What are the best practices to reconcile orders in QuickBooks?

Introduction

Many customers have asked us what are the best practices in reconciling orders in QuickBooks. Our answer is that it depends on the number of orders and your specific business needs.

Steps

Your goal is to enter a negative deposit into QuickBooks, so you can reconcile:

  • Enter a journal entry for the fees.
  • Match the orders to the bulk deposit. 
  • Reconcile the bank statement and the check register.

Journal Entry Expenses

You must make a negative deposit to offset the total orders from the total fees. Here are the steps:

  1. In the Company menu, select Make General Journal Entries
  2. Credit Undeposited Funds and debit Merchant Account Fees as this example displays: 

Entering Negative Deposits as Expenses

Payment processors take two to three percent of each transaction as processing fee. All of the orders the payment processor collects are transferred, in bulk, to your bank account. You must match this bulk deposit to orders in QuickBooks. These orders are located in the home screen > record deposits area of QuickBooks.

In this example, the orders total $1,677.44. The total PayPal fees are $48.65. Here are the steps to add a negative deposit:

  1. In the payments to deposit window, select all the payments that match the batch transfer.
  2. Click OK.

Reconcile Bank Statement and Check Register

When someplace places an order on your website, it goes to your merchant account provider and into your order management system. There is no need to download orders from your merchant account provider and your order management system at the same time. When you download transactions from your bank, you will see the bulk deposit. Make sure you delete it when you reconcile.

To reconcile, follow these steps:

  1. On the QuickBooks home screen, click Reconcile.
  2. Enter today's date and the ending balance: 
  3. Check all transactions and make the difference $0:

Profit and Loss

In QuickBooks, go to Reports > Company and Financial > Profit and Loss Standard. You'll see the merchant account fees:

In this example, the sales had dates prior to March 1st. Only the merchant account fees were recorded in March.

Shipping Charges

Unlike merchant account fees, shipping costs to the carrier don't come out of each order. You should enter the total charges as a bill, then a payment, on a monthly basis. Total shipping that the customer paid will enter QB as income.

Adding the total shipping charges on a per transaction basis will mess up QuickBooks. Charges are only taken out of QB, once you pay your shipping carrier. In this bill payment, we take $125 out of the checking account after sending UPS a check.

In this profit and loss report, we spent $19 on shipping and paid UPS $125:

Reconcile Amazon Fees

Print a transaction detail summary from Amazon. Highlight the rows with the fees and you'll see a sum on the bottom right. Enter the fees in the bank deposits item deposits area of QB. For instruction, see this video.

Unable to Reconcile

There are times when you're missing orders or they are inaccurate. If you have several transactions, it could take several hours to find the error and move onto the next task.

A shorthand way of reconciliation is journal entries. In the example above, the bookkeeper created a journal entry for $98.95 to increase the bank deposits to match the bank deposit. To make a journal entry, follow these steps:

  1. Under Company, click Make General Journal Entries
  2. Debit Undeposited Funds $98.95 and credit Sales $98.95: 

 

If you wanted to decrease the bank deposits, credit undeposited funds and debit merchandise sales.

 

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