How to Record Cash Back Rewards in Quickbooks Online
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- Опубліковано 5 лют 2025
- How to record cash back rewards in Quickbooks Online. Most people don't really know what to do with cash back rewards in Quickbooks Online. They usually are just a percent of spending instead of relating to a certain expense. But still, how to record cash back rewards in Quickbooks Online confuses people to no end.
I show you 3 ways to record cash back rewards in Quickbooks Online in this video. All quite simple but also very easy to screw up. Learning how to record cash back rewards in Quickbooks Online the right way can make all the difference in how your profit and loss statement looks!
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Thank you! I was banging my head wondering why I couldnt just assign the account directly into the row pulled from the credit card import.
I did want to make sure to mention to others who might encountered this. You need to the step in the video first, THEN you can match the statement credit that flows through the linkage between QB and your CC company. When you go through this step and hit save and close, then go to your credit card transactions and then you can MATCH the transaction - this will help clear this and put it in the CATEGORIZED bucket.
Awesome thanks!
I love your videos, thank you for the content! I'm wondering how the method of recording as "other income" aligns with CC rewards not being taxable. This method inflates our PnL by 5 figures in any given year and would result in additional 5 figures of Tax owed.
Thank you. I am just getting started and I think your vids will be a sold resource.
Thanks!
thank yoooou! 💗 I can probably look this up on google, but do you have a video on what "reconcile" specifically means?
Not a video but it just means your balance at the bank matches what’s in QB
How do I add a large reward that is used as a credit card payment so no money changes hands, just reduces the CC statement amount?
So incredibly helpful - thank you!
You’re welcome!
In my client's case, the cash back rewards are very significant!! One is for $330.13 and the other is $497.41. And these are NOT credits on the credit card - they are actual funds ($$) deposited to her checking account by the bank. I'm thinking (based on your video) that I should count this as Other Income.
Yes I would
Do you have a tutorial on how to hide a credit so that it doesn’t show on an open item statement ?
No I don’t. Why are you trying to hide it?
This do not apply in my case since my credit card send a deposit to my checking account and not reflecting any transaction on my credit card activities.
Awesome, then just record it in your checking account
@@QbuniversityOrg Do you have a video showing how to record cash back rewards that are directly deposited to your bank account? I use WF for credit card and bank account and this is how they do it. I receive 1.5% on all card purchases and they direct deposit it into my bank account every 3 months. When I enter it the way you describe, it deducts the reward amount out of my credit card balance which does not line up with my actual account balances. Maybe a good topic for a future video. Thank you for sharing all your knowledge! It has been a massive help in getting my new business running smoothly. Much appreciated!
Our cash back is automatically entered and is between 100-300 a month. Do i still do Other Income even if it isnt an insubstantial amount?
I would
Cash back is not taxable. Using it to reduce expenses or adding it as taxable income doesn't seem to be the right way to categorize it.
It depends on a few factors, such as if the rewards are used to pay down the balance of the card (cash) or redeemed with a retailer to purchase business expenses. A big one being the tax rules where the business is registered. I live in Canada. Cash back rewards on a personal credit card are not taxable. However, on a business credit card when converted into cash (aka used to pay down the balance of the card), they are certainly taxable. It's the same thing as using actual cash (reducing income) to purchase an expense. It's often looked at as "free" money when it's not in the case of a business. And a business owner shouldn't want it to be. More income = more taxes paid. So, in that way I agree with your statement about using it to reduce expenses not seeming right. This isn't a case of the cash back reward "washing out" the expense.
The other thing I disagree with in the video is that cash back rewards are immaterial (usually small amounts) in nature. In some, possibly many, cases that may be true (small businesses/low overhead), but what about in the case of a business that has large overhead (lots of expenses) and uses credit cards to purchase those expenses. For example, any business that manufacturers product and orders their supplies and equipment online or otherwise from suppliers/vendors that only accept credit cards. (Having a cash back credit card is a no brainer when you're racking up points at that volume.) Could easily be looking at a points balance in the six figures annually. (Doesn't mean anything until the points are converted to cash.) But then is it "fair" or even wise to be reducing the expenses at that large of a volume? Not really, it's going to overstate revenue by a lot, resulting in higher taxes paid. This is where people seem to get confused between personal and business finances, in my opinion, and these cash back rewards seem to be interpreted as discounts or "free" money across the board.
As a bookkeeper, my opinion is that it makes the most sense to post cash back rewards as "other income" (when converted into cash) since in most cases points are redeemed as lump sums, not on individual expenses. But best to always consult a tax professional (accountant) for the most accurate info for where the business is registered. My other opinion is rather than "cashing" in these rewards is to redeem them for "personal" things such as travel, etc, rather than actual "cash" within the business. But again, best to consult an accountant on this first, because I'm not sure if that's "legal." I don't see why it wouldn't be legal since the rewards aren't involved with the company this way, but I'm no tax expert.
If put the rewards in 'Other Income' doesn't that make it taxable?
No. That is why it is at the end of the P&L. The CPA will catch it and know that this is not actual income, just an income account. Especially, by the name of the account, you will make it easier for him/her. Hope this helps :-) Christina
What happens to the other income if it is not taxable?@@christinamarshall681
@@christinamarshall681other income makes it taxable, regardless of how far down it appears on P&L... Hopefully expenses can offset to positive income