QuickBooks®
Recording a Direct Deposit

by Kathy
(Pittsburgh)

How can I show fees associated with an ACH (automated clearing house) deposit in QuickBooks®?


I am doing very basic bookkeeping for a friend. She has been selling on line gift certificates for a %fee.

The sales minus fee are deposited directly to her checking.

How can I show the fees as a business expense for last year and in the future is there a better way to enter these transactions?

She uses QuickBooks®. Thanks, Kathy





Hello Kathy,

If I were recording this direct deposit entry in QuickBooks®, I would follow these steps:

  1. Setup a sales item for Gift Certificate Sales with the item coded to a revenue account ... and an expense item for Banking Fees (or Service Charges) with the item coded to an account called Banking Fees (or Service Charges).


  2. I would then create a customer invoice for each amount received. On the first line of the invoice I would enter the total sales amount using the sales item setup in step 1.

    On the next line, I would deduct the fees using the expense item also setup during step 1.

    The total invoice should equal the net amount to be deposited directly into the bank account.


  3. I would Receive Payment in the Customer area. At that time, I would also select "Group with other undeposited funds" if it is not setup as your default.


  4. Next, I would make a bank deposit. Complete the deposit form by selecting the appropriate deposit from the listing.

    I like to add a note to the "Deposit" Memo field, such as an abbreviation of the customer's name, to make it easier to work in the GL.



If this was a recurring transaction (and it sounds like it is), I would use the QuickBooks® memorized transaction feature. Memorizing the invoice makes the whole process more efficient and helps ensure there is consistency in booking the transaction each time. I would select the "reminder" feature (instead of "record automatically") so I could adjust the amounts to each new direct deposit amount.


Follow this link here to learn why my preference is to use Undeposited Funds as part of my internal controls.

If site visitors using QuickBooks® have others ways to book this type of direct deposit transaction, I would love it if they would share their method. :0)

January 2013 Note to Readers: When dealing with a PayPal account, I don't record PayPal's transaction fee with each receipt/purchase. I download the Monthly Financial Statement and enter the fees paid during the month in the banking charge section of the bank reconciliation window. The Monthly Financial Statement is where I also obtain the opening and closing balances by currency.


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Recording a Direct Deposit

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Feb 19, 2010
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starstarstarstarstar 		A Second Option For Fees
by: Lake, Bookkeeping Essentials

Kathy,

Another option for recording ACH fees would be to create your invoice as you normally would ... without the fees line like I first suggested.

Then when you receive the direct deposit in your bank account, go into the Receive Payments window and receive the payment for the whole amount of the invoice (or for whatever amount she actually received before the fees were deducted).

Next go to the Make Deposits window and select the deposit you just input from the list of deposits showing. Then select okay.

You should now be at the actual deposit window. On the next line after the deposit, enter your ACH fees coded to Banking Fees (or Service Charges) as a negative amount to reduce your deposit to the amount showing in your bank account.




The first option I suggested is efficient and time saving as you can memorize the transaction and just change the values.

This second option is probably more correct from a bookkeeping perspective ... in that the ACH fees are not really associated with the customer ... but the actual deposit. However, you can see you can't automate the fees part of the transaction ... so it takes more time.

Both methods end up correctly on your financial statements.

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