Deposits from Square come to undeposited payments - how to change

I'd be glad to help you change the default deposit account from Square, DS127.

You can manually change the Deposit to account in each payment to remove them from the Undeposited Funds. Here's how:

1. On the left pane, select Accounting and choose Chart of Accounts. 
2. Find Undeposited Funds. 
3. Under the ACTION column, click the drop-down and select Run report. 
4. Select the payment. 
5. On the Receive Payment page, click the drop-down under Deposit to. 
6. Select your bank account then click Save and close.  
7. Do the same steps for all payments.

After that, let's change the default bank that is linked to the Square so that the transactions will not flow to the Undeposited Funds. See the steps below.

1. Go to Banking and select the App Transactions tab.
2. Click the App settings.
3. Select the tab for the type of setting you want to change.
4. Update the default Bank account where Square deposits your money.
5. Hit Save changes.

Once done, you can refer to the following write-up to help guide you in reconciling your accounts in QuickBooks Online: Reconcile an account in QuickBooks Online. This will provide you steps on how to review your account as well as a link to resolve discrepancies.

Keep me posted with any follow-up questions about deposits from Square or need help with the reconciliation process. I'll be right here to provide additional assistance. Have a wonderful day!

Thanks for your message, Rose.But I think you missed 2 important details in my post.

One, I have over 5,000 transactions sitting in Undep Funds (put in there before my time). So correcting each one doesn't work for me. I AM open to doing this for the 2021 transactions. Also, in correcting them, since they go back to 2017, I can't change anything material bc of course those financials are already done, taxes finished.

Re: going forward, the other point you missed is that the client does NOT "sync with square". So I don't have an "App settings" tab. The bank feed just pulls these in.

It seems to me I need a Rule to say "Whenever Square Cash Payment" is in the Memo field, to post to A/R. THe transactions are not all consistent (see the Undep Funds report I am attaching..."Square Settlement"...is the client creating invoices in some cases..?)

Looking forward to receiving the input. Thanks!

Thank you for all of the details! Rest assured, I'll help you get these payments categorized with ease, @DS127.

Whenever you deposit your money from the Undeposited Funds to your bank account, it will automatically show as reconciled (R) in the asset register. I've included the steps below on how to locate the funds that are still sitting in this account.

1. Go to the Gear icon and select Chart of Accounts.
2. Find the Undeposited Funds account, then click View Register under the Action column.
3. Click the Filter icon above the Date column.
4. In the Reconcile Status drop-down, select Not Reconciled.
   
5. Select All Dates from the Date drop-down list.
6. Click Apply.

Doing this will list all the payments that sum up the account balance. Should you need to move them to your bank, these instructions will let you do so:

1. Click the +New button.
2. Choose Bank Deposit.
   
3. From the Account dropdown, choose the account you want to put the money into.
4. Select the checkbox for each transaction you want to combine. Make sure the total of the selected transactions matches your real bank deposit transaction. You can use your bank statement as a reference. 
5. Select Save and close or Save and new.

Let me also share these articles about managing your payments:

• Deposit payments into the Undeposited Funds account in QuickBooks Online
• What’s the Undeposited Funds account?

You can also create bank rules as this helps automatically categorize transactions for you. 

Here's how:

1. Go to the Banking or Transactions menu. 
2. Select the Rules tab.
3. Click New Rule.
4. Enter a new rule name.
5. Select Money in or Money out from the dropdown menu.
6. From the In drop-down, select the bank or credit card account.
7. Set the rule conditions. Decide the transaction must meet All or Any of the conditions. You can add up to 5 conditions.
8. In the Conditions fields, specify whether the rule applies to Bank text, Description, or Amount. Then, select Contains, Doesn't contain, or Is exactly to decide when how QuickBooks applies the rules.
9. Select the settings for the rule. Select the Transaction Type, Payee, and Category to apply.
10. Click Save.

Feel free to read this article to learn more about bank rules: How to Set and Use Banking Rules for Downloaded Transactions.

Hope this clears up your confusion. If you have any other questions or clarifications, feel free to leave them in the comments below. I'll get back to you as soon as I can.

The only real way to remove transactions from Undeposited Funds is to Deposit them.

There is nothing inherently wrong with recording a payment received posting to UF, in fact with the Square processing fees being deducted it is a good thing. But you either need to perform the Receive Payment against the customer invoice or Sales Receipt with payment type Square, and then while creating deposits to match the same in Square you can deduct the processing fee as a negative addition to the deposit. When you have the deposit created to match the daily deposit from Square then when your bank feed syncs you can easily accept the Match.

A payment through Square is the payment of income, whether you recorded it previously with a QB Sales Receipt or edit the bank feed deposit to reflect sales.

To clean up all those prior UF transactions that were not handled correctly I suggest using a bank type clearing account. Create Deposit to clearing, add as many items presented from UF as you are comfortable with or do  it by date range. Add a negative line item posting to owner equity so that the entire deposit is zero. This way it will have no effect on past income/expenses

Picking up the thread from a year ago ... I just realized a client has over $9000 worth of Square Cash transactions that have never been matched. In order to correct for this I can see how your suggestion is the way to go. My question is about moving forward. 

The client doesn't seem to have any pattern as to how often they make cash deposits. The bank statement can vary between once a week or every 10 days to two weeks. When I am reconciling the month, is the best practice to do my best to stick to a date range that starts the date of the last deposit and runs through the following and then use the resolve button to account for any difference and attribute that to square transaction fees? I cannot be sure I'll be getting that number correct since I do not have access to their Square account.

did any of these suggestions work for anyone? I am trying to clear up these Square UF's as it caused such a mess for me...$18k !

Let's look at this issue together, @veganchefsil. I'm here for you until you get a solution that meets your needs to clear up those Square Undeposited Funds (UF) seamlessly.

Please know QuickBooks Online (QBO) depends on the transactions that Square provides. You can follow John-pero's suggestion to use a bank-type clearing account to clean those prior UF transactions.

Create a deposit to clear and include as many items from UF as you find appropriate, or filter them by date range. Add a negative line item posting to owner equity to ensure the total deposit to zero. This approach ensures no impact on past income or expenses.

To seamlessly help you organize your transactions moving forward, these articles can surely guide you:

• Categorize online bank transactions in QuickBooks Online
• Reconcile an account in QuickBooks Online

Please let me know if you need clarification with your Square transactions or Undeposited Funds, or if there's anything else I can do for you. I'll be standing by for your response.

If I record it as a deposit to my bank account, will it mess up any past reconciliations; or make it appear as if I had an extra $$$ in my account when there wasn't? Square UF are all sales; which are already noted on my bank statements and categorized from my bank in QB. The UF are really duplicates since it was pulling these sales from Square. But they are not added income. 

It will impact the previous reconciliations if the transactions are deposited into the actual bank account, veganchefsil.

To avoid that, you can create a bank-type clearing account and use it to make the deposit as previously suggested by one of our Community champions.

Let me provide further details on how to do that in QuickBooks Online. Here's how:

1. Go to your Chart of accounts and click the New button.
2. Type in the name of the account in the Account name field.
3. Select Bank in the drop-down list for Account type, then choose an applicable Detail type.
4. Enter all other details.
5. Leave the Opening balances field blank.
6. Click Save and close.

Once you've completed this step, use it to record the deposit. Then, refer to the previous suggestions to add a negative line item to the owner equity account, which will offset the total amount of the deposit.

Simply scroll down to the Add funds to this deposit section and go to the Account column. This process ensures that it does not affect prior reconciliations and income report. I also recommend consulting your accountant for further advice on this matter.

In addition, we have our QuickBooks Live Expert Assisted Team that's available to offer personalized support for managing deposits and other financial processes.

Here are some additional articles that provide further insights about using the Undeposited Funds account and recording bank deposits:

• How to resolve negative entries from Undeposited Funds in QuickBooks Online
• Run an undeposited fund report in QuickBooks Online

If you have any additional questions regarding the entries in the Undeposited Funds account, please don’t hesitate to reach out. We're always here to assist you whenever you need help.