Of course, here is a detailed and lengthy post on how to record Intuit fees in QuickBooks, with a step-by-step guide and FAQs.
How to Record Intuit Fees in QuickBooks: A Comprehensive Guide
Hello there! Are you a business owner or a bookkeeper using QuickBooks and trying to figure out the best way to handle those pesky Intuit fees? You know, the charges for payroll services, credit card processing, or even your QuickBooks subscription itself? If so, you've come to the right place. Don't worry, it's a common question, and getting it right is crucial for accurate financial reporting.
Let's dive in and tackle this together, step by step!
Step 1: Understand the What and the Why of Recording Intuit Fees
Before we click any buttons, let's understand what we're doing and why it matters.
What are Intuit Fees? These are service charges from Intuit for using their various products. This could include:
QuickBooks Payroll: Monthly subscription fees and per-employee charges.
QuickBooks Payments: Transaction fees for processing credit card and bank payments from your customers.
QuickBooks Online/Desktop Subscription: The recurring fee for using the software.
QuickBooks Live Bookkeeping: Fees for their bookkeeping services.
Why is it Important to Record Them?
Accuracy: Correctly recording these expenses ensures your financial statements, like your Profit & Loss (P&L) statement, are accurate.
Tax Deduction: These are legitimate business expenses and are usually tax-deductible. Proper recording makes tax time easier.
Budgeting: Tracking these fees helps you understand your true cost of operations and allows for better budgeting.
Now that we're on the same page, let's get into the how.
Step 2: Choose the Right Method for Your Business
There isn't just one way to record these fees. The best method depends on how you receive the charges. We'll cover the two most common scenarios:
Scenario A: The Fees are Debited Directly from Your Bank Account. This is a very common scenario for QuickBooks subscriptions and payroll services.
Scenario B: The Fees are Netted from a Payout. This usually happens with QuickBooks Payments, where the transaction fees are deducted from the customer's payment before the rest of the money is deposited into your bank account.
Let's explore each method in detail.
Step 3: Recording Fees When They Are Debited Directly from Your Bank Account (Scenario A)
This is the most straightforward method. We'll use the Bank Feed in QuickBooks Online or the Bank Reconciliation feature in QuickBooks Desktop.
Sub-heading 3.1: Using the Bank Feed (QuickBooks Online)
This is the easiest and most efficient way to handle it.
Navigate to the Banking Tab: In your QuickBooks Online dashboard, go to the left-hand navigation bar and click on 'Transactions' > 'Bank transactions'.
Find the Transaction: Your bank feed will show a list of transactions downloaded from your bank. Look for the debit from "Intuit," "QuickBooks," or "Intuit Payments." The description might be something like "INTUIT *QBO SUBSCRIPTION" or "INTUIT *PAYROLL SERVICES."
Categorize the Expense:
Click on the transaction.
In the "Category" field, you need to select the correct expense account. You have a few options here:
If you have a dedicated "Bank Charges" or "Credit Card Processing Fees" account, use that.
For subscriptions, a "Software & Subscriptions" or "Office Expenses" account is a great choice.
For payroll fees, a "Payroll Expenses" or "Payroll Processing Fees" account is ideal.
Pro Tip: If you don't have a specific account, you can create one. Go to the 'Gear Icon' > 'Chart of Accounts' > 'New' and set it up as an Expense account.
In the "Payee" field, you can select "Intuit" or "QuickBooks." If it's your first time, you might need to add them as a new vendor.
Add and Categorize: Once you've selected the correct category, click 'Add' or 'Add & Categorize'.
That's it! You've now successfully recorded the expense. The transaction is now in your books and will be included in your P&L statement.
Sub-heading 3.2: Using Bank Reconciliation (QuickBooks Desktop)
Record the Expense First: Since QuickBooks Desktop doesn't have an automatic bank feed in the same way, it's often easier to enter the expense manually first.
Go to 'Banking' > 'Enter Credit Card Charges' or 'Write Checks'.
Select the bank account the fee was debited from.
In the "Payee" field, select or create "Intuit."
Enter the date and the amount of the fee.
In the "Expenses" tab, select the appropriate expense account (e.g., "Software & Subscriptions," "Bank Charges," etc.).
Click 'Save & Close'.
Reconcile the Account: When you do your monthly bank reconciliation, this transaction will appear. Simply check it off against your bank statement. This confirms that the transaction in your QuickBooks matches the one on your bank statement.
Step 4: Recording Fees That Are Netted from a Payout (Scenario B)
This is a little more complex but still very manageable. This applies to QuickBooks Payments fees.
Sub-heading 4.1: The 'Sales Receipt' Method (Recommended for Accuracy)
When a customer pays you, QuickBooks Payments will deposit the payment less the processing fee. You need to record the full amount of the sale and then record the fee separately.
Create a Sales Receipt:
In QuickBooks, create a 'Sales Receipt' for the customer.
Enter the full amount of the sale (e.g., if the customer paid $100 and the fee was $3, the full amount is $100).
Select the correct 'Deposit to' account. You need to select a "QuickBooks Payments" or "Undeposited Funds" account. This is a temporary holding account.
Record the Deposit:
Now, go to 'Banking' > 'Make Deposits'.
Select the sales receipt you just created.
In the "Deposit To" field, select the actual bank account where the money was deposited.
Here's the key step: The total amount of the deposit should be the net amount you received (e.g., $97).
On the same deposit screen, you will see a field to 'Add new deposits'. Add a new line item.
In the "From Account" column, select your "Bank Charges" or "Credit Card Processing Fees" expense account.
In the "Amount" column, enter the fee amount as a negative number (e.g., -3.00).
Review the Deposit: The total deposit amount should now match the amount that was deposited into your bank account ($100 - $3 = $97).
Save and Close: Click 'Save & Close'.
Now, your books show the full revenue from the sale and the expense for the processing fee, providing a crystal-clear picture of your finances.
Step 5: Review and Reconcile
No matter which method you use, the final step is always to review and reconcile.
Review Your P&L: Run a 'Profit and Loss' report and check your "Software & Subscriptions" or "Bank Charges" expense accounts. The amounts should look correct and reflect the fees you've paid.
Reconcile Your Bank Account: When you reconcile your bank account, the deposits and debits should match your bank statement perfectly. If they do, you've done it correctly!
By following these steps, you will ensure your books are accurate, your expenses are tracked for tax purposes, and your financial reports are reliable.
10 Related FAQs: Quick Answers
How to categorize Intuit Payroll fees?
You should categorize Intuit Payroll fees to a specific expense account like "Payroll Processing Fees" or a general "Payroll Expenses" account.
How to handle QuickBooks Payments fees that are deducted from the deposit?
Record the full customer payment as a Sales Receipt, then use the 'Make Deposits' screen to record the net deposit and add a negative line item for the transaction fee to an expense account.
How to create a new expense account for Intuit fees?
In QuickBooks Online, go to the 'Gear Icon' > 'Chart of Accounts' > 'New'. Choose 'Expenses' as the account type and give it a name like "Software & Subscriptions" or "Bank Charges."
How to record QuickBooks Online subscription fees?
Simply categorize the debit from your bank feed to an expense account like "Software & Subscriptions" or "Office Expenses."
How to find the amount of Intuit fees I have paid in QuickBooks?
Run a 'Profit and Loss' report and look at the totals for the expense accounts where you categorize your Intuit fees (e.g., "Bank Charges," "Software & Subscriptions").
How to know if a QuickBooks fee is for payroll or payments?
The transaction description in your bank feed or on your bank statement will usually specify the service, such as "INTUIT *QBO SUBSCRIPTION," "INTUIT *PAYROLL," or "INTUIT *PAYMENTS."
How to record a refund of an Intuit fee?
Record the refund as a deposit in your bank account and categorize it to the same expense account where you recorded the original fee. This will reduce the total expense for that account.
How to set up a rule for Intuit fees in the bank feed?
In the QuickBooks Online bank feed, find an Intuit fee transaction, categorize it, and then click 'Create a rule'. This will automate the categorization for future transactions, saving you time.
How to handle Intuit fees if I don't use the bank feed?
You can record the fees manually by creating an 'Expense' or 'Check' transaction in QuickBooks, selecting the correct vendor and expense account, and then reconciling it later.
How to track my Intuit fees for tax purposes?
By consistently categorizing the fees to a dedicated expense account, you can easily run a report at the end of the year to provide to your tax professional for deduction purposes.