Deposits VS Customer Payment – help ASAP
The owner is set up on QBO. When he deposits money from customers it automatically goes to an “Income” account. Do I have to delete the actual “Deposit” from the Bank and enter it as a payment to the customer? Or is there a way to post the “Deposit” as a payment to the customer? I know it’s confusing, but where should I have the deposits going until I can post as a payment?
I’m only assisting part-time and don’t do the entries everyday. We’re now on crunch time to get 2016 taxes file and I need to make sure this is corrected ASAP.
There are 3 ways to record income and receive payments from customers:
Option #1: Record a deposit that is coded to a bank account and an income account. There is a field to select the customer if you would like to do that. The following video tutorial walks you thru the steps to record a deposit in QBO: https://fitsmallbusiness.com/bank-deposits-quickbooks-online/.
Option #2: Record a sales receipt. This method is great for recording both the sale and the customer payment at the same time. This is assuming that you do not invoice your customers. The following video tutorial walks thru the steps to record a sales receipt in QBO:https://fitsmallbusiness.com/how-to-create-sales-receipts-in-quickbooks-online/.
Option #3: Create an invoice & send it to the customer. If you bill your customers and they send in a payment later on, then you should create an invoice. Below is a step by step video tutorial on how to do this in QBO:https://fitsmallbusiness.com/send-an-invoice-through-quickbooks/.
Option #3.1: Receive payment on an open customer invoice. You only need to do this step if you chose option #3 above. Below is a step by step video tutorial on how to apply customer payments to open invoices:https://fitsmallbusiness.com/how-to-receive-payments-in-quickbooks-online/.
It sounds like you are using Option #1. If that is working for your client then stick with that. The primary benefit of options 2 and 3 is that you can run sales reports that will include sales by customer. You wont be able to do that with option #1. If having visibility to sales by customer is important then you might want to consider switching to options 2 or 3 for 2017 or for next year.
Thanks for reading!
Best wishes –