Question

Splitting a received payment between two companies

Forum|Forum|5 years ago
July 13, 2021
10 replies
173 views

We have two companies with similar names. Common ownership, but two completely separate entities, with two different tax IDs, bank accounts, and purposes. We'll call them Acme Ltd. and Acme Services.

Acme Ltd. is product oriented, selling supplies to industry. Acme Services provides services to industry and municipalities. Ltd. has been in business for over 40 years; Services has been in business for nearly 30 years.

We have about 25 customers that do business with BOTH companies - and most of those are very long-term customers. They often pay with one check for invoices for BOTH companies, and the check will be made out to either one company or the other, or simply to "Acme."

In the past, we've used spreadsheet and manual bookkeeping and had several "settlement" accounts...that is, something that amounts to basically "Ltd owes Services" and "Services owes Ltd." That is to settle the customer payments.

There is also the issue that we share SOME office space and overhead between the two, and make apportionment calculations on a yearly basis and readjust if needed. So, those are more settlement accounts.

This has always worked, as we have a complete paper trail as to exactly WHAT is being reimbursed WHERE, and WHY. However, those of us who understand manual bookkeeping want to retire one day...hence, QB.

To make a muddy situation easier, I'll ask just one question in this post: Is there a way to split a payment received from a common customer to post to accounts in TWO DIFFERENT COMPANIES?

This is not a situation where one check to one company is paying for invoices from two commonly owned businesses. WE have the commonly owned businesses, and they must be set up separately in QB because they ARE separate.

Also ~~~

~ We have tried repeatedly over the years to get our customers to send separate checks. While occasionally one or two will do so, for the most part it's been unsuccessful.

~ We thought briefly about one company invoicing the other for the settlement, but then this could appear as though it's income or expense - and while it IS income, it's income once, and is not an expense.

~ I've reviewed QB's info on setting up a clearing account, but again, this involves two companies - not two jobs.

~ Services' invoices are imported into QB; we have a specialized database for that company that tracks the jobs and issues and emails the invoices.

~ We have tried setting up "Ltd. owes Services" types of accounts, BUT when I enter a payment received and there is an overpayment, my ONLY options are to refund the customer or issue a credit. Since the companies are separate on QB, I'm not sure how to settle that - I don't have an option to move the overpayment to a settlement account. In a manual journal, we just had a third column. Example: For a payment received by Acme Services, journalize the cash debit, and apportion the payment accordingly to "Sevices AR Credit" and "Ltd. Settlement Payable Credit." The following month, write a settlement check from one company to the other. If I had an option to put that "overpayment" somewhere else, it would be easy!

~QB Desktop 2021, Windows 10. (Desktop because we have undependable internet.)

OK, SECOND Question: If I set up a clearing account or wash account, will this magically appear as an option in addition to "refund customer" and "save credit?" And will using a wash account work, as we have two separate companies and the journals are NOT linked in QB? (ooops, that makes 3 questions...)

Thanks very much in advance for any advice. Sorry about the long post, but I've found that when I ask these questions without all the details, I receive answers that indicate that no, I didn't explain myself properly....

Brenda

QuickBooks Desktop

C

Catherine_B

Level 9

Hello there, Brenda.

I can provide information on how we treat transactions on two separate companies.

We treat both companies as separate ones so whatever real-life transaction you created in Acme Ltd. company you create them in the first company file, and any transactions that happened in Acme Services you also record on the second company file.

Yes, you can split a payment received from a common customer to post to accounts in two different companies. In both accounts, you'll want to create the same accounts to track the flow of transactions and use them in recording your transactions. You either create an account for the other company or use an Equity account to represent the other company.

If the check is deposited to Acme LTD., then create a bank deposit splitting to Accounts Receiveable (A/R) and Equity Account (Acme Services). Then, if Acme LTD transfers the money to the Bank of Acme Services then can just write a check using the Equity account of Acme Services.

I also suggest reaching out to an accountant if how your accounts should be set up according to your business preferences.

You can also pull up reports on both companies to see an overview of the transactions created and visit our Help articles page for more information in handling your accounts.

I'm just here if you have other questions. Take care!

S

swampgoddessAuthor

Thank you, Catherine - I kind of understand what you're saying. Having similar accounts (Ltd Settlement Payable, Services Settlement Receivable etc.) is what we do now. But could you go into a little more detail about setting up an Equity account? Neither my husband nor I are bookkeepers, although we do know something about bookkeeping. (Our bookkeeper of 30 years retired, and we have been unable to find anyone to replace her!)

Two other concerns:

1 - we get several ACH payments a month made to Acme Services. While some of these include payments for Acme Services, some are ONLY for Acme Ltd. - and no part of that payment is for Acme Services, so there is no way to apply it anywhere in that company account. But it goes through that bank account. This is set up because the customer is a large company who wants all payments to go to one bank account.

2 - Again, the question arises - when I apply a split payment to the invoices of one company and there is a balance left, I do not have an option to put the balance of the payment in that equity account or other account. My only options are to issue a refund or a credit. I still don't see how I can handle that. What am I missing?

Many thanks!!

L

LollyNino_C

QuickBooks Team

Hello there, @swampgoddess.

Let me show you first how to receive an invoice payment.

Go to the Customers menu, select Customer Center.
Look for the customer and double-click on the invoice.
From the invoice menu, click Recieve Payments.
In the Customer Payment window, review that the payment amount is 100.
Click Save & Close.

After these steps, you can split the payment by creating a deposit.

From the Banking menu, click Make Deposits.
You'll be prompted with the Payment to Deposit window. Select the payment you just created.
Click OK.
In the Deposit To drop-down select the Checking account.
Enter on the second line the client's name, select the expense account you use in tracking bank charges.
Then, in the AMOUNT field, enter the charge as negative (-40).
Review the Deposit Total and then click Save & Close.

You can check your bank's register and review the transactions you just created. In reconciling your accounts, you can use refer here: Reconcile an account in QuickBooks Desktop.

See this article for the steps: Contact QuickBooks Desktop support. You can keep it as a reference since it has their hours of operation.

I'll share with you this article as well: Void or refund customer payments in QuickBooks Desktop. It has a short description of when you can void or refund a customer's payment.

Additionally, let me share with you this link that lets you personalize your invoice and add more details to it: Use and customize form templates.

Tag me in the comments below if you have other questions about your QuickBooks Desktop company. I'll get back to you as soon as I can.

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