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!