We can create a clearing account and a Journal Entry to clear the Undeposited Funds, emersonrharo.

Before doing so, I'd recommend reaching out to your accountant to guide you with the process to prevent future issues.

Here's how to create a clearing account: 

1. From the Accounting tab, select Chart of Accounts.
2. Click the New button.
3. Select Bank as the Account Type.
4. Select the Detail Type.
5. Enter the account name.
6. Select when do you want to start tracking your finances.
7. Click Save and Close.

Afterwards, you can now create a Journal Entry. Before that, we'll need to know the total amount in the Undeposited Funds. 

1. Click the + New button and select Bank Deposit.
2. Get the total amount under the Select the payments included in this deposit section.
3. Hit X to exit the page.

Then, here's how to create a Journal Entry:

1. Click the + New button, and then Journal Entry.
2. Select Undeposited Funds on the fist line. 
3. Enter the amount you noted earlier in the CREDITS column.
4. In the second line, DEBIT the clearing account with the same amount.
5. Click Save and close.

We'll have to make a deposit to move the amount to the correct account.

Take note: Make sure to select the bank account when recording customer payment. This is to avoid the transactions to be deposited in the Undeposited Funds.

I'm always right here if you still need help when making a deposit. Thank you!

Not sure if this is still an active issue for you or not, but I was told today that cash transactions do not automatically record in QBO like the CC transactions do, because QBO cannot verify that the cash was deposited each night and to which account. Very flimsy answer in my opinion, but I guess cash is not as verifiable as credit card processing. So essentially, this Sync with Square only does half the job for you. Cash deposits will still have to be manually recorded each day, and if you are like me and have tons of daily cash transactions, this will be a hefty manual job. 

I see the same thing.

Processing Square Credit card transactions create an invoice, a deposit, and deposit to the bank account I have chosen in the apps.

However, All of the cash transactions go right into the Undeposited funds.  What I normally do is use cash to pay contractors for their work, and so I normally pay that out of the "cash" account in the chart of accounts.  I guess what I'll start doing is making a transfer from "undeposited funds" to cash once a week and that should clear it up.  If I deposit cash in the bank, I'll do it from the cash account.  

Does that work for anyone else?  Any other suggestions?

Hello there, @judi-ogd!

You're on the right track, creating a transfer fund or a deposit transaction would allow you to transfer from your undeposited funds account to the correct cash account.

Even if you have set a deposit cash account, it'll still post the payment into your Undeposited or Square funds account by default. You can read through this article to learn more: Sync with Square - Default Accounts and Names.

Lastly, here are helpful articles you can read for ideas to help manage your sales in QuickBooks: Sales and Customers for QuickBooks Online.

If there's anything else that I can help you with, let me know in the comments. I'll be here to lend a hand.

Hi Briana,

Hope all is well. Was your issue reconciling square cash sales into QuickBooks ever solved? I hope so. I'm having the same issue. Can you please share your experience in how to solve this issue?

J R