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Set up a Clearing Account in QuickBooks

A Clearing Account:

  • Is an account you use to move money from one account to another account when you cannot move the money directly.
  • Normally has a balance of $0.00 because you always take out the same amount that you put in.
  • Is also known as a Barter Account or a Wash Account.

The most common reason that we need a Clearing Account in QuickBooks is that the program will not let you record transactions that contain:

  • Two A/R accounts.
  • Two A/P accounts.
  • One A/R account and one A/P account.



Note: If you have multiple uses for a Clearing Account, you may want to create several such accounts.

How do do it.

To set up a Clearing Account, simply add a new account to your Chart of Accounts. While you can choose several types of account, the best is a bank account:

  1. You can pay into a bank account via Receive Payments or Make Deposits.
  2. You can pay out of a bank account via Write Checks or Pay Bills.
  3. A bank account appears on the balance sheet and on the statement of cash flows to balances and changes in balances.
  4. To allocate expenses to overhead or class using a zero check, you must use a bank account as your Clearing Account.

To set up a Clearing Account:

  1. In the menu bar, select Lists and then Chart of Accounts.
  2. Right click in the Chart of Accounts and select New.
  3. In the Add New Account window, click the Bank radio button.
  4. Click Continue
  5. In the Account Name field, enter Clearing Account, Barter Account or Wash Account.
  6. Do not enter an opening balance.
  7. If you use Account Numbers, enter an Account Number at the top, right of the window.
  8. Click the Save and Close button.

Your typical transaction:

  1. Create a journal entry
  2. Add the A/R or A/P from which you are moving money. 
  3. Add the Clearing Account
  4. Save the Journal Entry.
  5. Create a second Journal Entry.
  6. Add the Clearing Account.
  7. Add the A/R or A/P account to which you moving money. 
  8. In either Pay Bills or Receive Payments, link the Journal Entries together.


If these steps do not resolve the issue, you can read discussions and post messages and questions relating to your issue on the Intuit QuickBooks Community site for free or you can contact a technical support agent for additional guidance. Fees may apply.

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