- 1 What are Cash Back Rewards in QuickBooks?
- 2 Easy Steps to Record Cash Back Rewards in QuickBooks
- 3 Now You Can Easily Record The Cash Back Rewards with The Help of Following Steps
- 3.1 Open Banking Option
- 3.2 Click on Credit Card Charges Option
- 3.3 Enter Appropriate Name
- 3.4 Select The Amount
- 3.5 Enter The Charge Amount
- 3.6 Hit The Save Option
- 3.7 Here are the steps to create an income account
- 3.8 Now, you need to create a credit card for your cash back rewards
- 3.9 Record the cash back credit rewards
- 4 How to Categorize Cash Back Rewards in QuickBooks?
- 5 Issues users face while entering cashback rewards in QuickBooks
- 6 Second problem that users encounter is,How the credit card Cash Rewards are recorded in the QuickBooks?
- 7 FAQs
What are Cash Back Rewards in QuickBooks?
A Cash Back Reward is nothing but an income when you received it. It is basically posted to other income and it doesn’t matter how you use it. Based on the purchases, Cash Back Rewards should be counted as discounts/adjustments to the purchase price, not as income.
When you get a new credit card, which can give you cash back on some percentage of the amount spend by you, now the question arises that how to show this transaction of refunds in QuickBooks. You can solve the issue by following the below mentioned two approaches:
1. Offsetting The Expense
To understand it better let’s take an example: a trip was taken by you and lots of money was spend on the airfare, so this reward refund could easily be applied to the same category of travel expense, which was used originally for transaction. The transaction could further be split in the multiple expense accounts.
Problem that is associated with this approach is that, at the end of the year you won’t have the true analysis of the expenses, as it will appear that less was spent by you than you actually did.
2. Creating Other or A New Income Account
The statements credits or cash back that you get on the credit cards of yours go here. Refund is classified by it as an income, but it won’t be a part of the Gross Receipts, hence it is not going to have any impact on the revenue analysis.
Easy Steps to Record Cash Back Rewards in QuickBooks
The cash back rewards can be registered as a credit card. Many businessmen or entrepreneurs use other revenue as the affected account. You can create revenue specifically for cashback rewards through you.
Let’s See The Steps to Create An Income Account
- Initially, go to Accounting and then click on the Chart of the accounting tab
- After that select the New button and choose an appropriate income in the field named “Account Type”
- Now select the detail type
- In case, you are not what to choose then you can take advice from your accountant
- Next, enter the appropriate account name in the appear name field
- At last, hit the Save button and then close the tab.
To Proceed Further, You Need to Create a Credit Card for Your Cashback Rewards
- The very first, select and click on Create menu with a symbol (+)
- Next, at the top, you can see the credit card option
- Select the Payee option and enter the accurate credit card account
- After that enter the relevant account details
- Now under the account columns, you need to enter other income or the other account that you’ve created
- Once you’ve done with that then enter the amount for cashback as well
- In the end, hit the save button and then close the tab.
Now You Can Easily Record The Cash Back Rewards with The Help of Following Steps
To Enter Cash Back Rewards in QuickBooks follow the steps provided below:
Total Time: 2 minutes
Open Banking Option
Firstly, Go to Banking option
Click on Credit Card Charges Option
Next, select and click on the credit card charges option
Enter Appropriate Name
Now enter the appropriate name on the purchased field type
Select The Amount
After that select the amount that you’ve created
Enter The Charge Amount
Along with that you have to enter the charge amount as well
Hit The Save Option
At last, hit the save option and then close the tab as before.
How to Record Cash Back Rewards in QuickBooks Desktop/Online/Pro?
Users can record their cash back rewards as a credit card. As the amount affected, some businessmen or entrepreneurs use other income. So, to record cash back rewards, users can create an income especially for that.
Here are the steps to create an income account
- Initially, click Accounting and move to the “Chart of Accounts” tab
- Next, hit the New button and select the Income within the field named Account Type
- Now, select the Detail Type or if you’re not sure then consult your accountant to choose the appropriate one
- After that, enter the appropriate account name in the relevant field
- At last, hit Save and then close the tab.
Now, you need to create a credit card for your cash back rewards
- The very first hit the create (+) menu
- Next, at the top of the menu select the Credit Card
- Along with that, select the Payee
- And then enter the appropriate credit card account
- After that, enter the information related to the account
- Along with that, enter other income or the other that you have created under the columns of account field
- Now, enter the amount of the cash back
- And finally, hit save and then close the tab.
Once the above process is done then you are ready to record the cash back credit rewards with the help of the following steps:
Record the cash back credit rewards
- Firstly, go to the “Banking” section
- Next, pick the credit card charges option
- In the purchased field, you have to enter the name
- Along with that choose the created account
- Now, enter the charge amount
- And lastly, hit Save and then close the tab.
How to Categorize Cash Back Rewards in QuickBooks?
You can categorize the Cash Back Rewards on QuickBooks Self-Employed. Generally, you get the Cash Back Rewards from your credit card account and is not usually a part of your business income so you can categorize the downloaded transaction as personal within your computer.
Here Check Out The Different Categories
- Business income
- Car and truck
- Commissions and fees
- Home office expenses
- Interest paid
- Office expenses
- Personal deposit
- Personal withdrawal
- Taxes and licenses
Some of The New Categories Added
- Advertising- Listing fees
- Car and truck- Vehicle loan
- Commissions and fees- Referral/ broker/selling fees, Transaction/processing fees
- Insurance- Other property insurance
- Interest paid- Business loan, Mortgage
- Home office expenses- Mortgage (home office)
- Rent and lease- Equipment rent and lease
- Other expenses of business- such as Memberships/subscriptions, Uniforms, Computers, Furniture, and more.
Issues users face while entering cashback rewards in QuickBooks
Issues that may arise are:
What expense can be used for the amount of cash back on the Debit Card and what can be written in the field of Description, this happens when user does not know where the money was spent.
Second problem that users encounter is,How the credit card Cash Rewards are recorded in the QuickBooks?
Another situation could be that, users are using the credit card to make purchase and to get the cash back when they pay from the same credit card. What user wanted to know here is that how the cashback is going to be recorded in the QuickBooks?
There might be other situations as well, apart of what is mentioned by us above, where you may feel stuck or unable to get the appropriate solution. So, to get the desirable and correct answer of all your queries, you can anytime get in touch with the SMB QuickBooks tech support team on Call smbaccountants.com. SMB product help professionals are very well aware of the working of QuickBooks and can handle all your queries with great ease.
What is cashback in QuickBooks?
✔ QuickBooks Online method of tracking cash back rewards is almost similar. You should follow up on the points before you use them. Such rewards are revenue for the company either by using them as a credit that decreases the balance, or by receiving a check and making a deposit.
Do you pay taxes on cash back?
✔ Most credit card rewards are not taxable, but watch out for those who do not have the expenditure threshold needed to redeem the rewards. Although these cards provide a benefit up front, you will be expected to report such benefits as income later when you file your taxes.
How do you categorize cash back rewards from your business credit card?
✔ Usually, the cashback rewards that you receive from your credit card account are not part of business revenue. Within the system, you may categorize the downloaded transaction as Personal.
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