Using the Undeposited Funds account

When you receive payments, use a payment item on an invoice, or enter a sales receipt, QuickBooks knows you've received money. chart of accounts, Undeposited Funds account, deposits, undeposited funds, . When you record each payment, you can choose how you want QuickBooks to handle the deposit.

You can do one of the following.

Use the Undeposited Funds account as the default: If you set your Sales and Customers preferences to always use the Undeposited Funds account as the default deposit to account, you will not see the "Deposit to" option on the Receive Payments or Enter Sales Receipts windows. chart of accounts, Undeposited Funds account, deposits, undeposited funds, . Any payments you receive from customers automatically go into this holding account until you deposit the payment into a QuickBooks bank account. chart of accounts, Undeposited Funds account, deposits, undeposited funds, . The Undeposited Funds account acts as a holding account, similar to holding money in a drawer until you make a deposit to your financial institution.
Use the "Deposit to" option to deposit the payment directly to a QuickBooks bank account: If you choose this option, funds are transferred immediately to the bank account. chart of accounts, Undeposited Funds account, deposits, undeposited funds, . The funds do not appear in the Undeposited Funds account and you do not need to deposit them using the Make Deposits window.

Which method should I choose?

Basic steps for using the Undeposited Funds account

Set your Sales and Customers preferences to always use the Undeposited Funds account as the default Deposit To account. chart of accounts, Undeposited Funds account, deposits, undeposited funds, . Then, any payments you receive from customers automatically go into this holding account until you deposit the payment into a QuickBooks bank account.
When you deposit the money you will first see the Payments to Deposit window, which lists all the transactions in the Undeposited Funds account.
Select the transactions you want to deposit and click OK. chart of accounts, Undeposited Funds account, deposits, undeposited funds, . QuickBooks enters transactions in the Make Deposits window. chart of accounts, Undeposited Funds account, deposits, undeposited funds, . When you save the deposit, the amount is transferred from the Undeposited Funds account to your QuickBooks bank account.