I am unable to add deposits in bank reconciliation because its asking for VAT code, "You cannot track tax on accounts of types Accounts Receivable and Accounts Payable."?

Thanks for joining us here in the Community, shahbazk1987@gma.

Allow me to provide clarifications regarding assigning a VAT code to your transactions in QuickBooks Online.

The system will only allow you to track taxes on the expense, checking, and income accounts. However, utilizing the Accounts Payable or Accounts Receivable type of accounts isn't available.

To get your work done, you'll need to create an invoice or a bill so you can allocate a VAT code to the transaction. This way, it will be added to the appropriate bank account and will help show the tax amount you've paid. 

For your reference, I'm also adding here some links about adding and removing the VAT rates or sales taxes on your forms in QBO:

• How do I set up sales GST/VAT rates and use them on forms?
• Applying Sales Tax to Transactions and Sales Forms

Let me know if you need additional information by clicking the Reply button below. I'm always right here to assist you. Take care!

Thanks for your response, is there anyway that I can delete the tax agency so that VAT code should not appear in Bank Reconciliation?

I'm here to answer your follow-up question, @hahbazk1987@gma. 

Currently, there isn't a way to delete a tax agency because we want to preserve your data integrity in QuickBooks Online (QBO). It also seems like you only have one tax rate under that agency based on your scenario. I'd first suggest deactivating that VAT code so it won't appear in bank reconciliation. I'll guide you how. 

1. Go to Taxes/VAT from the left menu. 
2. Select Edit tax in the top right corner. 
3. Choose Edit rates. 
4. Locate the VAT code, then click Edit under the Action column. 
5. Select Make inactive. 
6. Tap Yes to confirm. 

The screenshot below shows you the last three steps. For the detailed instructions, see this article's Deactivate tax rates section: Tax Centre Overview. 

The second option is to select Out of scope of Tax from the Amounts are drop-down menu when making deposits in bank reconciliation. This way, the VAT column, and its codes won't display on the transaction. 

Once done, you can proceed with reconciling your account in QBO to ensure it matches your bank statement. Thus, I recommend visiting this website: Reconcile Workflow. It contains more details about starting, fixing any differences, and completing the reconciliation process.

I'm here anytime you have other concerns. Keep safe always. 

Thanks for the response, I have tried both the options but still the issue is not resolved. Kindly suggest any other option.

I'm here to help remove the error, shahbazk1987@gma.

Let's try one more step to fix this issue by adding and saving the deposit to a different account. Then, go back and edit it using the correct account.

If the same issue persists, I recommend contacting our QuickBooks Online Support Team. They can further investigate why it's asking for a VAT code when making a bank deposit.

Here's how to get in touch with our support:

1. Sign in to your QuickBooks Online company.
2. Click Help (?) at the top right.
3. Select Contact Us to connect with a live support agent

Stay in touch with me on how the contact goes by commenting below. I'm always right here whenever you have follow-up questions.

Thank you and stay safe!

Thanks Mary, but this is a very lengthy solution, I have more than 300 transactions in my bank feed for reconciliation, I can not individually change the account of every transaction. 

I think this is a bug in QuickBooks online, where it is asking VAT Code for Accounts Receivable deposit, and when I provide Zero Vat Code (0%) it gives that error that VAT can not be tracked on Accounts Receivable and Accounts Payable.

Thanks for getting back to us and sharing your insights about the issue, shahbazk1987@gma,

In order to look into this further, you can follow MaryLandT's suggestion to contact our Support Team. They are the ones who can check if this problem is cause by a system bug and can provide other suggestion if you don't want to edit the transactions one at a time.

I'm also adding the steps to contact us below:

1. Click the (?) Help icon in the upper right-hand corner of the Dashboard.
2. From there, select the Contact Us button and enter your concern in the description box.
   
   
3. Once done, select Chat or Get a callback option.

Let me know how the call goes as I want to make sure you're taken care of. I'm also here if you need additional help with QuickBooks. Have a good one!

Hi,

i click help but there is no contact us shown

Hi there, sl-wong-bettergr.

Aside from the Help button, you can also click this link: https://help.quickbooks.intuit.com/en/contact.

There should be contact options when you follow the steps shared by my colleagues. You may also perform some troubleshooting steps to fix issues unusual behavior caused by a browser.

Let's start by using an incognito window. From there, go to the Help button to see if you can now see the contact options.

• Google Chrome: Ctrl + Shift + N
• Mozilla Firefox: Ctrl + Shift + P
• Safari: Command + Option + P

We can also clear the cache since it causes errors in QuickBooks Online. Lastly, make sure that the browser is updated or use a different one. Here's how and when can you contact Support.

I'll be here if you have more questions. Wishing you all the best!

Hi, was this ever resolved? I am encountering the same issue ever since I set up a Tax Agency.

Hello, @Uncle_. I've got a workaround to help you add deposits in bank reconciliation when using QuickBooks Online (QBO).

You can consider creating an expense and input No Vat (test) as the description, then proceed to match the OLB transaction in QBO.

If the issue persists, we can troubleshoot your browser to find out what's causing the problem. 

Here's how:
 

1. Restart your browser.
2. Open your QBO account using an incognito window.
3. Delete your browser's cache.
4. Add Intuit as a trusted site.

Additionally, to efficiently manage your financial data in QBO, you'll want to check this help article: Run reports in QuickBooks Online.

If you have follow-up questions about adding deposits in bank reconciliation, please let us know. We're always here to help. Have a good one.

Hi, I did not get any joy with the suggestion. Why is it we can't add deposits to accounts receivables after registering a tax agent? How else can we track the aging of our debtors if this function is disabled. Before adding a tax agent the bank depositing process was seamless, now I am stuck with unreconciled transfers. The matching function only works if the deposit is equal the invoice amount. What of instances where a client does a prepayment or overpays and we want that amount to offset the receivable.

I can see how you want to get this fixed. I have a way on how you can do the recording in QuickBooks Online, Uncle_.

As @BettyJaneB mentioned, QuickBooks Online (QBO) will only allow you to track taxes on the expense, checking, and income accounts. At the moment, utilising the Accounts Payable or Accounts Receivable type of accounts isn't an option.

And yes you're right, you can only match bank transactions if both amounts are equal. If the client overpays an amount on the invoice, we have another way how you can record this in the system. With this, enter bank deposit to show money received from the Customer, recording them to the  Accounts Receivable (A/R) account. This increases the Customer balance until you raise or enter the final Invoice.

1. Enter cheques or payments made to the Supplier. Please know that tax codes should not be used on these transactions.
   
   
   1. Select + New.
   2. Select Bank Deposit.
   3. Select the Bank Account the money is received in to, and the Payment Date.
   4. Scroll down to the Add funds to this deposit section, enter information as follows:
      • RECEIVED FROM:  Customer Name
      • ACCOUNT:  Debtors (or Accounts Receivable)
      • AMOUNT:  Enter amount paid by the Customer.
   5. Click Save and close.
   6. Repeat steps 1- 4 for each payment received from the Customer in advance of raising the Invoice.
       
2. Enter the Invoice.
   
   
   1. Select + New.
   2. Select Invoice.
   3. Fill out the necessary information, including the VAT information.
   4. Click Save and close.
       
3. Apply prepayments to the Invoice.
   
   
   1. Locate and open the Invoice.
   2. In the top right-hand corner, click Receive payment.
   3. In Outstanding Transactions section, tick/select the Invoices you want to associate with the prepayments.
   4. In the Credit section, tick/select the relevant Payments created in Step 1, above.
   5. If there is a balance due on the Bill, you can pay the pay the remainder by editing the Payment amount against the Invoice. If you don't want to pay the remaining amount, edit the Amount figure above the right-hand side of the Outstanding Transactions section.
   6. Click Save and close.

Once done, track payments against a Current Liability account. I've added this article so you can see the detailed process. The article is in the UK version but know this works similarly to QBO International: How to Record Customer Prepayments for Products or Services.

 But, I still suggest reaching out to your accountant to guide you on other possible ways how to do the recording. 

This works, thank you.

On behalf of my colleague, I would like to say that you're welcome, and we're glad that my previous colleague's response was able to help you, Uncle.

If you have further QuickBooks concerns, please know that the Community is always open, as your satisfaction is our top priority.