New Business Direction LLCNon-sufficient funds (NSF) is a term used in the banking industry to indicate that a demand for payment (a check) cannot be honored because insufficient funds are available in the account on which the instrument was drawn. An NSF check is often referred to as a bad check or a bounced check.
When a customer’s check is returned for insufficient funds, perform the following steps in QuickBooks®
First, check to see if these items have already been set up in your QuickBooks file. Go to Lists, Item List and look for Other Charge Items called Bounced Check and Bounced Check Fee. If they are already on your Item List, you can skip step 1.
Step 1: Create items for tracking bounced checks and their associated charges: This is a one-time setup task.
- Go to the Lists menu and click Item List
- Click Items at the bottom of the list and then click New
- Under Type choose Other Charge and name it “Bounced Check”
- In the Amount or % field, leave a zero
- From the Tax Code list, choose Non (if you use Tax Codes)
- In the Account field, select your bank account (for example, Checking)
- Click Next.
- Create a second Other Charge item titled “Bounced Check Fee” for the service charge you assess your customers for bouncing checks
- In the Amount or % field, leave a zero
- From the Tax Code list, choose Non (if you use Tax Codes)
- In the Account field, choose Bank Service Charges
- Click OK
Step 2: Use the items you created in Step One to re-invoice the customer for the bounced check, plus any bank fees you want to recover.
- Click Customer Center
- On the Customers & Jobs tab, select the customer with the bounced check
- Right-click and choose Create Invoices
- For the first line item on the invoice, use the Bounced Check item for the amount of the bad check
*Note: Because this item is linked to your bank account, this will reduce your bank account by the amount of the bounced check.
- For the second line item on the invoice, use the Bounced Check Fee item for the amount of any bank fees that you want to recover from the customer
- Complete filling out the invoice as usual
Step 3: QuickBooks® has a Bounced Check Letter that you can send along with the new invoice
- Select the customer in the Customer Center
- Go to the Word menu at the top of the Customer Center and click Prepare Letter to Customer
- Follow the onscreen instructions in the Letters and Envelopes wizard
- In the Choose a Letter Template window, choose Bounced Check
Step 4: Enter your bank’s bounced check charge when you reconcile your bank statement
When you reconcile your bank statement:
- Include your bank’s charge for the bounced check in the Service Charge field
- In the Service Charge Account field, enter Bank Service Charges
This article of QuickBooks Tips and Tricks was based on the 2012 version of QuickBooks.
Each January we rush around to gather tax information on the independent contractors we paid in the prior year in order to send them a 1099. Here are some basic tips for making it easier and less hurried for next year.
Form W-9
As a trade or business, you are required to obtain a Form W-9 from your independent contractors before you pay them, better yet – before they do any work for you. This is regardless of how much money you pay them. This form will give you the name, business name, address, entity type and taxpayer identification number.
Who Needs a 1099?
Service Providers – Anyone you pay in the course of your trade or business for services rendered. This includes Accountants, Consultants, Architects, Engineers, Designers, Contractors, Plumbers, Electricians, Installers, Landscapers, Snow Removal companies, Cleaning companies, the Auto Repair technician, Entertainers – anyone who performs a service or casual labor for your business who is not your employee.
Rents – If your business pays rent for office space or land or equipment, you are required to send the recipient a 1099 for the amount of rent you have paid them.Exclusions – Sole proprietorships, partnerships and LLC’s that are taxed as sole proprietors and/or partnerships receive a 1099. You are not required to send 1099’s to a Corporation or a Tax Exempt entity. The Form W-9 will provide information regarding the entity type.
Threshold – Send to recipients to whom you have paid $600 or more during the calendar year.
Deadline
January 31st of the following year to recipients. February 28th to the Internal Revenue Service.
This article of QuickBooks Tips and Tricks was based on the 2012 version of QuickBooks.
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Tips & Tricks in QuickBooks®
