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idaza-kaptivaspo
September 8, 2021
Question

How do I categorize a refund made to a client? Keeping in mind that it is not an expense, could it be categorized as an Income "Sales" as a negative amount?

  • September 8, 2021
  • 1 reply
  • 0 views
If I categorize this negative amount as a Sales, I assume it will be deducted from my total sales right?

    1 reply

    R
    Rea_M
    September 8, 2021

    Recording and categorizing a refund is easy in QuickBooks Online (QBO), and I'm here to show you how, @idaza-kaptivaspo.

     

    When you refund a customer, it's an expense of your business. This reduces your total sales, bank's balance and offsets the customer's open credit, overpayment or prepayment.

     

    You can use Refund receipts if a customer asks a refund for an item or service. Make sure you didn't enter a credit note yet to avoid a double refund. To do this, here's how:

     

    1. Go to the+ New button.
    2. Select Refund receipt or Give refund.
    3. Choose the Customer dropdown, then select the client you want to refund.
    4. Select the bank you deposited the payment for the invoice to in the Refund From dropdown.
    5. Add all products or services the customer returned in the PRODUCT/SERVICE column.
    6. Make sure to fill the service date, quantity, rate, amount, tax, and other fields accordingly, then select Save and close. 

     

    On the other hand, when you refund a customer's overpayment or credit, record it using a Check or Expense. For the step-by-step guide, you can refer to this article: Record a customer refund in QuickBooks Online.

     

    Also, categorizing your transactions will ensure that they match your real-life bank statements. With this, it's important to reconcile them every month. This way, you can monitor the growth of your business and detect any possible errors accordingly. For the detailed steps, you can refer to this article: Reconcile an account in QuickBooks Online.

     

    Let me know in the comments if you have other concerns about categorizing a refund made to a client in QBO. I'm always around to help. Take care, and I wish you continued success, @idaza-kaptivaspo.

    I
    idaza-kaptivaspoAuthor
    September 8, 2021

    And once the refund has already been made and appears in the transactions to review as a negative number. Which category inside the expenses categories is the most appropiate to use?

    DivinaMercy_N
    DivinaMercy_N
    September 8, 2021

    Thanks for returning to this conversation, @idaza-kaptivaspo. I'm here to further guide you in the right direction on how to categorize your refund transactions.

     

    Once the refund transactions show on the For Review tab, you can use the find match feature and look for the sales receipt.

     

    Also, to give you information about the expense account you can use, feel free to visit this article: Learn about the chart of accounts in QuickBooks. Simply click the See which accounts QuickBooks sets up for you dropdown to check them.

     

    You can also generate a handy copy of your reconciliations to have a reference guide in the future. To have one, check out this article for the detailed steps: How do I view, print, or export a reconciliation report?. You can either print or export it and save it on your desktop folder. 

     

    Should you have any other concerns about categorizing refund transactions, you can always post here in the Community. I'm always here to listen and ensure your needs are taken care of.

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