I code deposits from a certain source as "Legal and professional services" since that is what I am paid for. WHY does this show as an expense in P&L?

It's possible that the deposits were coded to the default expense account Legal and professional services in QuickBooks Online's (QBO) Balance Sheet, Bobbie. This account is for tracking the costs associated with hiring legal, financial, accounting, and payroll professionals.

If the deposit transactions are coded under this account, QBO interprets these as expense reductions, leading to negative amounts in your Profit and Loss (P&L) statement. For this, I suggest coding them to an appropriate income account . I can assist you in accomplishing this in QBO.

While I can't recommend a specific income account where you can categorize your deposit transactions, I suggest collaborating with your accountant to choose or create an income account in QBO to ensure your books are accurate. You can also consider looking for QuickBooks Certified ProAdvisor to help with this task.

Once done, let's run a QuickReport of the expense account where the deposit transactions are. Then, we can edit each of the deposit transaction. You can follow these steps:

1. Go to the Gear icon in your QBO account. Then, Chart of accounts.
2. Find the Legal and professional services account.
3. Click on Run report to open a QuickReport that lists all transactions coded in this account.
4. Choose the Report period. Then, hit Run report.
5. Under the Amount column, click on the amount of the deposit transaction.
6. On the Bank Deposit screen, scroll down to the Add funds to this deposit section.
7. Choose an appropriate income account under the Account column.
8. Review other details. Then, hit Save and close.
9. Repeat steps 6 to 10 for the rest of the transactions.

After this, run the P&L report to ensure your earnings are accurately displayed.

For future reference, I'm adding this article as a guide in saving the current customizations in your report: Memorize reports in QuickBooks Online.

We'll be here in the Community if you need further assistance recording your earnings in QBO. We're committed to offering ongoing support. Take care!