My bookkeeping client has incorporated a second company and at times they move funds between companies. Their accountant told me I need to setup an inter-company between the two companies. How do I setup in QuickBooks Desktop?
You only need to do one inter-company in both corporations. Do not make multiple inter-company accounts as it just gets confusing.
Make sure to reconcile both inter-company accounts. Each inter-company will have the same balance. One account will be a credit and the other debit.
I reconcile the inter-company accounts the same day I enter the transactions. This way everything is balanced in both companies.
Step 1 – Create Inter-company
1. In the first company create an inter-company bank account.
2. Open your Chart of Accounts, right click and select New. (For this example working with QB sample companies)
*CLICK ON IMAGES TO VIEW FULL SIZE*
3. Create Bank account – give it the name of the other company. To make things easier to recognize the inter-company account- put I/C at the end of name.
4. Follow the above steps to create inter-company bank account in other company. Make sure to call it the name of other company.
Owner of company withdraws funds in the amount of 30K from Twenty Twenty Eye Care company and deposits into Pro Hockey School company.
Step 2 – Transferring Funds Between Companies
1. Open up company – this example will be Twenty Twenty Eye Care.
2. Write a cheque like you normally would.
3. Pay To The Order Of: You can leave blank or enter example as per screenshot.
4. Leave No. blank.
5. Under Account – select Pro Hockey School I/C.
6. Save & Close.
2. Next open up second company. For this example we are using Pro Hockey School company.
3. In Pro Hockey School company do a deposit. Make sure to deposit to correct bank account.
4. From Account: Twenty Twenty Eye Care.
4. Once all amounts have been entered it is time to reconcile both inter-company accounts.
Step 3 – Reconcile Inter-Company Accounts
Always check the account balance in your Chart of Accounts to get Ending Balance . This will always be the correct Ending Balance.
1. Make sure that each inter-company has the same balance. One will be a credit and the other a debit.
2. Opening balance for Sample Pro Hockey 0 (zero).
3. Ending balance -30,000.
4. Opening balance for Twenty Twenty Eye Care 0 (zero).
5. Ending balance 30,000.