How To Write Off Bad Debt In QuickBooks Online & Desktop?

Losses and debts are a part of the business and there is no way to avoid it. Bad debts can be frustrating because it means that a customer or a client owes you money but you cannot collect it. If you know that you are not going to be paid then you will need to write off bad debt as a deduction. Thankfully, QuickBooks has a range of features that make it easy to track bad debts and write them off. You can call the QuickBooks customer care number and speak to an expert to learn more about the tools you can use to keep track of your bad debts and invoices. You can also go through this blog to learn how to write off bad debt in QuickBooks Desktop and QuickBooks Online.

Steps to Write Off Bad Debt In QuickBooks Online & Desktop

When some of the business invoices you send become uncollectible, your QuickBooks accounting software will allow you to record them as a bad debt and write them off. Writing off your bad debt will ensure that your accounts receivable and net income stay up-to-date. You can follow the steps below depending on which version of QuickBooks you use:

When using QuickBooks Desktop:

Add an expense account to track the bad debt

  1. Go to the Lists menu and select Chart of Accounts.
  2. Select the Account menu and then New.
  3. Select Expense, then Continue.
  4. Enter an Account Name, for example, Bad Debt.
  5. Select Save and Close.

Close out the unpaid invoices

  1. Go to the Customers menu and select Receive Payments.
  2. Enter the name of the customer in the Received from field.
  3. For Payment amount, enter $0.00.
  4. Select Discounts and credits.
  5. Enter the amount you need to write off.
  6. Select the account you added in step 1, and press ‘Done.’
  7. Select Save and Close.

When using QuickBooks Online

Check ageing accounts receivable and create a bad debts expense account

  1. Open QuickBooks and go to the Reports menu.
  2. Find and open an Accounts Receivable Ageing Detail report.
  3. Check which outstanding accounts receivable should be written off.
  4. Go to Settings and select Chart of Accounts.
  5. Select New to create a new account.
  6. Go to the Account Type dropdown menu and select Expenses.
  7. Open the Detail Type dropdown and select Bad debts.
  8. In the Name field, enter “Bad debts.”
  9. Select Save and Close.

Create a credit note for the bad debt

  1. Select ‘New’ option and select Credit note or Give credit.
  2. Select the customer from the Customer drop-down menu.
  3. In the Product and Service section, select Bad debts.
  4. Go to the amount column and enter the amount you need to write off.
  5. Click the Message displayed on statement box and enter “Bad Debt.”
  6. Select Save and Close.

Once you create a credit note for the bad debt you will need to apply the credit note to the invoice and then save the data. Once that is done you can call the QuickBooks contact number and consult an expert to find out how to run an Account Quick Report to check all the receivables you tagged as bad debt and make sure everything is in order.