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Common accounting corrections and troubleshooting

We know that keeping your books accurate is a top priority. Occasionally, you may run into scenarios where transactions were recorded incorrectly, or you encounter unexpected behavior in the interface. This guide covers common corrections and troubleshooting steps for QuickBooks Online.

Correcting transaction types and accounts

Use the correct form for transactions with names

When recording transactions that involve a Customer or Vendor name, you should generally avoid using Journal Entries. Journal Entries do not always link correctly to names and can cause issues later.

• Rental deposits and commissions: Instead of using a Journal Entry to record a deposit or a commission held back, use a Credit Memo.
  1. Create an Item for the commission and link it to an expense account.
  2. Create the Credit Memo in the customer’s name.
  3. Apply it to the open invoice. This offsets the gross amount owed and leaves the correct net due.
• Pay from account errors: If you paid payroll via Direct Deposit using the wrong bank account, you cannot edit the payment after it is sent. You must correct this using a Journal Entry to move the funds from the incorrect account to the correct one.

Verify Item account mappings

If paid invoices are not appearing correctly in your reports or Chart of Accounts, check the setup of the Items used on the invoice.

• The sales side of the item should be mapped to an Income account.
• The cost side (if applicable) should be mapped to an Expense or Cost of Goods Sold (COGS) account.
• Neither side should be mapped directly to your bank account.

Handling deleted lines and billable expenses

If you delete a line from an invoice that was previously marked as billable, it will not automatically revert to “billable” status on the original transaction. When you attempt the deletion, QuickBooks displays a warning stating that the change will not be reflected at the originating transaction.

To fix this, you must navigate back to the original expense or purchase transaction and manually recheck the box to mark it as billable again.

Recording VAT refunds

To record a refund for a previous VAT return that shows a negative value:

1. Go to Taxes (or VAT) in the left navigation menu.
2. Select VAT History.
3. Locate the specific VAT return in the list.
4. Look at the right side of the line item for the return and select Record payment.
5. If the return has a negative value, a window will pop up allowing you to select Refund.

Note: Do not use the main blue payment button at the top of the screen for this process.

Troubleshooting known issues

Missing “Back to Summary Report” link

We have identified an issue where the “Back to Summary Report” link is missing when viewing a Detail report. To return to the Summary report, click the back arrow in your web browser.

Direct Deposit routing number error

Some users may see the error “Save employee payment method information failed. Routing number should have 9 digits” after switching an employee from paper check back to Direct Deposit. This is a known issue where the routing and account numbers are not saved correctly during the switch. Our engineers are actively working on a fix.

Transitioning from Sole Proprietorship to S-Corp

If you are converting a business from a Sole Proprietorship to an S-Corp (or LLC taxed as S-Corp), it is best practice to start a new set of books for the new entity.

• Fixed Assets: Determine the current book value of the assets. You can do this by taking the original purchase price and subtracting the depreciation claimed (or that should have been claimed) on prior Schedule C forms.
• Owner Draws: Do not worry about reconciling previous owner’s draws from the Sole Proprietorship books, as S-Corps use Shareholder distributions and equity accounts instead. For complex tax transitions, we recommend consulting a tax professional.