How To Record Bank Deposits in QuickBooks Online
Tim is a Certified QuickBooks Time (formerly TSheets) Pro, QuickBooks ProAdvisor, and CPA with 25 years of experience. He brings his expertise to Fit Small Business’s accounting content.
Mark has researched and reviewed accounting software at Fit Small Business since 2019 and has developed an extensive knowledge of accounting software features and how unique business needs determine the best accounting software.
This article is part of a larger series on Accounting Software.
In this tutorial, we’ll guide you through the process of how to record a deposit in QuickBooks Online. First, you’ll receive and place checks from customers in the Undeposited Funds account, then group and combine checks from that account with noncustomer checks to create a single deposit. You’ll finally record cash back and then print your bank deposit.
This lesson is part of our series of free QuickBooks tutorials, which is designed to help you learn your way around QuickBooks Online, our top-ranking small business accounting software. This guide will be more useful if you follow along in your own QuickBooks account. If you have no account yet, you can register for a 30-day free trial or get 50% off for three months.
Step 1: Receive Customer Checks & Record Them as Undeposited Funds
Before recording a deposit, you must record the receipt of customer checks as Undeposited Funds (in new QuickBooks Online accounts, it has a default name of Payments to Deposit), which we demonstrate in previous courses. Our prior tutorial on how to receive payments covers how to record the receipt of checks from customers when an invoice was issued, while our guide on how to create online sales receipts shows how to record the receipt when no invoice was issued.
Why use Undeposited Funds?
Using this account makes tracing from your check register to the bank statement easy. Undeposited Funds groups an unlimited number of customer checks into a single deposit slip, which will show up in the check register as a single amount. This is important because the deposit will appear on the bank statement as a single amount as well.
Step 2: Create a New Deposit
To create a new deposit, click the + New button above the left menu bar and then select Bank deposit from the far-right column, Other, as shown below.
Create a new bank deposit in QuickBooks Online
The top portion of the Bank Deposit screen requires you to choose a bank account and input the date of the deposit.
Select the bank account and date for a bank deposit
While QuickBooks allows you to choose current asset accounts, such as prepaid expenses, it would be very unusual to do so. Be sure to select the bank account where you’ll be depositing the funds. Then, scroll down to the next section, which allows you to choose the customer checks that will be included in the deposit.
Step 3: Add Customer Checks From Undeposited Funds
QuickBooks Online provides a list of the checks you have received from customers and placed in Undeposited Funds. All the information on this screen is carried over from when you recorded receipt of the payment. Place a checkmark next to each customer check that will be included in this deposit and then scroll down to add noncustomer checks in the next step.
Select checks in Undeposited Funds to include in the QuickBooks Online deposit
Tip:
Think of Undeposited Funds as an envelope where you place all the customer checks as you receive and record them in Step 1. Making the bank deposit is like taking the checks out of the envelope and listing them on the deposit slip.
Step 4: Add Other Checks to the Deposit
The next section of the Bank Deposit screen allows you to add checks that are excluded in Undeposited Funds. These are generally non-customer checks—such as tax refunds, insurance proceeds, and vendor refunds.
Add non-customer checks to a QuickBooks Online bank deposit
Tip:
If the check is a refund of an expense, select the account where the original expense was recorded. We recommend indicating the number of the check being deposited to leave a trail if you need to investigate any problems later. Be sure to include a Class if you’ve enabled class tracking in your advanced settings.
Step 5: Record Cash Back & Print Your Bank Deposit
The bottom of the Bank Deposit screen allows you to record any cash back you receive from the deposit.
Record cash bank from a bank deposit in QuickBooks Online
If you receive cash back at the time of the deposit, then you must specify the amount and an account or category. Any cash back will reduce the deposit recorded in your check register to match the actual deposit on your bank statement.
If you’re making the deposit in person, we recommend printing a deposit summary to give to the teller. To do this, click on the Print button at the bottom of the screen and select Deposit Summary. Be sure to click the green Save and new button to complete the deposit.
Print and save the check deposit
Why Recording Deposits in QuickBooks Online Is Important
One of the tenets of good bookkeeping is keeping your bank transactions accurate and updated. It’s essential to record a deposit in QuickBooks Online, as it helps you track all of the activity running through your bank account. This is true even for deposits that aren’t income, such as investments by the business owner.
Wrap Up
Congratulations on completing our tutorial on how to record a deposit in QuickBooks Online. You’ve learned how to deposit customer checks previously received and placed in Undeposited Funds, how to deposit non-customer checks, and how to record cash back on your deposit. Head over to our next guide on how to transfer funds between bank accounts.
