Recording Sales Transactions in QuickBooks Online

In Chapter 5, Managing Customer, Vendor, and Products and Services Lists, you learned how to customize QuickBooks by adding customers, vendors, and the products and services you sell to QuickBooks. Now that you have completed your QuickBooks setup, it’s time to learn how to record transactions. Recording sales transactions will allow you to keep track of how much money your business is making. This information is important and will help you to determine whether or not your business is profitable.

In this chapter, we will focus on recording sales transactions in QuickBooks Online (QBO) as well as how to customize sales templates. We will cover the three types of sales transactions, when you should use them, how to record each transaction, and the behind-the-scenes accounting that QuickBooks does for you. We will also show you how to record customer payments, how to manage credit card payments, and how to issue...

Entering sales forms

Recording income for a business can be accomplished in a variety of ways. There are three primary ways to record income in QBO. First, a sales receipt is used when you receive payment at the same time as you provide products and/or services to your customers. Second, you can use a deposit to record income for a specific customer or to record income from multiple customers at any one time. Third, you can use a sales invoice, which allows you to bill a specific customer, who will pay you based on payment terms that are agreed upon upfront.

In the following sections, we will cover when and how to record income using a sales receipt, a deposit, and a sales invoice. We will also show you the accounting that takes place behind the scenes for each transaction. This will include the debits and credits recorded for each transaction.

Recording income using a sales receipt

A sales receipt is used when the sale of a product or service and the receipt of the customer...

Customizing sales templates

QuickBooks allows you to create custom sales forms to match your brand and style. Taking the time to customize sales templates will allow you to create professional-looking forms so your customers can easily see what they owe and make payments online in just a few minutes. You can customize invoices, estimates, and sales receipt templates. Follow these steps to learn how to customize these sales templates:

1. Click on the gear icon and select Custom form styles from the YOUR COMPANY column, as shown in Figure 7.10:

Figure 7.10: Navigating to Custom form styles

2. Click on the New style button and select a sales template to customize:

Figure 7.11: Clicking the New style button

3. The following window will display three areas you can customize for sales templates:

   

   Figure 7.12: Three customization options for sales templates

   The following is a...

Recording customer payments

If you record income using a sales invoice, you will receive payment based on the terms you have agreed with your customer. When customer payments are received, you must apply payments to an outstanding sales invoice to reduce the accounts receivable balance. As mentioned previously, you can accept multiple payment methods in QuickBooks, including check, cash, Apple Pay, Visa, Mastercard, Discover Card, Amex, ACH, PayPal, and Venmo. To learn more about managing credit card payments, refer to Chapter 16, Handling Special Transactions in QuickBooks Online.

Follow these steps to receive payment from a customer:

1. Click on the + New menu.
2. Navigate to Receive payment, located below CUSTOMERS, as indicated in Figure 7.14:

Figure 7.14: Navigating to Receive payment

3. Complete the fields, as indicated in Figure 7.15, to record the customer payment:

Figure 7.15: The Receive Payment window

The following...

Managing credit card payments

In addition to traditional payments such as cash and checks, you can accept credit cards as another form of payment from your customers. QBO has a built-in credit card processor called QuickBooks Payments. QuickBooks Payments is a merchant account that allows you to accept credit cards, PayPal, Venmo, Apple Pay, and ACH (bank transfers) from your customers. While there are fees associated with accepting credit card payments, there are several benefits. First, you can get paid faster with a credit card than waiting to receive a check in the mail.

Second, if you sign up for a QuickBooks Payments account (https://quickbooks.intuit.com/payments/?sc=seq_intuit_pay_click_ft), you can email customers their invoice, which includes a payment link. They can click on the link, enter their payment information, and pay their invoice in a matter of minutes, which is much faster than waiting to receive a check in the mail. Best of all, QuickBooks will mark...

Recording payments to the payments to deposit account

In the previous examples, each of the payments that have been recorded from customers, whether on a sales receipt, deposit slip, or invoice, were all deposited to the business checking account. This is ideal if you don’t deposit more than one check (customer payment) at a time.

However, like most businesses, you will probably wait until you have multiple checks before you head to the bank to make a deposit. In that case, you will need to record all customer payments to an account called payments to deposit (formerly “undeposited funds”).

The payments to deposit account is an account that is automatically created by QuickBooks. It acts like a cash drawer, where all customer payments are held until you record a deposit in QuickBooks.

After you make a deposit with the bank, you need to record that deposit in QuickBooks. Follow the steps below to record a deposit that includes multiple checks (customer...

Issuing credit memos and refunds to customers

There may be times when a customer returns merchandise, or you need to refund a customer due to an issue with the services or products you have provided.

When that happens, you can create a credit memo in QuickBooks that can be applied to a future invoice, or you can refund the customer instead by clicking on + New, selecting Refund receipt, and following the onscreen instructions.

Follow these steps to create a credit memo in QuickBooks Online:

1. Click on the + New menu and select Credit memo below CUSTOMERS, as indicated in Figure 7.23:

Figure 7.23: Navigating to the Credit Memo form

2. Complete the key fields indicated here for the credit memo:

Figure 7.24: Credit Memo form

The following are brief descriptions of the key fields to complete for a credit memo. All fields are required except for the QTY, DESCRIPTION, and Message displayed on credit memo fields:

• Customer...

Applying a credit memo to an open invoice

After recording a credit memo for a customer, the credit will immediately be applied to the open balance for that customer. Let’s assume that George Jetson has sent a payment in for invoice #1005. Navigate to the Receive Payment window, select George Jetson from the Customer drop-down, and the following screen will display:

Figure 7.26: George Jetson invoice

As you can see in Figure 7.26, the original invoice amount was $1,412.38, and now that the credit has been recorded, the open balance has been reduced by the $250 credit amount (shown in Figure 7.18) to $1,162.38.

Pro Tip: If you do not invoice customers through QuickBooks, you can issue a refund check by going to + New and selecting Check, listed below the Vendors column. This will allow you to refund a customer instead of creating a credit memo since you will never have an invoice to apply it to.

Summary

In this chapter, you have learned how to record sales transactions for the sale of products and services using a sales receipt, a deposit, and a sales invoice. You now know when to use each sales transaction and how to record them in QuickBooks Online. We have also covered the journal entry that is recorded behind the scenes by QuickBooks for each transaction. To put your best foot forward, we have shown you how to create professional-looking invoices, sales receipts, and estimates by adding your brand colors and logo. In addition, you have learned how to record customer payments so that they are correctly applied to open invoices. We have also covered how to manage credit card payments by signing up for a QuickBooks Payments account. Finally, we covered how to issue credit memos and refunds to customers. Recording sales transactions will allow you to keep track of how much money your business is making. This is important so that you can determine whether your business is...