Creating a clearing account

Thank you for the solution. 

Once transactions are in a clearing account, how are they moved to the actual account they were intended for and how do you reconcile a clearing account?

I’m here to share some insights on how a clearing account works, @1935 1475 8633 749.

In QuickBooks, a clearing account is used to move money from one account to another without moving it directly. This is like a holding account that holds your fund until you’re ready to move it.

This account is also called a Barter or Wash Account that has a balance of $0.00 because we always take out the amount we put in. Also, you won’t have to reconcile this account as this doesn’t hold any funds.

To learn how a clearing account works, you can follow the steps below:

1. From your QuickBooks Online (QBO) account dashboard, Go to the + Menu.
2. Select Journal entry.
3. Add the Account Receivable (A/R) or Account Payable (A/P) account from which you are moving money.
4. Enter the Clearing account.
5. Save the Journal Entry.
6. Create a second journal entry.
7. Add the Clearing account.
8. Enter the AR or AP account to which you moving money, then click Save and close.
9. In either Pay Bills or Receive Payments, link the Journal Entries together.

You can also check this article for more details about this. Although it’s for QuickBooks Desktop (QBDT), it also applies to QBO in using a clearing account: Set up a clearing account.

I’d also recommend working with your accountant for additional guidance. They can advise you on what account A/R or A/P account to use. If you’re not affiliated with one, you can check our ProAdvisor page and we’ll help find one from there.

Once everything is settled, you might want to read this link that serves as your guide in reconciling your accounts effectively: Reconcile an account in QuickBooks Online.

Let me know if there’s anything else you need help in managing your accounts in QuickBooks. I’d be more than happy to assist you. Take care, and keep safe.

I have just taking over Bookkeeping for this company they have 2 accounts. I have created clearing accounts in both. 

now company A pays for invoice for Company B, but Company B was invoiced for work Company A did.

in accounts it shows all invoices have been paid, but nothing has been reconciled between these 2 accounts since Company A year end in Aug 2020. NOw Company B's Year end is coming up at end of May 2021. 

what would be easiest way to reconcile accounts so it is reconciled, have about  200 invoices to date. thank you

I can help you reconcile your account in QuickBooks Online, MEL7111.

Reconcile one bank statement at a time each month. The beginning balance will be incorrect when an opening balance was entered incorrectly or was not entered during setup. Since this account has not been reconciled, you’ll have to check your register to see if any transactions were mistakenly reconciled and make the necessary corrections. Please check our detailed guide on reconciling an account in QBO.

I've attached some articles below for additional reference:

• How to Reconcile an Account in QuickBooks Online.
• Fix issues the first time you reconcile an account in QuickBooks Online.

I'm always here if you have any other questions regarding reconciling accounts in QBO.

Does this apply when reconciling between 2 companies by same owner....so internally

Hi there, MEL7111.

When reconciling accounts, it can only be done on a single company. That said, you'll have to reconcile the accounts of the first company and then do the same on the other company.

You can check these references as your guide:

• How to Reconcile an Account in QuickBooks Online.
• Fix issues the first time you reconcile an account in QuickBooks Online.

I'll be around if ever you need help. Keep safe!

Client received a number of deposits which, i believe, were deposited into a currently closed account. But the banking transaction was accepted into an open account. Thus, they were never reconciled away.

I have created a clearing account and move all of the transactions into it. I have 21 payments for a total of $655, all but one in 2019. 

Now I'm at a loss of what to do to zero the clearing account. These were payments on accounts. I can't just delete the payments because that would affect the balances on the accounts.

Need some ideas?

Hi jwpemberton,

Thanks for joining in the thread. I'll guide you to move the deposits on your client's records, so you can reconcile their account.

Instead of creating a clearing account, you can open each deposit and replace the bank account with the new one, where those payments were posted in reality. Or, create a transfer for each to move the funds to the new account. Then, delete your transactions in the clearing account afterward.
 

Change the bank account:

1. Open one deposit transaction.
2. Change account in the Account field.
3. Click Save and close.

Create transfers:

1. Click on +New. and choose Transfer.
2. Select the old account in the Transfer Funds from field.
3. Choose the new account in the Transfer Funds to field.
4. Enter the amount and the date based on the payment transaction.
5. Click Save and close and do the same steps for the remaining deposits.

Speaking of reconciliation, I've got an article with steps and a video clip to guide you through the process. Please check this out: Reconcile an account in QuickBooks Online.

Let me know if you need more help as you move the deposits or as you reconcile your client's account. Have a great day!

Sounds good, except that the account that they may have gone to is closed, zeroed, reconciled.

So i just don't know what to do with the money! Call it Miscellaneous Income?

Not sure if you have resolved this since, but you can re-open a closed reconciliation report. Either if you have an accountant they can do this, or if you have a secondary email, you can become your own accountant (just do an invite). Once you log into Quickbooks online as an accountant, you can open a closed month and edit the reconcilation, then submit it again.

Hello,

for some reason, QB Online has created a new DD Clearing account in Quickbook Online payroll.  How can i set up where the QB Direct Deposit clearing is mapped.  I already had an account set up, now we are mapping to a new/different account.  Thank you in advance.

Welcome to the QuickBooks
Community, @ Nancy Clary. Let me help you with your query.

When you merge old account with the new account, all of the data is moved into that one account you want to keep. Keeping your lists clean
helps you keep track of your finances faster and easier.

Important reminder, once you’ve combine the account you can never undo it.

To merge the accounts, here’s how:  

1. If you're merging accounts that have reconciliation reports, save those reports first. The transactions remain on the merged account and stay reconciled.
2. Go to Settings  and then select the Chart of Accounts.
3. Find the account you want to keep. Then, select the dropdown▼ in the Action column and then edit.
4. Note the name and detail type of the account.
5. Check if the Is sub-account option is marked. If it is, note the parent account it's tied to.

You can refer to this article if you want to learn more about merging your accounts.

If you need more help about managing your accounts, leave comment below. We’re always here to assist
you on your queries. Have a nice day!

Great, thank you for responding.  The problem is also, i don't know why payroll began mapping to an incorrect account.. how can i fix where it maps going forward?

Thanks for getting back here, Nancy Clary.

I'll share details why this happens and how you can correct the account mapping.

When your payroll transactions are posting to an incorrect account, it might be because of the following:

• The incorrect account is selected from the Pay from drop-down menu when you run payroll. 
• Someone updated the Accounting preferences and changed the default account.

You can run the Audit log report to see the account history and who made these changes.

Here's how:

1. Click the Gear icon located in the upper right-hand corner.
2. Select Audit log.
3. From the drop-down menus, choose the User, Date changed, and Events.

After checking out the history details, if you want edit the account posting and these paychecks were created manually, you'll want to delete and re-create them

The instructions are included in these articles:

• Delete or void employee paychecks
• Create pay checks in online payroll

Moving forward, make sure to check the account selected from the Pay from drop-down. If it's not the default account and you are subscribed to the Enhanced payroll, you can edit it by going to your payroll preferences.

Here are the steps:

1. Go to the Gear > Payroll Settings. 
2. Under Preferences, click Accounting. Once you are there, you can see which Expense and Liability accounts are affected when you create a paycheck, make a tax payment or create a deduction. This is a great starting point for drilling down which Payroll Expenses or Payroll Liabilities will reflect on your Profit & Loss or Balance Sheet reports. 
3. Choose your desired account name from your Chart of Accounts from the drop-down. Note: Account numbers do not appear in this box.
4. Select OK after choosing all your desired accounts.
5. (Optional) You will be prompted to update Classes if the class feature is turned on.
6. You will receive a confirmation screen that your accounting preferences have been updated.

Notes:

• The change of settings affect future transactions. However, you have an option to apply these changes to your past transactions too. If needed, you can backdate these changes for all transactions to the beginning of the year (does not affect changes to selected Bank account).
• When setting up your accounting preferences, any pay type that doesn't increase your employee's gross pay, such as Cash Tips or Personal Use of Company Car will not appear for you to assign an account.

For reference, you can check out this article: Payroll accounting preferences.

If you have the full service payroll, I recommend contacting our Payroll Support Team. They can help you update the Accounting preferences and correct your payrolls.

You can follow the instructions on how to contact our support agent here.

Please let me know if you have more questions regarding the process. I'll be right here to help you out again. Take care.

Thank you.. i understand the payroll settings.  I am posting to the correct bank account.  But, for some reason, there's a debit and credit to a Direct Deposit Clearing account.  and, QB payroll has created an incorrect account for this.. how can i find "that" mapping?

Hey Nancy Clary,

Thank you for reaching back out! I double-checked, and there isn't an option to change that mapping once QuickBooks created it. To get a better understanding of Clearing Accounts, I encourage you to review this article. However, I advise contacting Payroll Support directly to have them review the mapping on our end. Here's how: 

• Go to the Help menu.
• Hit the Contact Us button
• Enter a brief description of the problem.
• Select "Let's Talk"
• Pick the "Get a call" option to connect with us.

Let me know if you were able to get through. If you have any more questions, please don't hesitate to let me know. I will be around. Take care for now.

It's frustrating to see different directions on the same topic through Intuit's online help. 

Here's a link to another set of instructions.  https://quickbooks.intuit.com/learn-support/en-ie/help-article/sales-receipts/record-total-daily-sal... 

When I selected Bank for the Account Type, there was nothing under Detail Type that fit.  I had to choose Other Current Liabilities to find Payroll Clearing as an option.