Here is the basic procedure that we use for posting sales from a POS system or cash register that isn't directly integrated with QuickBooks Online.
Collect incoming deposits in clearing accounts.
As they come into the bank feed, post all credit card deposits from your merchant processor to an account called “Credit Card Clearing.” This account should be set up as a Bank Account.
Similarly, post all cash and check deposits to an account called “Cash Clearing,” also set up as a Bank Account.
Use a Journal Entry to record your sales by category against payments received.
This journal entry should be made at least monthly, but it could be made weekly or daily, depending on the work flow that works best for you.
The journal entry breaks sales down into the categories that you want to track in your accounting system. At the very least, sales should be grouped into "Taxable Sales" and "Tax Exempt Sales." Sales can be broken down further into categories if desired. For instance, for retailers, I will often track Gift Sales, Packaged Food Sales, and Wholesale Sales (at a minimum). These numbers should be available on a POS Summary report or on your Z Tape if you are using a cash register.
These sales go directly to the Income Accounts on the P&L. In the Journal Entry, income is recorded as a credit (right hand column). Discounts would be recorded to an Income Account also, but as a debit.
Next in the journal entry, record the sales tax you collected into a liability account called 'Sales Tax Payable." This is also a credit entry (as it is money you collected which increases a liability you owe to another party).
Finally, record the various payments received. Usually, there will be a line for credit card payments (goes to Credit Card Clearing), cash payments (goes to Cash Clearing), check payments (goes to Cash Clearing), and gift card payments (goes to a liability account called "Gift Cards Outstanding").
Here is an example journal entry:
Reconcile the clearing accounts.
Since you have set up your clearing accounts as bank accounts, they can be easily reconciled in QuickBooks. They should always be reconciled to zero. They should be reconciled at least once a month (if not more often).
When you go to reconcile, you will see all of your deposits (from Step 1 above) in the register as payments (this is backwards from what you would see in a bank register because it is a clearing account, but just go with it).
Then, you will see the payments from your journal entry as a deposit in the register. If you just made one journal entry at the end of the month, you will only see one deposit. This is the amount you _should_ have received that month, and it should reconciled against what you actually received.
When reconciling at the end of the month, you will have to view and reconcile some transactions made after the end of the month. This is because deposits are never all made by the last day of the month. Credit card payments typically come in two days after the sale was recorded in your POS.
For cash deposits, make sure you deposit cash for sales through the end of the month as a single deposit. Then when a new month starts, start a new deposit. Otherwise, it will be tricky to reconcile.
And after that...
There are still several things to do. File and pay your sales tax, reconcile your Sales Tax Payable account, and make any adjustments for over/short. Keep an eye on your Gift Cards Outstanding account. Account for any Tips Payable and paid out. Account for any cash that was received as payment but not actually deposited in the bank. Make sure you are accounting for in-state vs out-of-state sales for sales tax purposes.
This system works and is pretty tight, but if not used correctly can go haywire. If you would rather outsource it, we're happy to talk!
Thank you to Jeanette Tan at QB Winery Solutions for some of the tehcniques used in this method!