Learn the Process to Create a Clearing Account in QuickBooks
Well, you have already known about QuickBooks software and its amazing functions. Sometimes, you need to create multiple accounts in QuickBooks. Today, we are here to tell you about a clearing account that needs to be created to move money from one account to another. The information provided in the following article appears to be suited for a clearing account in QuickBooks. You can get all the aspects related to a clearing account in this article. So you have to be connected with us through this blog.
Now, we can proceed further and understand a payroll clearing account in QuickBooks and its uses.
What is a Clearing Account?
Before knowing the steps to create a clearing account, you first must know what a clearing account is. This account will help you to move money from one account to another account in case of unable to move money directly. A clearing account usually contains a balance of $0.00 since you will be able to take back the amount that you transfer in it. This account is also called a Barter or wash account.
When you can use a Clearing Account in QuickBooks?
You might be looking for the uses of a clearing account in QuickBooks and thinking “why we need to create a clearing account”. We have provided all the advantages of making a clearing account in QuickBooks for your convenience.
- You will be able to manage vendors and AP after creating a clearing account. And, you can easily avail of the following features:
- Move an account from one AP account to another.
- You can refund a check from one vendor to another.
- Transferring a Bill or Bill Credit from one vendor to another will get easier.
- You can easily handle customers and AR and avail of the following features.
- Handle accrual basis and debt and move a Credit Memo from one job to another for the same customer.
- You will be able to transfer an amount from one A/R account to another.
- Easily record on check for paying invoices to customers.
- You can move foreign currencies from one AP account to another.
- Recording barter transactions for a vendor or customer. Also, you can write off a receivable against a payable.
How to Create a Clearing Account in QuickBooks?
Once you have got all the information about “clearing accounts in QuickBooks”, it is time to create the account. We have mentioned the complete steps that will help you in creating a payroll clearing account in QuickBooks.
- First of all, you have to choose the Chart of Accounts from the Lists menu.
- After that, choose New by right-clicking on the Chart of Accounts.
- Go to the Add New Account window and choose the Bank radio option.
- Next, click on Continue.
- You have to choose the Account Name field and type Clearing Account, Wash Account, or Barter Account.
- We recommend you not to enter an Opening Balance.
- Finally, click on Save & Close.
How to use clearing accounts in QuickBooks?
After creating a clearing account in QuickBooks, you might be looking for the steps to use it. Below, you can find out the steps that will help you to use clearing accounts in QuickBooks. You can follow all the steps in order and make your accounting easier.
- First of all, you have to make a journal entry.
- And then, add the AR or AP so that you can easily move money.
- Next, you are required to add a clearing account.
- After that, save the Journal entry.
- Make a second Journal Entry and add the Clearing Account.
- You have to add the AR or AP account to move money.
- Finally, you have left with linking the Journal Entries in either Pay Bills or Receive Payments.
Hopefully, you have got all the essential information regarding a “clearing account in QuickBooks” with the help of this blog. In our assumption, you have successfully set up a clearing account and found the above article fruitful. Sometimes, you may get stuck into steps while setting up an account.
In such cases, you are free to take the assistance of our experts. All you require to do is get in touch with our experts by dialing the QuickBooks Support Phone Number (1-855-857-0824). We will guide you in the right direction by setting up a QuickBooks payroll account.
Frequently Asked Questions
Q1: How can you remove a clearing account in QuickBooks?
A: The following are the steps to delete a clearing account in QuickBooks:
- First of all, choose to Create and choose Journal Entry.
- After that, click on Accounts Payable under the Account Column. And, enter the Credit overpayment amount.
- Select the name of the vendor and choose a clearing account.
- Enter the same amount in the debit column and choose Save.
Q2: Where is the clearing account on the Balance Sheet?
A: A clearing account does not directly come under the balance sheet till gets disbursed. And, it is the suspense account shown under Assets.
Q3: Can a payroll clearing account consider as an asset?
A: A payroll clearing account is a general ledger account that comes under the assets section of the balance sheet.
Q4: How can you set up a payroll clearing account in QuickBooks?
A: The following are the steps to set up a payroll clearing account in QuickBooks:
- First of all, choose the Banking tab and select the bank account.
- Look for the transaction and choose the add option.
- After that, choose the expense for the transaction type.
- You have to assign the account as Payroll Clearing.
- Finally, add out of scope and choose Add.
Q5: What is the main purpose of a payroll clearing account?
A: The main purpose of a payroll clearing account is to separate a bank account that is used by the company to pay employees.