By Amanda Karen | CrunchSum
Square is a convenient way to receive invoice payments from your clients, however the bookkeeping side of recording Square payments in QuickBooks Online can sometimes be tricky. Because of transaction fees, some additional bookkeeping must be completed first before you’ll be able to match your Square deposits in the banking transactions screen. The tutorial below will walk you through how to record Square income transactions step-by-step.
Please reference the following information when walking through the tutorial:
Square deposit amount: $483.75
Amount of invoice paid: $500.00
Square processing fee: $16.25
*The Square payment used in this example is for a single invoice. It is very likely that your Square deposit transactions cover multiple invoices.
Step 1: Identify your Square deposit transactions.
Review your current bank transactions in QuickBooks Online: Transactions > Banking.
Step 2: Identify the customer invoices that were paid via Square.
Step 3: Receive Payment against open invoice(s).
Select the invoices that were paid through the Square deposit. Make sure that this payment is being deposited into your Undeposited Funds account.
To ensure that the associated Square transaction processing fee is recorded accurately, the invoice payment must be applied manually through the “Receive Payment” screen (rather than through the matching feature). A manual deposit must also be entered (step 4).
Step 4: Add a new Deposit “+” > Other > Bank Deposit.
Step 5: Select appropriate invoice(s) and record the Square processing fee part of the transaction.
*For purposes of recording any transaction related fees we like to create and use a Processing Fee expense account for our clients. Consult your CPA when in doubt which account(s) you should be using.
Make sure to enter the amount of the Square processing fee as a negative number so that it deducts from the total deposit amount. This will ensure that we are able to match this transaction (step 6).
Step 6: Match your deposit to accept the transaction in QuickBooks Online.
Go back to Banking > Transactions and locate your Square deposit. Since the processing fee has now been recorded in QuickBooks Online, you will be able to match your Square deposit.
Following the steps above is one way to record your Square deposit transactions in QuickBooks Online. We should note that if you process a lot of client invoice payments through Square then the most efficient option might be to sync your Square account to QuickBooks Online. This will help streamline the process and make it a lot less manual.
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CrunchSum provides web-based bookkeeping and QuickBooks Online support services to web and technology companies.