QuickBooks Accounting software is garnered astonishing and widespread popularity among small and medium-sized businesses due to the advanced tools and features it offers. The program also employs unmatched quality standards for ensuring that the entered data into the software is secured. In the comprehensive post by diligent experts, we discuss the process to write off bad debts in QuickBooks Desktop.
Bad debts are among the most conspicuous and prominent problems faced by many organizations regardless of their size and type. Due to this, all businesses want to ensure that they’re able to write off their bad debts at the earliest without going through any obstacles. Thus, here QuickBooks Desktop accounting application does the job. The software is handy for conveniently writing off bad debts. Thus, let us dive into different process aspects to know how to write off bad debt in QuickBooks Desktop.
Some Points To Note
Before embarking on the process of writing off QuickBooks bad debts, you would have to note the following points:
- It is possible to write off bad debts like deductions, also.
- While making a bad debts account, it is possible to get acquainted with various bad debt types with unpaid invoices.
- There is a simple avenue of writing off overpayments and utilizing QuickBooks software.
Writing Off Bad Debts in QuickBooks
For any organization, when the amount in the lucrative form received from the customer is recovered, it is termed as a bad debt. For such organizations that already use QuickBooks Desktop, bed debts are understood as invoices being uncollectible over time.
Writing off bad debts can make it convenient for an organization for tracking profit and the net average turnaround. Although, the same becomes difficult when you have to handle and manage the records manually without getting assistance from any accounting software.
How QuickBooks Desktop is Helpful For Writing off Bad Debts?
QuickBooks Desktop software can make writing off bad debts simple as it is dedicated to cloud-based accounting software. Thus, any organization whether large or small doesn’t have to bother about hiring an accountant for managing finances as you’ve got user-friendly software.
Methods Of Writing Off Bad Debts in QuickBooks Desktop
If you need to know how do I write off bad debt in QuickBooks Desktop, you can follow the step-by-step guide provided below. After following these instructions you use QuickBooks desktop without any problem.
Step 1: Making Expense Account For Bad Debts
The very first step can demand the creation of bad debts expense accounts. Below are the instructions for the same:
- Firstly, you would have to launch QuickBooks Desktop and move to the options settings.
- Now, from the options list, click on the option Charts of Accounts.
- Later, in the top-right corner, tap the option New for creating a New Account.
- After you click on the option New, another step is hitting on Expenses from the dropdown Account type.
- In the Detail Type, afterward, hit on the option Bad Debts.
- After completing the above-mentioned steps, you would have to click on the option Save And Close.
Step 2: Closing Unpaid Invoices
Some steps to close unpaid Invoices in QuickBooks are illustrated for how to write off bad debt in QuickBooks desktop 2021:
- You need to access the menu Customers and click on the option Receive Payments.
- Type the customer’s name in the field Received from.
- In the Payment amount space, you must enter $0.00 and select the option Discounts and credits.
- Afterward, in the Amount of Discount field, put the value that you would need to write off.
- For the Account discount, select the account that you added in the last step, and click on Done.
- Conclude the same and select the option Save and Close.
These are a few employed methods in writing off bad debts in QuickBooks Desktop software without hassle. Such methods are simple to follow and aid you to get the automated process.
Writing Off QuickBooks Online Bad Debts
When you use Quickbooks online, you must perform the below-mentioned steps to know how to write off bad debts in Quickbooks Desktop Online. Further, we look at each of these methods:
Step 1: Check Ageing Accounts Receivable
For checking the aging accounts receivable, the process is quite simple for implementing and it does like follows:
- For starting off, you would initially have to head to the reports menu.
- Furthermore, you have to look at and open the aging detail reports for open accounts receivable.
- Also, select the outstanding accounts receivable that you must write off.
Step 2: Make a Bad Debt Expense Account
Make an expense account for bad debts after you perform the below-mentioned earmarked steps:
- Herein, you would need to move the option settings and select the chart of the account.
- Now you must opt for the option new for creating a new account.
- Now from the dropdown account type, select the option expenses.
- After you’ve implemented all mentioned steps, select the option bad debts from the dropdown detail type.
Note: Conclude the steps after you choose the options to save and close.
Step 3: Making Bad Debt items
Users must follow the below-provided instructions for making bad debts items:
- For making bad debt items, initially, you would have to scroll to the tab ‘settings’ and select from the options products and services.
- Within the products and services tab, you would need to select the tab new and also opt for the non-inventory.
- Furthermore, enter bad debts in the name fields.
- Moreover, you would need to select the option bad debts from the account dropdown income.
- Finish the process after opting to respectively, save and close tabs.
Step 4: Making Credit Notes For Bad Debts
In the next step create a credit note specifically for bad debts. For any convenience, you can follow the below-provided directions:
- For making a credit note pertaining to bad debts, you can select the option +New.
- With the next step, you must opt for the option credit note.
- You would subsequently have to select the custom from the dropdown customers.
- Now in the section product/service, select the option bad debts.
- Now you would need to enter the amount you want to write off in the column amount.
- From the displayed message on the statement box, you must enter bad debts.
- Finally, select the button save and close the tab.
Step 5: Apply Credit Note To Invoice
The process to apply credit notes to the invoice initially needs you to choose the option +New.
- Under the section customers > Choose receive payment select the appropriate customer from the customer dropdown.
- Now you need to head for the invoice from the section outstanding transactions.
- Moreover, from the section credits, and also select the credit note.
- Finally, you must hit the option save and close.
Step 6: Running Bad Debts Report
The final step to write off bad debt in Quickbooks Desktop is to run a report for bad debts.
- For running a bad debts report, initially, you have to move to the option settings.
- Then you need to head for a chart of accounts.
- Now, in the bad debts account action column, you would have to select the option run report.
Note: that, it is possible to tell a bad debt entity apart from other customers after you add a note to their name:
- Proceed to the sales menu and select the options for customers.
- You would have to select the customer’s name and hit on the option edit.
- Now, in the field display name, you would have to enter no credit or bad debt after the customer name.
- Conclude the process after you opt for the option to save.
By knowing how to write off bad debt in QuickBooks Desktop, you ensure that you’ve got the appropriate balances in check. It is also good to get technical support for QuickBooks users. The above step-by-step guide ensures quick ways to write off bad debts in QuickBooks Desktop and Online versions. However, in case it is not possible to follow sections in the article because of technical intricacy or if you face other issues that pertain to the software, then you can reach a QuickBooks expert.