When you get a new credit card or debit card which can give you cash back on some percentage of the amount spent by you. Now, the Question will be arises in your mind that how to show this transaction in QuickBooks or How to record cash back rewards in QuickBooks. then don’t worry here we disclosed all.
You can solve this issue by following approaches
Offset the Expenses
If you take a trip and spend a lot on the fare, you can apply the reward refund to the same travel expense category that you originally used for the transaction into multiple expense accounts. The main problem associated with this approach is that at the end of the year you won’t have the correct analysis of the expenses because it looks like you spent less than you did.
Creating other or new income account
The statements of credits or cash back that you get on the credit cards of yours go here. Refund is classified by income, but it won’t be a part of the gross receipts, hence it can not have any impact on the revenue analysis.
You can create other new income account by these method:
- Click on the list tab on the top menu bar
- Then, select the chart of account
- Click on the drop-down arrow and go to the account
- Now, click on the New
- And also choose other account types and also select other income
- Click on the continue
Learn How To Record Cash Back Rewards in QuickBooks
You can record the cash back rewards as a credit card. Some entrepreneurs or businessmen use other income as the affected account. Through you can create an income specially for cash back rewards.
Let’s have a look to create an income account
- Click on the accounting and go to the chart of the accounting tab.
- Now, click on the new button and choose the income in the account type field.
- Choose the detail type. You can refer to your accountant if you are unsure of what to choose
- Enter your desired account name in the name field
- Click on the save and close the tab
Now create a credit card for cash back rewards
- Click on the create menu (+) and select the credit card at the top menu
- Choose the payee and enter the correct credit card account
- Now, enter the account details
- Enter other income or the other account you created under the account columns
- Then, enter the cash back amount
- Now click on the save and close the tab.
Once done, now you can record cashback credit rewards by following these steps
- Click on the Banking option
- Then, select the option credit card charges
- Enter the name on purchased field
- Select the account which you created
- Enter the amount of charge
- Now, click on the save and close the tab
Which type of issue face users while entering cashback rewards in QuickBooks
An issue that may arise are
- What expense will be used for the amount of cash back on the credit card or debit card and what can be written in the field of description, this happens when the user does not know where the money was spent and how many cashback rewards points on it.
- Other reasons could be that users use the credit card to make purchases and to get the cashback when they pay from the same credit card or debit card. Then, the user wanted to know how the cashback is going to be recorded in QuickBooks.
You can reach your accountant to be sure that this blog will be the best option for you to record cash back rewards in QuickBooks. If you are still unable to understand How to record cash back rewards in QuickBooks, then you can contact Quickbooks Proadvisor.