This is an updated version of an older post. For a more step-by-step instructional post, click here.
If you’re taking care of your business’s accounting on your own, Quickbooks Online can be a daunting piece of software to navigate. However, accounting journal entries can save you a big headache, and they’re easier to manage than you might expect.
Chart of Accounts
Before explaining how to input a journal entry, let’s review the setup of your Chart of Accounts.
Your Balance Sheet includes your liabilities, your assets, and your owner’s equity. In double entry accounting, you’ll want to add every accounting entry twice – once as a credit to one account, and one as a debit to another. This way, your accounting should always balance in real time.
Journal entries are a way to credit and debit your accounts manually.
How to Create a Journal Entry
When creating a journal entry, you’ll most likely want to have both Quickbooks Online (QBO) and Amazon Seller Central (or whichever dashboard you’re working from) open next to one another. In QBO, you’ll click on the “+ New” button in the upper left of the screen and choose “Journal Entry”. You’ll then choose a settlement period that matches the one you’re viewing on your dashboard.
Amazon color codes their credits and debits, which makes telling the two apart fairly easy: in this screenshot, credits are blue, and debits are red.
You’ll then turn each data point from Seller Central into a credit or a debit in your QBO journal entries. In the screenshot below, debits are the first column after the numbered category, and credits are the second. There’s also a description column where you’ll want to explain the purpose of the entry for your accountant’s or your own understanding of the data.
If you’re an Amazon seller, you may also have a reserve balance, which is money that Amazon owes you over a period of time. As Amazon pays you out in installments, you’ll want to zero past entries out of your accounting with a journal entry. This is as simple as creating a credit for the previous reserve amount and a debit for the new one, both of which are explained further in the video above.
QBO also has a built-in failsafe mechanism for journal entries: if your debit and credit columns don’t match, you won’t be able to save and exit. This makes it easier to spot errors and missing data without creating a larger accounting problem in the future.
As your business becomes more complex, sometimes you’ll need to split data across months instead of over a neat one-week period. If that’s the case, we recommend using an Amazon data import software like A2X – or putting your bookkeeping in the capable hands of Seller Accountant.