Splitting a received payment between two companies

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!

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!!

Hello there, @swampgoddess. 

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

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

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

1. From the Banking menu, click Make Deposits.
2. You'll be prompted with the Payment to Deposit window. Select the payment you just created.
3. Click OK.
4. In the Deposit To drop-down select the Checking account. 
5. Enter on the second line the client's name, select the expense account you use in tracking bank charges.
6. Then, in the AMOUNT field, enter the charge as negative (-40).
7. 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. 

Oh dear...I am still struggling with this. I'm having problems with the answers presented. Maybe I'm asking too much at once, so...one step at a time...

Question: I have a deposit to make to Acme Services. 7 of the checks are "split" - that is, each check total is for invoices from BOTH companies. For instance, a $2000 check is paying for $800 to Services, and $1200 to Ltd. Other checks will be of vary amounts and splits. 

In the past, I've included the TOTAL check amounts in the deposits, because that IS the total being deposited... the amount of the checks, the amount of the deposit, is my cash debit. 

Let's say the total deposit is for $15,000. Acme Services' part of that total deposit is $10,000 and $5,000 is owed to Ltd. 

How we've done it before (and still do, because we haven't found an easy way to do this in QB) in the Cash Receipts Journal:

~ Deposit $15,000 to Acme Services (this is what actually goes into the bank account)

~ Cash Debit to Acme Services is $15,000

~ AR Credit for Services is $5,000, AND

~ Credit to Acme Ltd. Settlement Payable Credit (that's the account) is $5,000.

Needless to say, there will be several deposits during the month; some with checks, some with electronic payments that will also need to be split. At the end of the month, the total of the Cash Debits must equal the total of Acme Services' AR Credit PLUS the total of the Acme Ltd. Settlement Payable Credit. 

The following month, a check is written by Acme Services to Acme Ltd. for the amount of the Acme Ltd. Settlement Payable Credit - i. e., pays Ltd. what it received on that company's behalf. 

(We have worked with our accountants to devise this, and everything settles out as it should.)

My questions:

~ Do I need to show each "split" payment as a SEPARATE deposit, in order to direct part of the payment elsewhere?

~ And - this is still unanswered - HOW do I "receive payment" in the correct amount that is being paid (say, for a $200 invoice for Services AND a $300 invoice for Ltd. in a single $500 check, made out and deposited to Acme Services)?

....If I show $500 in the "receive payment" window, I have a $300 OVERPAYMENT with TWO OPTIONS (refund to customer or hold as credit) and those are my ONLY options. However, to show $500 as the payment is the ONLY WAY to get the deposit amount correct in the check register and reconcile with bank account (at least, via QuickBooks).

...If I show $200 in the "receive payment" window for Services and later $300 in the receive payment window for Ltd. (which is what I've been doing for each company), and assign those payments to the proper invoices, my check register and bank account will be wrong (and I have to manually adjust the deposit slip).

...must I process each split payment as a separate deposit? It looks like that's what I have to do, at least with the second answer posted.

We were hoping that this whole settlement issue would be easier with QB - that's what we were told - and that reconciling bank statements, etc. would be quicker and easier. So far, that has not happened.

I'd considered making individual deposits for EACH split payment (taking up a lot of time), and setting up an account that CASH BACK GOES TO....but then, I'd still be stuck with the "refund customer" or "save credit" issue in the "receive payments" dialogue.

If someone could just tell me IF there is a way to deal with the "receive payment" issue I'd appreciate it. That would be a start; I haven't been able to get past this to even try to implement suggestions.

Thank you!!

Was this ever resolved for you?

We have the EXACT same dilemma that occurs between two of our companies that are separate entities with similar names.  It is a huge headache to track the payments correctly and the correct deposit amount for reconciliations and to not have the transfers between companies to settle the amounts double counted as income. 

I'd be very interested in hearing if you came to any resolution on this. 

I can imagine the challenges you've been through, Rufus1. I would feel the same way too in that situation if this happens to me. 

Allow me to share insight in recording payments in QuickBooks Online.

You can split a payment received from a typical customer to be posted to the accounts of two different companies. In the same account, you'll want to create to track the flow of transactions and use them to record your transactions. You can either create an account for another company or use an Equity account to represent another company.

Here's how to create a bank deposit when splitting into multiple transactions:

1. Go to the Banking menu and select Make Deposits.
2. In the Payments to Deposit window, select the payments you want to combine. Then select OK.
3. In the Make Deposits window, select the account you want to put the deposit into from the Deposit to drop-down.
4. Enter the needed information in making the deposit.
5. When done, select Save & Close.

You can check this article to learn more on how to combine multiple transactions in QuickBooks Desktop: Record and make bank deposits in QuickBooks Desktop.

I recommend consulting your accountant in choosing the right account to ensure accuracy and compliance. 

I’ve also added this article that you can use for future guidance in effectively reconciling your accounts in QBDT: Reconcile an account in QuickBooks Desktop.

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.

I am very well informed on making bank deposits and even splitting them. The question is how do we record the payment, apply it to the customer invoice and then where does the overpayment get directed to so that it is not shown as income to the company that did not earn the income. 

The full amount of the check must be recorded in order to reconcile the bank account, yet only the portion that is truly income should be recorded as such. The remainder then needs to flow to and from somewhere in order to track the activity in the bank account which shows the full amount of the payment in the deposit and then the transfer to the other company when it is made. 

Do you understand what I am trying to do>? 

I completely understand that you need to record the payment and will make sure the overpayment won't show as income, Rufus1.

In QuickBooks Online, once you record the payment of the invoice, it's considered as income. The overpayment stays on the customer's account and still consider as income.

You can use a clearing account to hold the overpayment. Please browse this link for instructions: Set up a clearing account. It provides steps on how to set up and use the account. You may see that the link is for QuickBooks Desktop. However, the process is the same in QuickBooks Online.

Upon sharing this, I still suggest consulting with an accountant. If you don't have an accountant, I can help you find a ProAdvisor.

You can use this link: Find an expert. Simply enter your address and the system will locate a QuickBooks-certified accountant near your place.

Once your transactions are recorded on your bank register, you can start reconciling the bank account. This ensures your books are accurate and there aren't any duplicate transactions.

You can get back to me by leaving a comment below if you have additional concerns about this. I'm always around to help you.

WE DO NOT USE ONLINE. We are running Quickbooks Enterprise. 

Thank you for clarifying, @Rufus1. Providing the correct QuickBooks product will help me provide the most appropriate information about your payment.

Happy to add further details about your customer payments in QuickBooks Desktop (QBDT).  

The workflow to save invoice payments in QBDT is quite probably the same in QuickBooks Online. The payment and overcharge will automatically qualify as income. For more details, see this link: Get started with customer transaction workflows in QuickBooks.

For setting up a clearing account, please follow the steps below or click on the link provided by Maryland above.

1. Go to the Lists menu and select Chart of Accounts.
2. Right-click anywhere in the Chart of Accounts, then click New.
3. Choose Bank in the Add New Account window, then hit Continue. 
4. Enter Clearing Account in the Account Name field. Please don't enter the opening balance. 
5. Click Save and close. 

After that, let's create a Journal Entry (JE) to use your clearing account. To do this, please follow the steps below: 

1. Go to the Company menu and select Make General Journal Entries.
2. In the first line, add the Accounts Receivable or Accounts Payable which you're moving the money. 
3. Pick your Clearing account in the second column. 
4. Click Save and Close. 
5. Then create another entry. Ensure that the clearing account is on the first. 

Once done, link the JE payment to the bills. Follow the instructions below: 

1. Go to the Pay Bills or Receive Payment tab. 
2. Click Set Credits and check the JE you previously created. 
3. Hit Done. 
4. Select  Pay Selected Bills.

Did you know that you can keep track of your outstanding bills in QuickBooks by running the Unpaid Bills Detail report? To achieve this, go to the Reports menu, then select the said report from the Vendor & Payables section.

Further, check out these articles below on how to memorize transactions and customize a chart of accounts in QuickBooks: 

• Create, edit, or delete memorized transactions
• Learn about the chart of accounts in QuickBooks

Let me know if you have follow-up questions about this topic. I'll be more than happy to share some more information about the tasks in QuickBooks. Have a nice day, Rufus1.