Wise Bank 'Jars' (and Monzo Bank 'Pots') - what is the best way to input, track and reconcile transactions?

Shawn_C · ‎October 16, 2022

hi,

I'm new to QB so forgive me if this is a newb question.

My sole proprietor limited liability company uses a WISE (formerly Transferwise) bank account. Like Monzo bank's 'Pots', Wise has 'Jars' which allow you split up money to more easily budget for things and/or keep money separate from the 'main' operational account. For example I have jars to store my VAT when collected so it is ready to use when VAT is due, or same for pension contributions, company tax, etc - or I have jars for annual software and other subscriptions that I put a little towards each month so when the subsciptions are due I have money set aside for them specifically.

My WISE account is connected to my Quickbooks online.

When I move money from the main account into a 'jar' I have currently set it up as a rule - Transaction Type = Expense, Supplier/Customer = blank (no info inputted), Category = VAT or Subscription, or xxx (whatever the purpose of the jar is) as a 'Sub-Account' of the main account, VAT = Exempt (0%), Tags = Jar transfer, Memo = I put here a note about exactly what the transferred amount is for.

When it comes time to transfer the money back out of the jar to the main account and pay the expense, I do that in my banking app but to be honest am really not sure how to account for it in Quickbooks.

My question is - should I be dealing with these 'jar transfers' in a better way? How will everything tally up and reconcile properly at any point/VAT quarters/financial year end?

There doesn't seem to be any definitive answers to my issue on the community forums about this.

Thanks in advance for any help!

paul72 · ‎October 17, 2022

Hi @Shawn_C

Jars (Wise), Pots (Monzo), Spaces (Starling), etc are simply Sub-Accounts.

If you're happy accounting for them inside the bank's own app, there's no real need to mention them in QBO because the total account balance is all that really matters (unless you're using auto matching which then makes a mountain out of a molehill).

Set up each Jar as a Sub-Account in QBO.

Enter each transfer as a Transfer in QBO (New > Other > Transfer)

This way you can move the money backwards & forwards between sub-account >< main account & the whole thing should show correctly in QBO.

BEWARE - your current method has a couple of major problems.

(1) Entering every transfer as an Expense will upset your purchase figures.

(2) Each & every transfer will show on your VAT Return because you are using VAT Code = Exempt (0%)

NoVAT is the code to use for a transfer (no posting to VAT)

Hope this helps.

View solution in original post

JessT · ‎October 16, 2022

Thank you for choosing QBO for your business, Shawn_C.

I would recommend consulting an accountant about how to properly categorise the money you're setting aside. Then, let us know if they have instructions that you find challenging to reflect in QBO.

With regards to reconciliation, just be sure to reflect whatever transactions you have in the main account so you won't have issues when you reconcile. Your records should be the same as your bank statement.

You can always go back to this thread if you have any other questions in mind.

paul72 · ‎October 17, 2022

Hi @Shawn_C

Jars (Wise), Pots (Monzo), Spaces (Starling), etc are simply Sub-Accounts.

If you're happy accounting for them inside the bank's own app, there's no real need to mention them in QBO because the total account balance is all that really matters (unless you're using auto matching which then makes a mountain out of a molehill).

Set up each Jar as a Sub-Account in QBO.

Enter each transfer as a Transfer in QBO (New > Other > Transfer)

This way you can move the money backwards & forwards between sub-account >< main account & the whole thing should show correctly in QBO.

BEWARE - your current method has a couple of major problems.

(1) Entering every transfer as an Expense will upset your purchase figures.

(2) Each & every transfer will show on your VAT Return because you are using VAT Code = Exempt (0%)

NoVAT is the code to use for a transfer (no posting to VAT)

Hope this helps.

Shawn_C · ‎October 17, 2022

hi Paul,

AMAZING!! Thanks so much for the advice - it's exactly what I needed!

Much appreciated.

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Wise Bank 'Jars' (and Monzo Bank 'Pots') - what is the best way to input, track and reconcile transactions?