How to record bank deposits that are not income?

Welcome here at Community @Moreofu.

It depends on you if you will consider it as a client expense. 

I suggest reaching out to your accountant if it could be considered as client expense.

 If so, you can record it as a billable expense that is a feature of QuickBooks Online Plus and Advance by turning on the billable expense feature.

Here's how:

1. Go to the Gear icon ⚙.
2. Choose Account and Settings.
3. Click the Expenses tab.
4. From the Bills and expenses section, choose Edit ✎.
5. Put a checkmark first three boxes, and make sure to uncheck the Track billable expense and items as income.
6. Click Save, then Done.

Once done, you can follow the steps below to enter a billable expense:

1. Click (+) New button.
2. Choose the transaction you want to create.
3. Select the payee.
4. In the Category column, choose the expense account for the transaction.
5. Enter the description and amount of the expense.
6. Put a mark in the Billable checkbox.
7. Select the customer you want to bill for the expense in the Customer column.
8. Click Save and Close.

I've included an article that will guide you in handling financial reports: Run reports in QuickBooks Online.

Feel free to leave a comment below if you have additional questions. I'd be glad to help you as soon as I can. Thank you!

Hello,

What are these wires for if they are not income?  Are they deposits or retainers?  If so, then you can offset a liability account because that money isnt yours till you have earned it.  Or, if you offset Accounts Receivable and make sure your customer name is on the transaction, it will create a credit in their account that can be used to offset future invoices.

It all depends on WHAT that money is for. Why are you getting that wire in the first place? Once you answer that, it will give you a better idea of what account should be offset by the deposit.

I work for a law firm which handles personal Injury and Corporate law. So some of our wires deposits are settlement check for clients and payments for services for my attorney's. 

I do consider them as a client expense. My question is, why is it when I enter the deposits as a client expense does my P&L reflects a negative balance?

Hello,

I agree that you should contact an accountant (Even better if they have worked with law firms as the rules are very specific of tracking monies)

As to WHY when you enter a deposit against an expense account and it shows a a negative on your profit and loss.  It's because expenses show as positives on a P&L when money has LEFT the bank account to pay those expenses. (A debt)  By depositing money against an expense account, you are actually crediting the expense account and therefore it will show as a negative on a P&L.  Even more reason that you should consult an accountant for the best way to track these so they reflect accurately on your P&L and Balance Sheet.

Thank you!