Hello Matt
You do not have to link the bank account in real life through the QuickBooks to record the income and expenses through the banking connection option.
However if in real life you have put the money into the bank then the best thing to do is to set up a chart of account to represent the bank account and then when you mark an invoice as paid in the drop down which shows as undeposited funds change that to the bank account chart of account you set up(steps included below)
Where it is an expense you can then select the same bank account chart of account. Unless the situation is you are not banking the money and using petty cash money in which case you can set up a separate chart of account called petty cash in the same way as below except in detail type select cash in hand and name it petty cash.The undposited funds is intended for use when it is something you will be banking at a later date.If it is something you will not be banking as income and will use to pay for expenses you can record income to petty cash and expense out from it.
To set up the chart of account go to accounting on the left>chart of accounts>new>in account type select cash at bank and in hand>in detail type select current(if it is a saving account select savings) >in name select the name of the bank>you can enter in an opening balance at the time you want to start recording banking transactions>save and close.
Any income you have already recorded to undeposited funds you can bank by going to the +symbol>bank deposit>just select the bank account in the account section in the top left>select the date>tick the payments in the payments included in this deposit section>save
Any questions at all on this feel free to reply back to this post
Emma
