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rrussell0125
April 18, 2024
Question

Recording transactions made outside of our bank accounts

  • April 18, 2024
  • 1 reply
  • 0 views

Hello, 

 

We run a real estate company and I am looking for the best way to record trasnactions that occure outside of our bank accounts. 

 

Example: 

A closing occurs with a title company involving an agent of ours and the total commission is $1000. 

The Agents portion of the $1000 is $500. The title company pays the agent $500 directly on our behalf and we are paid the balance of $500. 

 

We need to report the full $1000 as income from the title company as well as the $500 payment to the agent to 1099 them at the end of the year. As far as matching the bank transaction, we will only have a $500 deposit in our bank account. 

Agent Sally is paid $500 of the $1000 at the closing table by the title company. 

1 reply

S
SheandL
April 18, 2024

Hi there, @rrussell0125. I'll help you out in recording transactions that took place outside QuickBooks Online (QBO).

 

Firstly, let's create a dummy bank account to hold the commission amount paid by the title company to the agent. It will serve as the posting account for the entry that wasn't linked to your company's bank. At the same time, you'll be able to report this in the 1099 of your agent. To create one, here's how:

 

  1. Go to the Gear icon, then select Chart of Accounts.
  2. Click New.
  3. The New account window will show.
  4. Add the necessary details from there, and don't forget to indicate that this bank is a dummy account.
  5. Hit Save.

 

Once done, let's create a journal entry to record the commission income and the payment to the vendor. Making this will ensure that the payments occurred outside QBO will be recorded accurately. I'll gladly walk you through on making one.

 

  1. Go to + New.
  2. Select Journal Entry.
  3. Start by selecting an account from the Account field. Next, enter the amount in the appropriate column based on whether you need to debit or credit the account.
  4. On the next line, choose the other account you want to move money to or from. Enter the same amount in the opposite column as you did on the first line.
  5. Ensure that the amount in the Credit column matches the amount in the Debit column. This confirms that the accounts are balanced.
  6. Click Save and new or Save and close.

 

Lastly, for the entry that is deposited successfully to your company's bank account, you can match it directly to online banking since it's a regular transaction.

 

Moreover, it's still best to consult an accountant on the processing of recording this transaction. They can give you the best suggestion on how to approach this. 

 

You can also read this article to learn how to speed up your categorization process in QBO: Set up bank rules to categorize online banking transactions in QuickBooks Online.

 

We're always available to address your queries about recording transactions that happened outside the system. Click the reply button or post here in this forum if you have one. We'll be sure to assist you.

R
rrussell0125Author
April 19, 2024

Thank you for the reply! The Dummy bank account is the piece that I was missing. With that being said, I forgot to mention in the original post that we use the accrual method. Part of our process is we require the date the transaction closes and the date the bill to the agent is within the same month. We currently do this by creating invoices for the title company and a bill to the agent. Would we do the same and then pay the bill to the agent using the dummy account? 

 

How do we record the income ($500) to us that is deposited from the title company to our actual checking account? Transfer? 

C
CamelleT
April 19, 2024

I've got you covered, rrussell0125. I'll enlighten you about paying the bill using the dummy account and how we can record the income deposited from the title company.

 

Regarding your first question, yes, you can do the same and pay the bill to the agent using the dummy account. 

 

Then, about recording the income, if you placed the full $1000 in the dummy account, we can record this as a transfer. If not, we can record this as a bank deposit. 

 

Here's how we can record the $1000 as a transfer:

 

  1. Click +New and choose Transfer.
  2. In the Transfer Funds From dropdown list, select the bank account that the money is coming from.
  3. Then, in the Transfer Funds to dropdown list, choose the bank account where the money is going.
  4. In the Transfer Amount field, enter the amount being transferred and edit the Date field.
  5. Enter a description of the transfer in the Memo field.
  6. Hit Save and close. Then, tap Yes to confirm.

 

To record a bank deposit, refer to the steps below:

 

  1. Click + New, then choose Bank Deposit.
  2. From the Account dropdown, select the account you want to put the money into.
  3. Make sure the amount matches your deposit slip. Use your deposit slip as a reference.
  4. Hit Save and close.

 

Additionally, here's an article I'll share to help you analyze your spending and give you information on how your business is doing: Run reports in QuickBooks Online.

 

I'll be a post away if you have other questions about recording transactions or managing bank deposits in QuickBooks Online. Take care!

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