will be made that will link to this account and will be entered in the Daily Sales Entry as negatives. Using this method, the discounts will show up on the P&L under the top income section as a negative amount.
Hello Gunnar, thank you for your time and contribution of knowledge. May I ask you this: even thou POS of my restaurant not intergrated with QBO, QBO dowloads all transactions including sales from my business bank account. Can I not just be categorizing evry transaction accordingly? Why do I have to do daily sales manually since sales transactions are already there at Bank Feeds center ? Confused. Thank you!
My pleasure and thank you! The reason is that what is being brought in the QuickBooks Bank Feed is not just sales per se, but the bank deposits. These deposit amounts usually, especially in terms of restaurant sales, containing more “items” associated with them than straight up just sales. Some quick examples include tips and sales tax collected. For both of those items you won’t want to include them in the rest of your sales numbers. Don’t get me wrong, it is sometimes possible to do this in some situations, but usually there is some sort of further breakdown required. Thanks again!
I would create a separate account for tips using the same methods shown in the video for the other accounts and treat it as a payable liability. So, you can create a tips payable liability in the chart of accounts and then create a tips payable product/service and link it to this clearing/liability account. When you put in the daily sales the liability tips account will then increase as a payable, if the tips are paid via cash, you them, create a transfer out of the tips payable account and if you pay the tips out via payroll then you just link the associated payroll account with the new tips payable account!
@@essentiallyintentional Hi there, I'm just trying to figure all of this out. I have done all of the above and it's working great. Thank you SO much for the excellent video. I have a question. I am paying out credit card tips from the till every night. Do I need to record a "pay out" somewhere? And also, you say to "create a transfer out of the tips payable account" but you don't say what transfer account it should go to. Sorry for the rookie questions, this is all brand new to me.
@@glorypaulat150 No problem! Yes, recording the "payout" in QBO if using the above method would most likely be handled by creating a new Journal Entry or Transfer and debiting (decreasing) the Tips Payable Liability account) and crediting (also decreasing) whatever payout method was used (Cash on Hand, Payroll, etc). If Transferring you would be transferring from the payout account (cash, etc) to the Tips Payable Liability account. I can see now how the transfer to the Tips Payable account is confusing so maybe creating Journal Entries will be more straightforward. They both will be essentially accomplishing the same thing regardless by decreasing both accounts. You will be decreasing the Tips Liability account by debiting it and decreasing the Payment (Cash) Asset account by crediting it. Let me know if this doesn't make sense!
@@essentiallyintentional I don't know if you can answer this but I'm setting up to enter daily sales in QBO for my partner's bike shop.. he has a 'payout' category on his till receipts, which they use if they pay a customer for a used bike or if they go buy supplies at the corner store, etc. I'm not sure how I can track this on QBO using the daily sales template..? I also need to be able to track the sales tax paid on these items (we're in Canada, btw). Should I add items to the product list for each of the expense categories, then link them to the matching expense accounts? And make another item for sale tax paid on purchases? Thanks!
@@libbys400 Hmm, I may have to brainstorm more about this one. As of now, I can't think of a solution to handle all of this within the Daily Sales transaction. If you do the method mentioned where you create different products and link them to the expense accounts then that would represent the accurate expenses but cash would be overstated as there would be no withdrawal from the Cash clearing account, I guess it would offset Cash coming in as sales for that day so it may work. There are ways to accomplish this correctly but they are outside the daily sales transaction. One would be creating expenses, selecting the Petty Cash account as the payment method. Not to say there isn't a way to handle all of this within a Daily Sales transaction, I just can't think of one for now but I will keep thinking/looking!
Thank you, I’m glad it helped! Basically, you follow the same method and create the needed Chart of Account Accounts, which sounds like probably an Income and some Liability accounts here and then create the Products/Services and link them to the Chart of Account accounts. When entering the sales, discounts will be negative and the tips will be positives. You may need to really think about the entire workflow of how the tips get paid out to figure how the clearing accounts should be set up and whether you need to put in net CC collected before tips or total of all CC collected including tips, etc. It's hard for me to truly answer this via comments without diving a little bit more of a deeper dive of your exact situation as most businesses are set up differently. Because of this, I can only give general advice via TH-cam, but if you are potentially interested in me getting to know your business workflow better and providing you an exact, customized solution, then check out this page here: www.essentially-intentional.com/qbotraining It sounds like that most likely you’d benefit from one month of Package #1 in order for us come up with the correct solution for you. Thanks Again!
The under/over or over/short you set as an expense. It's likely more commonly under (-), which would make sense as an expense, but if over (+), should the account type not be 'income' instead? Also, there should be two entries with & without VAT, which can be fairly calculated.
In this case, it would be a “Negative Expense” that’s usually how I handle Cash O/S, set it as other expense in one account and if it is over then it’ll just be a negative expense or vice/versa if set up as an other income account. However, if you want, you definitely can create two separate cash discrepancy accounts, one expense account for cash shortage and one income account for cash over if you would prefer for it to be more separated out on your P&L, and the same + / - rule would apply for each!
Glad to hear this video helped. First, I would want to know if you have Chart of Account account(s) set up for comped meals and discounts. Are they going to fall under the same bucket such as "Customer Satisfaction Expenses" or be separated on the P&L as Comped Meals Expense and Discounts Expense, this is up to you and your Accountant. If they are not created, go ahead and create them as shown in the video, I would say these are most likely going to be expense accounts. Then, create 2 separate Product/Services items again as shown in the video one for Complimentary Meals and one for Customer Discounts given. and link them under the "Income Account" to the associated Chart of Account account(s) that we created just before. When creating the daily sales receipt, put them in as a negative amount. An example would be $100 positive for sales $95 negative for cash collected and $5 negative for comp meal and/or discount. Hopefully this is applicable and makes sense!
my credit card batch sometime doesn't match what is on my POS report, so I enter the correct amount on the sales receipt in the applicable clearing account and enter the difference in the drawer/short over . Should I use the drawer/short over or the use the applicable credit card clearing account to indicate the differnce?
Not OP, but I have the same question. In my case it is the processing fee. If I do 500 in cc sales, only say 450 shows as a deposit in my bank account. Conversely, I have another merchant account the does the opposite (500 shows up, but 50 will be taken later as another transaction) and wonder if you have any ideas on how to account for that as well.
@@essentiallyintentional I realize that my first question was answered in a previous comment, but would still love your advice on how to account for the issue of receiving the sales amount from the cc company and then transaction fees being taken out later. This issue means that my deposits from the bank don’t match up, but since I don’t know what the amount of fees will be, I can’t add a clearing account for it.
@@mandeecunningham5521 This method will work, but not sure if there is a simpler method out there as I try to avoid clients needing journal entries as much as possible but it may be needed in this case, what you could do is this: first, in the sales entry put in the CC payment amount before fees because you don't know yet what the fees will be, let's say $500, then, when the deposit hits, let's say for $450, then take that out of CC clearing just like the regular workflow. Then, look at your CC merchant statement as often as you want, probably monthly, and find the total CC processing fees that they kept, you can create a Journal Entry to debit CC processing fees $50 and credit $50 the remaining CC clearing account back down to zero. Hope this makes sense and works in your case.
Thank you for this video! This was incredibly helpful! I run a consignment store and so all of our sales funds aren't 100% ours. Would I be able to create a Consignor Payout "Clearing Account" to get a more accurate picture of our overall finances? (Would it be (+) in the products/services like sales tax?) I don't need QBO to track individuals as we have other software that does that, but our Square POS doesn't track what the consignor is due in the daily sales reports.
Yes, I think you're correct. You can make the Consignor Payout most likely a Current Liability on the Chart of Accounts/Balance Sheet and make the product/service that links to it a "+". Just be sure to make the correct transfer or journal entry when the payouts are made afterward to lower (debit) this liability account and you should be all set!
Hello, what a great video! I am trying my best to do better book keeping this year and this was very helpful. I did have a question though. With credit card sales tips are included in mine, we pay out the servers daily from the cash sales collected. How would I set up something for tips collected but paid out from the cash?
I feel like I've answered my own question after thinking about this a few minutes LOL. I will just deduct the CC tips from the cash collected and enter that amount in the COH section. Sometimes the cash collected may be a negative after the cc tips are taken out though. Would that be an issue?
@@hollyg0808 I am glad to hear that! At the surface that seems like it may work but may potentially get messy with the negative values, I would have to think more about that. I do know I very clean way to do this but would just require an additional step. Enter the daily sales as is, the actual cash sales will be recorded correctly and placed in the petty cash clearing account. Then, create a "Transfer" from petty cash into your tips expense account.
Extremely helpful. Thanks Gunnar! If there is merchant fees already deducted, discounts given, refunds provided -- how do I add that to the sales receipts and under which accounts? Thanks again!
Really helpful video. I was wondering if you could walk me through how to set up gift cards. I can't seem to get them to show up as Daily Sales when they are redeemed or as a payable when they are issued. I must be missing something.
I usually create one Gift Card Product Account and link the Income Account as the Gift Card Liability Account. Then, it will go in two different places in my template: One in the top portion for Gift Card Purchased that will be entered as a positive amount and then again resisted in the bottom section for Gift Cards redeemed that will be entered as a negative amount. Neither of these two gift card entries will directly increase sales, only raise and lower the gift card liability outstanding. Here’s an example: Total Sales (this includes the GC redeemed during the day): $1,000 GC Purchased: $200 Credit Card Payment: $1,100 GC Redeemed: $100 Here’s the entry: Sales: $1,000 Gift Cards: $200 CC Payment Collected: -$1,100 Gift Cards: -$100 See the entry balances out to zero. The Gift Card Liability balance change at the end of the day is $100 ($200 GC Issued minus the $100 redeemed that day). The $1,000 total sales for the day already includes the sales from the $100 gift card redeemed and part of the $1,100 credit card payments collected includes the issuance of the $200 in gift cards, so $1,000 in sales, but $1,200 total collected.
If you want a strictly “cash-basis” accounting, then you could lower the sales portion to $1,500 to match the payments collected, and then do the opposite when the payment collected, that day the collected will be higher than sales, but then you could just raise your sales portion for that day to match the cash colletced. If you want more “accrual-based” accounting, then you could create an asset account, probably “Accounts Recievable” to record the sales on the day they are incurred. So, in this case it would be: Debit: $1,500: Payment Collected Debit: $500: Accounts Receivable Asset Account Credit: $2,000 Sales Then, say next day payment is made for yesterday’s sale, total $1,000 sales, $1,500 collected, then, Debit: $1,500 Payment Collected Credit: $500: Accounts Receivable Asset Account Credit: $1,000: Sales
It’s different for each POS system but generally, you would set up the same type of Chart of Account accounts and Products/Services as in the video and then go into your POS settings and link the associated accounts (sales, tax, inventory, payment types, etc). Again, every POS integration is a little different but ideally you are essentially linking it so the same general transactions are being inputted into QBO with the payment clearing accounts and everything except now it’ll be done automatically and sometimes per transactions vs daily. Thanks for watching and hopefully this helps! Let me know if you'd like more info.
Hi Gunnar -- Thanks for what you do for us! Can I do this on a monthly basis rather than daily? I guess the better question would be what is the value in doing this daily rather than monthly. This is a consignment resale business I am working with.
I have sales from Products (we pay out the commission monthly not at the time of sale, there is no inventory, so no COGs) then also, income from booth rents as well that are monthly payments from the vendors. Would I set up a type of product just for that called Rents?
Absolutely, I usually for my clients do this on a monthly-basis. The value in doing it daily is better reporting (sales and p&l reports per week, etc) if that would be used/helpful and easier clearing account audits/reconciliations. If you are having trouble figuring out if your clearing account numbers are correct, I've found it is much easier if you have the sales being entered daily because then you can see the exact daily in's and outs for things like daily credit card payments in and then deposits out into your bank account and reconcile them off of each other. This becomes more difficult to reconcile when you have 20-30 credit card deposits into your bank account (transfers out of the CC clearing account) and then one, bulk entry back into the CC clearing account
Whatever will lower your Sales Tax Payable Liability, most likely back down to zero will work. At the end of the day the Journal Entry most likely should be: Debit: Sales Tax Payable Liability Account Credit: Your Bank Account There are multiple different “transaction types” in QBO that will ultimately entering the same Journal Entry as above including a “Transfer”. You can always run a Transaction Journal to verify this. A Transfer “from” your Bank Account “to” your Sales Tax Liability Account will create the above-mentioned Journal Entry at the end of the day.
Thanks you, although I have a question about prepaid services. I own a beauty salon, where we take deposits to secure the appointments, I also sell gift cards, and I also have a membership program where I presale services at a discounted price if they enroll in a monthly CC auto draft. I have a POS where I have all the details by customer transaction. Now, my question is what kind of sales receipt should I create on QBO to correctly record all the payments ( I am clear with Cash and Credit Cards), But I am not sure how to register the liabilities of selling gift cards or prepaid services; and at the end of the day when the customer has used their credits to pay, what do I need to do?
This may be more involved than I can greatly help via a comment, but generally, you can create liability accounts for the deposits and gift cards. When deposits or GC's are used to pay, you can enter them as negatives in the daily sales entry which will lower the liability. The presale stuff is more involved and depends on your business i.e when the sale should be recorded cash vs accrual, etc. You could record the sales the day the presale services are paid, increase a presale liability, and then decrease that liability on a monthly basis but I can't say for sure unless taking a deeper dive. Hope this helps.
Do I add Gross sales or Net sales. POS exports have both and this seems confusing since we are separating taxes as well. I'm guessing Net but not sure.
@@fairytaleentertainment-det2700 If that's the case, then Net should work with the assumption that you will be separating Sales Tax in QBO, so you would add Net Sales and then a separate Sales Tax Line
First, you want to create the different Income accounts in your Chart of Accounts. Income: Food, Income: Beer, etc. Then, you want to create new Products/Services and link them to their associated new Income Accounts you just created in your CoA, this is done by selecting the "Income Account" when creating the Products/Service. When entering the Sales Receipt or creating the template, it will then be the same workflow as the "Sales" portion except for you rather than one Sales account you will use your multiple new Sales accounts that you just created.
Honestly, this is hard to answer in a simple comment because we would have to figure out how to handle deferred revenue for your particular business. The simple answer attempt is this: Add (if not already in there), the deferred revenue account in your chart of accounts and then create a separate product/service with the income account set to the referred revenue chart of account account. In terms of the receipt, you can add it just like the other sales accounts as a postive
Why does my balance on “Credit card clearing “ show up as 0 instead of the amount from credit cards. If I transfer from clearing account to checking, “clearing” account becomes negative. I followed step by step.
I'd first go to your "Products/Services" Page, then find the Product that you created for CC clearing, click "Edit" and then look and see what "Income Account" is associated with it. If the Credit Card Clearing account on your Chart of Accounts isn't listed here then I would change it to that.
Hi Gunnar. I was using this method for our new small restaurant business the last few months. But I was having problems with integrating with what QBO was automatically doing when I used QBO for a few catering invoices. I couldn't get the sales tax payable account I created to work with the TEnnessee Department of Revenue liability account that QBO created. So I played around with making sales tax payable a subaccount of TN Dept of Revenue account. I ended up undoing that b/c QBO would not then let me use your method of includes the sales tax as a product on my daily receipt. I'm going back through your video and now QBO won't even let me make a sales tax product!! Help!
Hi Doug, thank you for watching! Whenever you go to pay your sales tax, are you adding the sales tax from both types of sales (regular sales using the POS/Sales Method & the Sales via Invoices) and taking the sum of the tax due from both kind of sales and paying that amount to the same tax authority? Or, are they separated? I ask because sometimes when creating Invoices the addresses could sometimes be different for different counties, etc than the POS used at your restaurant so sometimes more than one sales tax authority needs to be paid.
It's basically to put in funds that will eventually be deposited into your bank account by the CC merchant company. It's a way for you to still correctly track everything needed (fees, sales, tips, gift cards, sales tax, etc) and still handle your bank deposits correctly so that you can accurately complete month-end bank reconciliations. It's basically just an account that you temporarily put funds in to so that you can eventually pull them back out (clear them) once the funds are deposited into your bank account. It's the same thing as a standard "Undeposited Funds" account, just set up for funds received via Credit Cards vs Cash/Checks.
so i did all of this and each sales receipt equals $0 and my chart of accounts are working fine. HOWEVER, QBO thinks I have zero sales! So my cash flow looks like $0! that makes it difficult to use the budgeting features obviously. And it also wants to use those zero sales #s for determining my zero sales taxes. what is the way around this? Do I have to redo all my sales receipts?
I'd start by going into to your Products/Services list and find the Product/Service(s) you created to enter your sales in the entries and click "edit", from this screen scroll down and look at the "Income Account" section, verify that this account chosen here is linked to an Income account on your Chart of Accounts, if it isn't you can change it and then hit the box "Do you want to apply these changes to historical transactions?" and this will make the change for past sales entries.
My payment processor automatically deducts a fee per transaction - so bank deposits are smaller then Credit Card Clearing account entries... How do you reconcile that difference?
In this case, when entering the CC Payment method in the Sales Receipt, you would enter the payment as the Net (CC payments collected after fees deducted) amount. Then, you would add an additional line using the method shown in this video and track it for CC Merchant Fees, this will also be added in as a negative on the Sales Receipt. You will have to know the amount of merchant fees being taken. This can be done on a daily, weekly or monthly basis. With this method, the fees are accounted for as an expense and the amounts going into the clearing account are only the net amounts to be deposited.
I knew accounting wouldn't ever be my strong point in running a business. I failed accounting in high school because I never could remember when to debit my accounts and when to credit them. My teacher said that I was wasting time being in her class. At 60 years of age, I'm still licking my wounds.
I just signed up for QBO in Jan. 2021 for my restaurant. When I use sales receipt, it has an option to automatically calculate the sales tax. If I make the daily sales zero out then the sales tax records as $0. It currently says that I owe $0 for State Sales Tax. I spoke to two different people with QBO and one said the way you present in the video is the wrong way to do it and the other says to do it similar to the way you showed. How can I enter the Daily Sales and it calculate in my Sales Tax report? Also my credit cards that are deposited into my bank already have the processing fees taken out. So my deposits will never "match" what is in my Daily Sales. How do I record this so that the deposit doesn't look like additional income?
Yes, if sales tax is not calculated at the POS and you want QBO to calculate the sales tax for you then you can still use this method while having QBO calculate the sales tax for you with a slight variation. I should have made this distinction in the video as with this method it is assumed that the data is being entered from numbers off a POS system that has the sales tax calculated. First, make sure if doing it this way that when creating/editing the product/service sales accounts that the associated accounts are marked as "taxable or "non-taxable". This will vary business to business but at the most broad level you could create separate "taxable sales" and "tax-exempt sales" accounts and mark them as such from the Product/Service menu. Then, you enter the sales receipt with the same exact method as shown excluding the sales tax line. If there is no cash/over short, then the sales receipt "subtotal" should be a negative number, then the calculated sales tax will be added and the actual bottom-line total should be zero. Basic example assuming 5% sales tax. In sales receipt: Taxable Sales: $100 (+) (make sure tax box is checked) Tax-Exempt Sales: $50 (+) Cash: $155 (-) (More payment collected than sales due to tax collected) Subtotal: -$5 QBO will then calculate the sales tax from the $100 of taxable sales: $5 Then the bottom line will be 0 unless there is cash over/short For this year's transactions you can either edit the already entered product/service accounts as taxable and select "update for past transactions", or go through the sales receipts and check the "Tax" box in the sales receipt to the right of the item. Also please see the comment below regarding viewing the tax amounts in QBO for GST returns. Now, regarding the credit card deposits, I'm going to give you 2 options and you can choose one or a combination of these ways to handle it. One of the variables will be when you actually know what the processing fees are, whether you know this number in your POS at daily closing when it gets deposited in your bank or only when you receive a monthly statement. Option #1: Probably best if you know the fee amount at end of day close. Create an additional Product/Service account like shown in the video, set the "Income Account" to your Merchant Fees associated expense account. This will be entered as a negative in the sales receipt. So, rather than putting $100 (-) in CC you would put $95 (-) in CC and $5 (-) in CC Payment Processing. When the $95 hits your bank, you will transfer it out of your CC clearing account. Option #2: If you know your fee amount by time you receive your monthly statement. Continue to put all CC transactions in the sales receipts as shown. When the deposits hit your bank transfer them out of the CC clearing account. At month-end, create a journal entry with a debit in the total monthly processing fees for the merchant payment expense account and credit the CC clearing account for the same amount. Number examples below assuming a 5% CC processing fee: Day/Week 1: $1000 in CC payment goes into CC clearing account Next day, $950 deposited into bank and transferred out of the CC clearing account. Day/Week 2: $500 in CC payment goes into CC clearing account Next day, $475 deposited into bank and transferred out of CC clearing account. Now, the CC clearing account has a balance of $75 (1500-$1425). Now, you look at your statement and see that $75 total was taken out in fees. That is when you will create the JE increasing the fee expense account by $75 and depleting the $75 remaining in the clearing account.
@@anderose9806 Just so you know, I do have a service set up for this, a 1-1 Zoom video chat with myself. You can check availabilities and schedule one if desired here: www.essentially-intentional.com/qbotraining and of course, no problem!
If I'm understanding you correctly, you could create a new Product/Service titled something like CC Fees and set the Income Account to your merchant fees expense account, then include it in the daily sales entries. That way, your entries will balance and the expenses will be accounted for
I did exactly the same way for my restaurant business. However, when I am filing GST return, it is calculating all the sales amounts( cash, check, card, tips, Gift cards etc. ) which is more than the sales amount, so my total sales revenue is a negative value?? How can I correct it?
If it is showing actual revenue on your P&L as negative I would be sure to make sure look at your Product/Service List and make sure that the payment accounts (cash, check, etc), edit them and look at "Income Account" make sure that income account so the associated clearing account and not an actual revenue account. If however, you are talking about the sales tax liability report in QBO yes it is unfortunate how customizable that report is. That report is messy in QBO showing Gross Sales as negative, the "Tax Amount" should be correct however. When my clients run onto this I usually have them save/bookmark the sales tax liability report as well as save other sales reports in order to get all info needed for the GST returns. This is the best solution I've found so far and unfortunately haven't found a solution yet where everything is in the same place. That second report could be a sales by product/service summary report for example. So for example at month end, they will run the saved/bookmarked Sales Tax Liability Report to get the state/city taxable sales and tax collected/due amounts for city/state. Then, they run the saved sales by product/service summary report to get the additional numbers needed. So, you could know for example which products are non taxed add them together to get the needed numbers for the report. I hope this helps, sorry for such a long answer!
@@essentiallyintentional my P&L is showing the correct sales and revenue values. So, I will use these when filing GST return. And yes the “tax amount” is correctly calculated including “tax credit amount”.
It was the Credit Card "Clearing" Accounts that should be under current assets. It is categorizing the funds received from customers using credit cards which is an asset.
@@claytonalexander3972 That is because for this method of putting in sales selecting a payment method there would be irrelevant as #1, the end balance of the transaction is zero and #2 the payment methods used are put in while entering the whole transaction, this template is utilized for entering sales with multiple payment methods, selecting only one there would not help us in this case. If you were putting in a sales receipt where only one payment method was used and no clearing accounts are being utilized then yes, right there is where you would select the payment method.
I'm not sure why it was so hard to find a simple video like this, but THANK YOU! That was extremely helpful & what I've been looking for for days!
same here. Took forever.
Confusing accounting made easier and fun. Saves me hours to figure out myself doing all diy. Thank you!
Glad I could help! Thanks for watching & thanks for the feedback.
First time watching your channel. Really glad I did. Very helpful videos.
Thank you for taking the time to add a comment and for this feedback and thank you for watching!
Keep posting. Learning so much from your channel. Thanks.
Awesome! I love your explanations. It helps so much to know the reason behind the method. If I don't know 'why' it doesn't stick. Thank you for making this!
Thank you for this feedback! I sometimes fear that I ramble on and make videos too long for certain topics but also know that I personally learn best when being presented with the "why" and am glad to hear that this teaching method is working for others as well
Hi Gunnar, Thank you so much for this video, VERY helpful. I own a liquor store in Minnesota & I have multiple tax rates for example, 6.875% General rate, 2.5% liquor, .5% County, etc. can I still use 1 Daily Sales Receipt? If so, can you help?
You should be able to, if in your POS system that sales tax is entered correctly and you can run a clean report to find the sales tax collected in order to translate over into these entries. And yes, I’d be glad to help, if interested, feel free to book a one-on-one training/consulting session using this link!:
calendly.com/essentially-intentional/training-with-gunnar-1-hour
Incredibly helpful video!
Incredibly helpful video, thank you!
Of course, thank you for the feedback!
Hi Gunnar, Thank you for this video. Super informative and helpful. 'm trying to figure out why my sales receipts are not auto populating in the bank deposit like shown in your video.
Very helpful video.Thankyou so much...
Best Video Ever , Thank you.
Loved the video!
HI Harris
Thank for the great video. I got confused with Tax as here QBO will recognise the full amount in tax while we only received Tax for the Cash sales
Thanks
I'm glad it helped. With this sales entry method, one of the main benefits is the flexibility. If you set this up and are entering the numbers correctly then you should be able to enter whatever tax collected amount that you want & QBO should not be calculating any sales tax at all because you'll be creating zero-dollar transactions. With this method you will be tracking cash sales tax collected with an External POS system and entering that number in manually, again with this method QBO should not be calculating the sales tax at all. Make sure to create a separate Sales Tax Collected Product & link it to the associated Chart of Accounts account and add it to the Sales Template as a positive amount. Your entry could look something like this:
(+) Total Sales: $100
(+) Sales Tax Collected: $10 (tracked via cash sales from an external POS system)
(-) Cash Payment: -$70
(-) Credit Card Payment: -$40
Making a zero dollar transaction where QBO has nothing to calculate the sales tax from.
Great Video, well explained. I have Sales on Account as well and am not sure of the best way to record them through this daily sales process. My detailed tracking/aging of A/R from Sales on Account and monthly invoicing of those sales is managed out of the POS. I really just want Quickbooks to have the total AR Balance on the trail balance. When Setting up Products and Services for Cash, Check, Credit Card, I also tried to set one up for Account Sales and tried to link it to Accounts Receivable. However the System will not allow Accounts Receivable to be linked. My work around was to create an Other Assets Account that I called "Receivable form Customers" that seemed to work but I am wondering if there is a better way to do this. Thanks.
Yes, that should work. QBO doesn't like you messing around with the default Accounts Receivables account. But, if like you said, you just want a total AR asset outstanding balance on the Balance Sheet then creating an Other Current Asset account for this should work perfectly fine. As long as you are tracking the customer payments accordingly (lowering/crediting) that same Current Asset account on the backend. The downside to this method is a lack of AR reports and tracking per customer (you can get creative and do this with the asset account you created if you really wanted to) that comes default with the QBO reporting, but if this information is available to you in your external POS system then this shouldn't matter to you anyway.
For someone who was in banking I find accounting extremely challenging with debits/credits being opposite, etc. I’m new to the whole accounting concept and QBO. I currently do not have my banking transactions or my POS trans automatically downloaded to QBO. As long as I set up the Products and Services correctly could I take my daily z-out from the POS and enter all the items in one sales receipt versus two? I’ll start with all the Sales +/- and make sure that’s a zero before then entering all the products sold that day?
It's hard to say for sure without further diving in but its sounds to me like you should be able to do it this way no problem. The key I think would be sure to manually enter all the actual bank deposits to clear out your clearing accounts and ensure that your bank reconciliations are correct. Even though your banking transactions are connected to QBO I would still recommend putting in all the bank transactions into QBO to ensure 1. The clearing accounts are properly cleared and 2. You have the ability to complete monthly bank reconciliations which I highly recommend
This video is so helpful! How would you account for discounts?
I'm glad it helped! There are a couple ways to handle discounts. The following is how I usually handle it for my clients: In the Chart of Accounts, a Discount Account will be created under "Income". Then, a Product/Service will be made that will link to this account and will be entered in the Daily Sales Entry as negatives. Using this method, the discounts will show up on the P&L under the top income section as a negative amount.
Hello Gunnar, thank you for your time and contribution of knowledge. May I ask you this: even thou POS of my restaurant not intergrated with QBO, QBO dowloads all transactions including sales from my business bank account. Can I not just be categorizing evry transaction accordingly? Why do I have to do daily sales manually since sales transactions are already there at Bank Feeds center ? Confused. Thank you!
My pleasure and thank you! The reason is that what is being brought in the QuickBooks Bank Feed is not just sales per se, but the bank deposits. These deposit amounts usually, especially in terms of restaurant sales, containing more “items” associated with them than straight up just sales. Some quick examples include tips and sales tax collected. For both of those items you won’t want to include them in the rest of your sales numbers. Don’t get me wrong, it is sometimes possible to do this in some situations, but usually there is some sort of further breakdown required. Thanks again!
I have looking for days for this. Thank you. I do bookkeeping for a restaurant. Where would I put tips?
I would create a separate account for tips using the same methods shown in the video for the other accounts and treat it as a payable liability. So, you can create a tips payable liability in the chart of accounts and then create a tips payable product/service and link it to this clearing/liability account. When you put in the daily sales the liability tips account will then increase as a payable, if the tips are paid via cash, you them, create a transfer out of the tips payable account and if you pay the tips out via payroll then you just link the associated payroll account with the new tips payable account!
@@essentiallyintentional Hi there, I'm just trying to figure all of this out. I have done all of the above and it's working great. Thank you SO much for the excellent video. I have a question. I am paying out credit card tips from the till every night. Do I need to record a "pay out" somewhere? And also, you say to "create a transfer out of the tips payable account" but you don't say what transfer account it should go to. Sorry for the rookie questions, this is all brand new to me.
@@glorypaulat150 No problem! Yes, recording the "payout" in QBO if using the above method would most likely be handled by creating a new Journal Entry or Transfer and debiting (decreasing) the Tips Payable Liability account) and crediting (also decreasing) whatever payout method was used (Cash on Hand, Payroll, etc). If Transferring you would be transferring from the payout account (cash, etc) to the Tips Payable Liability account. I can see now how the transfer to the Tips Payable account is confusing so maybe creating Journal Entries will be more straightforward. They both will be essentially accomplishing the same thing regardless by decreasing both accounts. You will be decreasing the Tips Liability account by debiting it and decreasing the Payment (Cash) Asset account by crediting it. Let me know if this doesn't make sense!
This video is extremely helpful. thank you!
I'm glad it was helpful, no problem!
@@essentiallyintentional I don't know if you can answer this but I'm setting up to enter daily sales in QBO for my partner's bike shop.. he has a 'payout' category on his till receipts, which they use if they pay a customer for a used bike or if they go buy supplies at the corner store, etc. I'm not sure how I can track this on QBO using the daily sales template..? I also need to be able to track the sales tax paid on these items (we're in Canada, btw). Should I add items to the product list for each of the expense categories, then link them to the matching expense accounts? And make another item for sale tax paid on purchases? Thanks!
@@libbys400 Are all of these purchases paid for via cash or a combo of cash and/or credit/debit cards?
@@essentiallyintentional They're all paid with cash, yes. thanks
@@libbys400 Hmm, I may have to brainstorm more about this one. As of now, I can't think of a solution to handle all of this within the Daily Sales transaction. If you do the method mentioned where you create different products and link them to the expense accounts then that would represent the accurate expenses but cash would be overstated as there would be no withdrawal from the Cash clearing account, I guess it would offset Cash coming in as sales for that day so it may work. There are ways to accomplish this correctly but they are outside the daily sales transaction. One would be creating expenses, selecting the Petty Cash account as the payment method. Not to say there isn't a way to handle all of this within a Daily Sales transaction, I just can't think of one for now but I will keep thinking/looking!
Good Evening.
Can you share the check list you provided on the video? Thanks.
Hello! Yes, please visit the link here: www.essentially-intentional.com/newsletter
for instructions on how to download this checklist. Thank you!
I truly appreciate the detailed breakdown but I a question on how to record customer discounts, house tips and credit card tips. Thanks in advance.
Thank you, I’m glad it helped! Basically, you follow the same method and create the needed Chart of Account Accounts, which sounds like probably an Income and some Liability accounts here and then create the Products/Services and link them to the Chart of Account accounts. When entering the sales, discounts will be negative and the tips will be positives. You may need to really think about the entire workflow of how the tips get paid out to figure how the clearing accounts should be set up and whether you need to put in net CC collected before tips or total of all CC collected including tips, etc. It's hard for me to truly answer this via comments without diving a little bit more of a deeper dive of your exact situation as most businesses are set up differently. Because of this, I can only give general advice via TH-cam, but if you are potentially interested in me getting to know your business workflow better and providing you an exact, customized solution, then check out this page here: www.essentially-intentional.com/qbotraining It sounds like that most likely you’d benefit from one month of Package #1 in order for us come up with the correct solution for you. Thanks Again!
The under/over or over/short you set as an expense. It's likely more commonly under (-), which would make sense as an expense, but if over (+), should the account type not be 'income' instead? Also, there should be two entries with & without VAT, which can be fairly calculated.
In this case, it would be a “Negative Expense” that’s usually how I handle Cash O/S, set it as other expense in one account and if it is over then it’ll just be a negative expense or vice/versa if set up as an other income account. However, if you want, you definitely can create two separate cash discrepancy accounts, one expense account for cash shortage and one income account for cash over if you would prefer for it to be more separated out on your P&L, and the same + / - rule would apply for each!
Hi. Thank you for your video. It helped me a lot. One thing I would like to ask you, how to treat complimentary and discounts for a restaurant?
Glad to hear this video helped. First, I would want to know if you have Chart of Account account(s) set up for comped meals and discounts. Are they going to fall under the same bucket such as "Customer Satisfaction Expenses" or be separated on the P&L as Comped Meals Expense and Discounts Expense, this is up to you and your Accountant. If they are not created, go ahead and create them as shown in the video, I would say these are most likely going to be expense accounts. Then, create 2 separate Product/Services items again as shown in the video one for Complimentary Meals and one for Customer Discounts given. and link them under the "Income Account" to the associated Chart of Account account(s) that we created just before. When creating the daily sales receipt, put them in as a negative amount. An example would be $100 positive for sales $95 negative for cash collected and $5 negative for comp meal and/or discount. Hopefully this is applicable and makes sense!
amazing video I just subscribed! 1 question though how to account for shipping especially when included in cc payments?
Are you referring to a shipping expense or income?
my credit card batch sometime doesn't match what is on my POS report, so I enter the correct amount on the sales receipt in the applicable clearing account and enter the difference in the drawer/short over . Should I use the drawer/short over or the use the applicable credit card clearing account to indicate the differnce?
Do you know what the difference accounts for? Is it CC processing fees?
Not OP, but I have the same question. In my case it is the processing fee. If I do 500 in cc sales, only say 450 shows as a deposit in my bank account.
Conversely, I have another merchant account the does the opposite (500 shows up, but 50 will be taken later as another transaction) and wonder if you have any ideas on how to account for that as well.
@@essentiallyintentional I realize that my first question was answered in a previous comment, but would still love your advice on how to account for the issue of receiving the sales amount from the cc company and then transaction fees being taken out later. This issue means that my deposits from the bank don’t match up, but since I don’t know what the amount of fees will be, I can’t add a clearing account for it.
@@mandeecunningham5521 This method will work, but not sure if there is a simpler method out there as I try to avoid clients needing journal entries as much as possible but it may be needed in this case, what you could do is this: first, in the sales entry put in the CC payment amount before fees because you don't know yet what the fees will be, let's say $500, then, when the deposit hits, let's say for $450, then take that out of CC clearing just like the regular workflow. Then, look at your CC merchant statement as often as you want, probably monthly, and find the total CC processing fees that they kept, you can create a Journal Entry to debit CC processing fees $50 and credit $50 the remaining CC clearing account back down to zero. Hope this makes sense and works in your case.
Thank you for this video! This was incredibly helpful! I run a consignment store and so all of our sales funds aren't 100% ours. Would I be able to create a Consignor Payout "Clearing Account" to get a more accurate picture of our overall finances? (Would it be (+) in the products/services like sales tax?) I don't need QBO to track individuals as we have other software that does that, but our Square POS doesn't track what the consignor is due in the daily sales reports.
Yes, I think you're correct. You can make the Consignor Payout most likely a Current Liability on the Chart of Accounts/Balance Sheet and make the product/service that links to it a "+". Just be sure to make the correct transfer or journal entry when the payouts are made afterward to lower (debit) this liability account and you should be all set!
@@essentiallyintentional Thank you!!
Hello, what a great video! I am trying my best to do better book keeping this year and this was very helpful. I did have a question though. With credit card sales tips are included in mine, we pay out the servers daily from the cash sales collected. How would I set up something for tips collected but paid out from the cash?
I feel like I've answered my own question after thinking about this a few minutes LOL. I will just deduct the CC tips from the cash collected and enter that amount in the COH section. Sometimes the cash collected may be a negative after the cc tips are taken out though. Would that be an issue?
@@hollyg0808 I am glad to hear that! At the surface that seems like it may work but may potentially get messy with the negative values, I would have to think more about that. I do know I very clean way to do this but would just require an additional step. Enter the daily sales as is, the actual cash sales will be recorded correctly and placed in the petty cash clearing account. Then, create a "Transfer" from petty cash into your tips expense account.
Extremely helpful. Thanks Gunnar! If there is merchant fees already deducted, discounts given, refunds provided -- how do I add that to the sales receipts and under which accounts? Thanks again!
can anyone answer this ?
Hi, I have the same question. Do you already know the answer? About the merchant fees deducted? Thanks
Hello, this was a very helpful video. How could I get your checklist?
Could you just send me a quick email (gunnar@essentially-intentional.com) and I can send it to you there!
Really helpful video. I was wondering if you could walk me through how to set up gift cards. I can't seem to get them to show up as Daily Sales when they are redeemed or as a payable when they are issued. I must be missing something.
I usually create one Gift Card Product Account and link the Income Account as the Gift Card Liability Account. Then, it will go in two different places in my template: One in the top portion for Gift Card Purchased that will be entered as a positive amount and then again resisted in the bottom section for Gift Cards redeemed that will be entered as a negative amount. Neither of these two gift card entries will directly increase sales, only raise and lower the gift card liability outstanding.
Here’s an example:
Total Sales (this includes the GC redeemed during the day): $1,000
GC Purchased: $200
Credit Card Payment: $1,100
GC Redeemed: $100
Here’s the entry:
Sales: $1,000
Gift Cards: $200
CC Payment Collected: -$1,100
Gift Cards: -$100
See the entry balances out to zero. The Gift Card Liability balance change at the end of the day is $100 ($200 GC Issued minus the $100 redeemed that day). The $1,000 total sales for the day already includes the sales from the $100 gift card redeemed and part of the $1,100 credit card payments collected includes the issuance of the $200 in gift cards, so $1,000 in sales, but $1,200 total collected.
Hey.
Thanks for the video, but what do I do if someone only pays a partial payment? Ie sales for the day of 2,000 payments in of 1,500?
Thanks!!!
If you want a strictly “cash-basis” accounting, then you could lower the sales portion to $1,500 to match the payments collected, and then do the opposite when the payment collected, that day the collected will be higher than sales, but then you could just raise your sales portion for that day to match the cash colletced.
If you want more “accrual-based” accounting, then you could create an asset account, probably “Accounts Recievable” to record the sales on the day they are incurred. So, in this case it would be:
Debit: $1,500: Payment Collected
Debit: $500: Accounts Receivable Asset Account
Credit: $2,000 Sales
Then, say next day payment is made for yesterday’s sale, total $1,000 sales, $1,500 collected, then,
Debit: $1,500 Payment Collected
Credit: $500: Accounts Receivable Asset Account
Credit: $1,000: Sales
@@essentiallyintentional Thank you for the reply!
This video is really helpful. Can you throw more light on how this process works when the POS transactions are interfaced with QBO.
It’s different for each POS system but generally, you would set up the same type of Chart of Account accounts and Products/Services as in the video and then go into your POS settings and link the associated accounts (sales, tax, inventory, payment types, etc). Again, every POS integration is a little different but ideally you are essentially linking it so the same general transactions are being inputted into QBO with the payment clearing accounts and everything except now it’ll be done automatically and sometimes per transactions vs daily. Thanks for watching and hopefully this helps! Let me know if you'd like more info.
Hi Gunnar -- Thanks for what you do for us! Can I do this on a monthly basis rather than daily? I guess the better question would be what is the value in doing this daily rather than monthly. This is a consignment resale business I am working with.
I have sales from Products (we pay out the commission monthly not at the time of sale, there is no inventory, so no COGs) then also, income from booth rents as well that are monthly payments from the vendors. Would I set up a type of product just for that called Rents?
We rec these in cash/check - would I make separate clearing accounts for Booth Rents Cash and Booth Rents Check --- I am confusing myself here.
Absolutely, I usually for my clients do this on a monthly-basis. The value in doing it daily is better reporting (sales and p&l reports per week, etc) if that would be used/helpful and easier clearing account audits/reconciliations. If you are having trouble figuring out if your clearing account numbers are correct, I've found it is much easier if you have the sales being entered daily because then you can see the exact daily in's and outs for things like daily credit card payments in and then deposits out into your bank account and reconcile them off of each other. This becomes more difficult to reconcile when you have 20-30 credit card deposits into your bank account (transfers out of the CC clearing account) and then one, bulk entry back into the CC clearing account
Do you have to do a transfer as well if you are paying your sales tax payable?
Whatever will lower your Sales Tax Payable Liability, most likely back down to zero will work. At the end of the day the Journal Entry most likely should be:
Debit: Sales Tax Payable Liability Account
Credit: Your Bank Account
There are multiple different “transaction types” in QBO that will ultimately entering the same Journal Entry as above including a “Transfer”. You can always run a Transaction Journal to verify this. A Transfer “from” your Bank Account “to” your Sales Tax Liability Account will create the above-mentioned Journal Entry at the end of the day.
Do you use TeamViewer? What do you charge?
Can't say I have, no, I'm not familiar as to what TeamViewer is.
How do I add multiple
Clients and eliminate duplicates?
Great video with details on the connection of accounts and type. Can you please send me the list of accounts and type for the clearing accounts?
I sure can. Would you mind sending me a quick email to gunnar@essentially-intentional.com and I can send you the PDF there
Thanks you, although I have a question about prepaid services. I own a beauty salon, where we take deposits to secure the appointments, I also sell gift cards, and I also have a membership program where I presale services at a discounted price if they enroll in a monthly CC auto draft. I have a POS where I have all the details by customer transaction. Now, my question is what kind of sales receipt should I create on QBO to correctly record all the payments ( I am clear with Cash and Credit Cards), But I am not sure how to register the liabilities of selling gift cards or prepaid services; and at the end of the day when the customer has used their credits to pay, what do I need to do?
This may be more involved than I can greatly help via a comment, but generally, you can create liability accounts for the deposits and gift cards. When deposits or GC's are used to pay, you can enter them as negatives in the daily sales entry which will lower the liability. The presale stuff is more involved and depends on your business i.e when the sale should be recorded cash vs accrual, etc. You could record the sales the day the presale services are paid, increase a presale liability, and then decrease that liability on a monthly basis but I can't say for sure unless taking a deeper dive. Hope this helps.
@@essentiallyintentional That makes sense, thanks for your prompt response.
Thanks amigo
Do I add Gross sales or Net sales. POS exports have both and this seems confusing since we are separating taxes as well. I'm guessing Net but not sure.
In your particular case, what is the net referring to: after COGS or Cost of Service, after taxes, or something else?
@@essentiallyintentional I believe its after taxes.
@@fairytaleentertainment-det2700 If that's the case, then Net should work with the assumption that you will be separating Sales Tax in QBO, so you would add Net Sales and then a separate Sales Tax Line
I have a restaurant. How do I input different categories of items that we sell? For example, food, beer, wine, liquor.
First, you want to create the different Income accounts in your Chart of Accounts. Income: Food, Income: Beer, etc. Then, you want to create new Products/Services and link them to their associated new Income Accounts you just created in your CoA, this is done by selecting the "Income Account" when creating the Products/Service. When entering the Sales Receipt or creating the template, it will then be the same workflow as the "Sales" portion except for you rather than one Sales account you will use your multiple new Sales accounts that you just created.
I wish this had a transcript. It’s so good and I’m still confused!! lol
Also, how would deferred revenue be added to this sales receipt. My POS shows deferred revenue based on advanced ticket sales for a future date.
Honestly, this is hard to answer in a simple comment because we would have to figure out how to handle deferred revenue for your particular business. The simple answer attempt is this: Add (if not already in there), the deferred revenue account in your chart of accounts and then create a separate product/service with the income account set to the referred revenue chart of account account. In terms of the receipt, you can add it just like the other sales accounts as a postive
Why does my balance on “Credit card clearing “ show up as 0 instead of the amount from credit cards. If I transfer from clearing account to checking, “clearing” account becomes negative. I followed step by step.
I'd first go to your "Products/Services" Page, then find the Product that you created for CC clearing, click "Edit" and then look and see what "Income Account" is associated with it. If the Credit Card Clearing account on your Chart of Accounts isn't listed here then I would change it to that.
Hi Gunnar. I was using this method for our new small restaurant business the last few months. But I was having problems with integrating with what QBO was automatically doing when I used QBO for a few catering invoices. I couldn't get the sales tax payable account I created to work with the TEnnessee Department of Revenue liability account that QBO created. So I played around with making sales tax payable a subaccount of TN Dept of Revenue account. I ended up undoing that b/c QBO would not then let me use your method of includes the sales tax as a product on my daily receipt. I'm going back through your video and now QBO won't even let me make a sales tax product!! Help!
Hi Doug, thank you for watching! Whenever you go to pay your sales tax, are you adding the sales tax from both types of sales (regular sales using the POS/Sales Method & the Sales via Invoices) and taking the sum of the tax due from both kind of sales and paying that amount to the same tax authority? Or, are they separated? I ask because sometimes when creating Invoices the addresses could sometimes be different for different counties, etc than the POS used at your restaurant so sometimes more than one sales tax authority needs to be paid.
What is credit card clearing account funtion?
It's basically to put in funds that will eventually be deposited into your bank account by the CC merchant company. It's a way for you to still correctly track everything needed (fees, sales, tips, gift cards, sales tax, etc) and still handle your bank deposits correctly so that you can accurately complete month-end bank reconciliations. It's basically just an account that you temporarily put funds in to so that you can eventually pull them back out (clear them) once the funds are deposited into your bank account. It's the same thing as a standard "Undeposited Funds" account, just set up for funds received via Credit Cards vs Cash/Checks.
so i did all of this and each sales receipt equals $0 and my chart of accounts are working fine. HOWEVER, QBO thinks I have zero sales! So my cash flow looks like $0! that makes it difficult to use the budgeting features obviously. And it also wants to use those zero sales #s for determining my zero sales taxes. what is the way around this? Do I have to redo all my sales receipts?
I'd start by going into to your Products/Services list and find the Product/Service(s) you created to enter your sales in the entries and click "edit", from this screen scroll down and look at the "Income Account" section, verify that this account chosen here is linked to an Income account on your Chart of Accounts, if it isn't you can change it and then hit the box "Do you want to apply these changes to historical transactions?" and this will make the change for past sales entries.
My payment processor automatically deducts a fee per transaction - so bank deposits are smaller then Credit Card Clearing account entries... How do you reconcile that difference?
In this case, when entering the CC Payment method in the Sales Receipt, you would enter the payment as the Net (CC payments collected after fees deducted) amount. Then, you would add an additional line using the method shown in this video and track it for CC Merchant Fees, this will also be added in as a negative on the Sales Receipt. You will have to know the amount of merchant fees being taken. This can be done on a daily, weekly or monthly basis. With this method, the fees are accounted for as an expense and the amounts going into the clearing account are only the net amounts to be deposited.
I knew accounting wouldn't ever be my strong point in running a business. I failed accounting in high school because I never could remember when to debit my accounts and when to credit them. My teacher said that I was wasting time being in her class. At 60 years of age, I'm still licking my wounds.
I just signed up for QBO in Jan. 2021 for my restaurant. When I use sales receipt, it has an option to automatically calculate the sales tax. If I make the daily sales zero out then the sales tax records as $0. It currently says that I owe $0 for State Sales Tax. I spoke to two different people with QBO and one said the way you present in the video is the wrong way to do it and the other says to do it similar to the way you showed. How can I enter the Daily Sales and it calculate in my Sales Tax report? Also my credit cards that are deposited into my bank already have the processing fees taken out. So my deposits will never "match" what is in my Daily Sales. How do I record this so that the deposit doesn't look like additional income?
Yes, if sales tax is not calculated at the POS and you want QBO to calculate the sales tax for you then you can still use this method while having QBO calculate the sales tax for you with a slight variation. I should have made this distinction in the video as with this method it is assumed that the data is being entered from numbers off a POS system that has the sales tax calculated. First, make sure if doing it this way that when creating/editing the product/service sales accounts that the associated accounts are marked as "taxable or "non-taxable". This will vary business to business but at the most broad level you could create separate "taxable sales" and "tax-exempt sales" accounts and mark them as such from the Product/Service menu. Then, you enter the sales receipt with the same exact method as shown excluding the sales tax line. If there is no cash/over short, then the sales receipt "subtotal" should be a negative number, then the calculated sales tax will be added and the actual bottom-line total should be zero. Basic example assuming 5% sales tax. In sales receipt:
Taxable Sales: $100 (+) (make sure tax box is checked)
Tax-Exempt Sales: $50 (+)
Cash: $155 (-) (More payment collected than sales due to tax collected)
Subtotal: -$5
QBO will then calculate the sales tax from the $100 of taxable sales: $5
Then the bottom line will be 0 unless there is cash over/short
For this year's transactions you can either edit the already entered product/service accounts as taxable and select "update for past transactions", or go through the sales receipts and check the "Tax" box in the sales receipt to the right of the item. Also please see the comment below regarding viewing the tax amounts in QBO for GST returns.
Now, regarding the credit card deposits, I'm going to give you 2 options and you can choose one or a combination of these ways to handle it. One of the variables will be when you actually know what the processing fees are, whether you know this number in your POS at daily closing when it gets deposited in your bank or only when you receive a monthly statement.
Option #1: Probably best if you know the fee amount at end of day close. Create an additional Product/Service account like shown in the video, set the "Income Account" to your Merchant Fees associated expense account. This will be entered as a negative in the sales receipt. So, rather than putting $100 (-) in CC you would put $95 (-) in CC and $5 (-) in CC Payment Processing. When the $95 hits your bank, you will transfer it out of your CC clearing account.
Option #2: If you know your fee amount by time you receive your monthly statement. Continue to put all CC transactions in the sales receipts as shown. When the deposits hit your bank transfer them out of the CC clearing account. At month-end, create a journal entry with a debit in the total monthly processing fees for the merchant payment expense account and credit the CC clearing account for the same amount. Number examples below assuming a 5% CC processing fee:
Day/Week 1:
$1000 in CC payment goes into CC clearing account
Next day, $950 deposited into bank and transferred out of the CC clearing account.
Day/Week 2:
$500 in CC payment goes into CC clearing account
Next day, $475 deposited into bank and transferred out of CC clearing account.
Now, the CC clearing account has a balance of $75 (1500-$1425). Now, you look at your statement and see that $75 total was taken out in fees. That is when you will create the JE increasing the fee expense account by $75 and depleting the $75 remaining in the clearing account.
@@essentiallyintentional if only I could call and you walk me through this LOL. Thank you for the information!!
@@anderose9806 Just so you know, I do have a service set up for this, a 1-1 Zoom video chat with myself. You can check availabilities and schedule one if desired here: www.essentially-intentional.com/qbotraining and of course, no problem!
My credit card account takes commission out in your way home from I record the bank fees?
If I'm understanding you correctly, you could create a new Product/Service titled something like CC Fees and set the Income Account to your merchant fees expense account, then include it in the daily sales entries. That way, your entries will balance and the expenses will be accounted for
I did exactly the same way for my restaurant business. However, when I am filing GST return, it is calculating all the sales amounts( cash, check, card, tips, Gift cards etc. ) which is more than the sales amount, so my total sales revenue is a negative value?? How can I correct it?
If it is showing actual revenue on your P&L as negative I would be sure to make sure look at your Product/Service List and make sure that the payment accounts (cash, check, etc), edit them and look at "Income Account" make sure that income account so the associated clearing account and not an actual revenue account. If however, you are talking about the sales tax liability report in QBO yes it is unfortunate how customizable that report is. That report is messy in QBO showing Gross Sales as negative, the "Tax Amount" should be correct however. When my clients run onto this I usually have them save/bookmark the sales tax liability report as well as save other sales reports in order to get all info needed for the GST returns. This is the best solution I've found so far and unfortunately haven't found a solution yet where everything is in the same place. That second report could be a sales by product/service summary report for example. So for example at month end, they will run the saved/bookmarked Sales Tax Liability Report to get the state/city taxable sales and tax collected/due amounts for city/state. Then, they run the saved sales by product/service summary report to get the additional numbers needed. So, you could know for example which products are non taxed add them together to get the needed numbers for the report. I hope this helps, sorry for such a long answer!
@@essentiallyintentional my P&L is showing the correct sales and revenue values. So, I will use these when filing GST return. And yes the “tax amount” is correctly calculated including “tax credit amount”.
why did you put Credit cards under current assets? I do not understand this
you also did not put anything in for the payment method, why?
It was the Credit Card "Clearing" Accounts that should be under current assets. It is categorizing the funds received from customers using credit cards which is an asset.
@@claytonalexander3972 That is because for this method of putting in sales selecting a payment method there would be irrelevant as #1, the end balance of the transaction is zero and #2 the payment methods used are put in while entering the whole transaction, this template is utilized for entering sales with multiple payment methods, selecting only one there would not help us in this case. If you were putting in a sales receipt where only one payment method was used and no clearing accounts are being utilized then yes, right there is where you would select the payment method.
20:05
can you please send the document to me.
Yes, can you email me at gunnar@essentially-intentional.com so that I can get your email address, and then I can send it over to you!
Please send me a copy of the Check List what is your email?