I am having trouble with my undeposited funds. I am a relatively new accountant and new to QuickBooks and don't know much with undeposited funds. I started using QuickBooks Online in 2020. There were none in 2020. I guess it started showing funds in 2021, but I was unaware, and my dad's accountant who filed his taxes didn't tell me about this issue. Now I having a serious issue for 2022. In 2021, it shows $ 107,601.50. The undeposited funds accounts is now showing $231,284.35 and I am struggling to get rid of it. I called for support, but they couldn't help and I am unsure what to do. Any suggestion?

Hello there,

The Undeposited Funds (UF) account holds all funds before a deposit is recorded. To affect the bank, you need to make a bank deposit with the available funds. Here's how:

1. Go to the + New menu and choose Bank Deposit.
2. Click on the section that includes the payments for this deposit.
3. Enter the necessary information and save and close.

For detailed information, refer to this article: Record and make bank deposits in QuickBooks Online.

If the balance in your register is correct even without depositing the undeposited funds, you'll need to create a journal entry (JE) to balance out the Undeposited Funds. Follow these steps:

1. Select + New.
2. Under Other, choose Journal Entry.
3. Enter the transaction date in the Journal date field.
4. On the first line, in the Account column, select the Undeposited Funds account.
5. Enter the deposit amount in the Debit column.
6. On the second line, choose the bank account in the Account column.
7. Re-enter the deposit amount in the Credit column (if not already entered).
8. Select Save and Close.

For more details, refer to this article: Create journal entries in QuickBooks Online.

You may visit these links to guide you on how to categorize your transactions and reconcile your account flawlessly:

• Categorize and match online bank transactions in QuickBooks Online.
• Reconcile an account in QuickBooks Online.

The Community always welcomes you for further inquiries. Have a great day ahead!

We use a third party merchant service so therefore don't actually need to deposit from QB but the "undeposited funds" are obviosuly not cleared so how do I clear them without actually depositing them in our bank??

Thanks for getting involved with this thread, earthly01.

To clear payments from your Undeposited Funds account, you'll want to create a deposit, then select each applicable payment to combine them into the transaction. The deposits should match what your bank statement shows.

Here's how to create a bank deposit:
 

1. In the left navigation bar, use your + New button.
2. Choose Bank deposit.
3. From the Account ▼ drop-down list, pick an account you want to put your funds into.
4. Tick the checkboxes for each payment you want to combine.
5. Confirm your total of selected transactions matches the bank deposit slip.
6. Select Save and close.

Since you're using a third party payment processor, the funds won't be redeposited into your account when you create a deposit in QuickBooks. The deposit into your real bank account should've occurred from your merchant service provider. The deposit you create will only serve as a record to show what occurred outside of your books.

I've also included a couple detailed resources about working with Undeposited Funds which may come in handy moving forward:
 

• Using Undeposited Funds
• Record & make bank deposits

Please don't hesitate to send a reply if there's any additional questions. Have a lovely day!

Is it incorrect to go into the payment and change the drop down from undeposited to the bank account?   I’m worried I’ve created a mess.  Should I have left that alone and added a bank deposit instead?

I can share you with information about changing the deposit account from undeposited to the bank account, jmolinar406.

There's no problem in changing the payment account to the bank directly. The Undeposited Funds account only serves as a drawer for your payments before adding them to the correct bank account. 

For more information about the Undeposited Funds account, check out this article: What's the Undeposited Funds account?.

You can check payments posted to your Undeposited Funds account by going to the Register. 

Here's how:

1. From Settings ⚙, select Chart of Accounts. 
2. Find the Undeposited Funds account on the list and select View Register.

From here, you can make a bank deposit by following the steps outlined in the following article: Deposit payments into the Undeposited Funds account in QuickBooks Online. 

Let me know if you need more information about the Undeposited Funds account. I'm always here to answer them for you. Have a wonderful day!

Our bank account is not attached to Quickbooks but our Square is.  I have been recording our deposits by going through App Transactions and adding (choice of add or exclude) the individual transactions then going to deposits and selecting which transactions to attach to the deposit.  My problem is that I cannot change the deposit from undeposited to deposited and everything is showing in the Undeposited Funds Account.  I have tried to fix it by going into the individual transaction and changing it to deposited, but it won't let me.  How do I fix this besides deleting all the deposits and doing them individually (which will not match my deposits)?