What are Cash Back Rewards in QuickBooks Desktop?
A Cash Back Reward is nothing but an income when you receive it. It is 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 spent by you, now the question arises of how to show this transaction of refunds in QuickBooks. You can solve the issue by following the below-mentioned two approaches:
To understand it better let’s take an example: a trip was taken by you and lots of money was spent on the airfare, so this reward refund could easily be applied to the same category of travel expense, which was used originally for the transaction. The transaction could further be split into multiple expense accounts.
The 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 did.
The statements credits or cash back that you get on your credit cards 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 Enter Cash Back Rewards in QuickBooks Desktop
The cashback 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.
How to Export QuickBooks Customer List in Just 7 Easy Steps?
- 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.
- The very first, select and click on the 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.
How to Categorize Cash Back Rewards in QuickBooks Desktop?
You can categorize the Cash Back Rewards on QuickBooks Self-Employed. Generally, you get the Cash Back Rewards from your credit card account which 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
- Assets
- Business income
- Car and truck
- Commissions and fees
- Healthcare
- Home office expenses
- Interest paid
- Supplies
- Office expenses
- Personal deposit
- Personal withdrawal
- Taxes and licenses
- Travel
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.
How to Enter Credit Card Cash Back Rewards in QuickBooks Desktop?
By following these two methods below, you can learn how to enter credit card cashback rewards in QuickBooks.
Method 1: Entering Cashback via List Menu
Need a few methods of recording the cashback of your credit card in QuickBooks you first go to the top menu bar and select List. After that make your way to your chart of accounts and select the account option soon choose any income option. It will be recorded in QuickBooks as a cashback reward.
- First, you open the QuickBooks.
- After that, you click on the top menu.
- Then click on the list here.
- now go to the chart of accounts.
- Now push the drop-down given with Account and select New.
- Then select the types of other accounts.
- Here, select the option of “Other Income”.
- Then click on Continue.
By following the above steps carefully, you will have entered credit card cashback in your QuickBooks account.
Method 2: Using the Banking Menu for Recording Cashback
A banking menu has been given to the QuickBooks software. Opening this menu shows the credit card charge. This option helps the user to quickly record/enter the cashback reward received from his card. The Save and Close button should be pressed to finally consolidate the typed information.
- Begin the process by opening the QuickBooks.
- Now, use "Banking".
- Title for "credit card fee" option.
- Here you will be asked to type the appropriate name for it on the Purchase field type. write the name.
- After naming you choose your cashback amount.
- Also, create the charge amount.
- Then, click on the Save and Close option.
Infographic Enter Cash Back Rewards in QuickBooks
Conclusion
There might be other situations as well, apart from 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 to all your queries, you can anytime get in touch with smbaccountants.com. SMB product help professionals are very well aware of the workings of QuickBooks and can handle all your queries with great ease.
Frequently Asked Questions
What is Cashback in QuickBooks Desktop?
QuickBooks Online's method of tracking cashback 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.
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.
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.
According to the seller's accounting, cashback is accrued by debiting cost accounts, for example, accounts 44 "Sales expenses", by the following entries: 44-62(76) - the buyer's bonus is accrued; 62 (76)-51 - the buyer's bonus is paid.
Generally, credit card cash-back rewards are not taxable. The IRS considers cash-back rewards to be rebates on spending and not income, so you will not have to pay income tax on them.
- Select + New.
- Select Credit card credit.
- Find the appropriate account from the Bank/Credit Account drop-down box.
- Under the Category details, select the account that you have for your cash back rewards whether expense/income account as you see fit.
- Enter the other needed information.
How do you record credit card rewards in accounting?
To include credit card rewards in your accounting records, you can log them within the "Other Income" or "Credit Card Credit" sections of accounting software like QuickBooks.
+1-800-961-4963