Chart of Accounts

Hi Rita123,

Yes, your client can record transactions into the bank register and categorize them as income, expenses, or liabilities. Then, they will be reported in the P&L and BS accordingly. However, for the tax part, QuickBooks has an automated sales tax, where it needs the customer's address, the shipping location, the taxability of the items, etc., and you won't be able to achieve this if you won't add sales transactions.

With regards to open invoices, you can use the A/R account, so yes, you will need to create one.

If you have other questions in mind, you can always go back to this thread.

Thank you Jess. 

There will be no taxable items so i think that's not an issue. There also will be no open invoices in QB as this part will be managed somewhere else.

Since the AR is managed somewhere else, is recording sales receipt in QB and then reconciling vs bank account is the best way? currently sales receipt is recorded under "sales" and goes into income category. so my question is basically how is best to set up his chart of accounts so that his income is showing up correctly in P&L.

I've got just the answers you're looking for, @Rita123.

When you create a company, QuickBooks Online creates specific accounts by default. Other special accounts are created when you turn on certain features in the settings. When you create an invoice or sales receipt, the associated income account will base on how you set up the item. When adding an item, you need to designate an income account. The defaults are Sales of Product Income (inventory) and Sales (non-inventory and service). For more info, refer to this article: Manage default and special accounts in your chart of accounts.

If you need to assign a specific income account for them, you can do so with these steps below:

1. Click the Gear icon, then choose Products and services.
2. Select Edit just beside the product or service name. If you need to add a new item, select New. 
3. In the Income Account drop-down, select the appropriate account.
   
4. Make the necessary changes.
5. Click Save and close.

Each time you sell an item, the income is distributed into the specified income account. This way, everything stays organized on your Financial Reports.

In addition, the initial Accounts Receivable account created will be its default in tracking A/R balances. QuickBooks automatically records invoice transactions as Accounts Receivable under the accrual basis. The following article contains additional insight into this: Can I Change the Default Accounts Receivable or Accounts Payable Account?.

To guide you through the basics of invoices and sales receipts in QuickBooks Online, check out this link: Invoice and Sales Form Basics.

Visit me here again should you have other concerns or questions. I'm here to ensure you can get your Chart of Accounts straightened out. Have a wonderful day.

Thank you LieraMarie. I think this is just the answer i was looking for. 

The income account is already there so anything i add as sales receipt is going there automatically as expected.  since I didn't originally create the chart of account i was worried i'm missing something. i guess everything is good then :)