Negative deposit? Huh?  How do I record that into Quickbooks Online (QBO)?  Is that even possible?

What is that? A negative deposit?  So money was taken out?  How is that considered a deposit?  Wouldn’t that be a check or expense entry?What exactly causes a negative deposit anyway? Great question!

Negative deposit:  Scenario # 1

Lets say you have a deposit from a customer in your + bank deposit window.  This customer paid by credit card and it’s for a small amount of $75.00. On that same day you have a refund from a different customer in the amount of $285.77. The refund to this customer is for more money than the deposit from the other customer. Both settle on the same day to your bank account. The net the deposit is -$210.77.

Negative deposit:  Scenario # 2

You have a merchant service account that on the 2nd of the month, it deducts the credit card fees from the prior period. Instead of a separate line item expense, they bundle it into whatever deposit(s) happen to settle on the same date. Same thing as scenario #1. Net result is sometimes it can be a negative deposit.So how is this recorded?In QuickBooks online, you cannot record and negative deposit. The system won’t allow it. You will get a red warning box telling you that it’s not a transaction that’s allowed. Creating a clearing account will allow you to process these transactions.

The steps…..

Create a special account for clearing the two transactions. Make it a bank account “type” so it can also be used for barter transactions. See this other post for barter transactions. 

• Go to accounting, chart of accounts, add “new”.
• Select type banking and then “checking” as the detail.
• Type in the name “clearing”.

The workflow…..

Once you have the account please, go back to the small deposit. Deposit it directly into the new clearing checking account. Next go to the customer refund and also deposit that into the clearing account.Now That both transactions settled into the same clearing bank account, lets make this work:

1.  Click + expense.
2. At the top of the expense for the bank/credit card enter the operating checking account. For the account below, use the clearing account.
3. Save and close.
4. Now check your register in the clearing account and it should have a zero balance.
5. Check your operating checking account and you should now see that negative deposit showing in the account. All of this is demonstrated in the video.

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