Linda Artesani shows how to fix QuickBooks Online when transactions pile up in Uncategorized Income because an item was set to post there. The Reclassify tool won't work for item-based entries, so you need to edit the Product & Services list or use a journal entry to move the money to the correct account.
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Hi there, Linda Artesani, Artesani Bookkeeping. I wanted to go through— this is very similar to another post that I did— I wanted to go through an issue. I had a client who had a lot of things in uncategorized income, and they basically set up an item incorrectly. My thought process is they did it before they set up their chart of accounts properly. Oh, and yes, I am on the camera. I don't really like it that much, but I figured put a face behind the voice and we'll go from there. So let's go into my sample file. So here's my sample file, and she discovered it by running reports. So she was going in to see how her records were doing. She just started using QuickBooks Online, and she noticed that she had a pretty large amount of money in the uncategorized income. In her case, she had an account that she had a whole entire 2017 with hundreds of transactions in there. So her first thought, because she's a bookkeeper, is, well, I'll just go into the tool Reclassify Transactions, which is in the Accountant's Briefcase, which is an awesome tool if you need to move things around. And I'm just going to go into this, and let me just refresh this so I can show you. And there's my uncategorized income account. So she was going through and she noticed that here's a deposit, and then she had no transactions show, but she has money in here. How come that is? Well, if you notice, it says you can only show— it's only showing transactions that are non-item-based that can be reclassified. So this is one of the things that with the tool is a little bit of a hindrance. So now she goes in here and she's like, well, why is this got Well, these are where they're supposed to be, but why is there a red dot? Well, you can see on the screen here, it's transactions cannot be changed. Well, that's true in this tool, it cannot be changed, but you can change them manually. That's the issue, right? The tool is great, it shuffles things from category to category except for when it comes to item-based things. So I'm showing all the transactions so I can show— and here's that transaction. Imagine she had a list that filled this page of transactions. She had an entire 2017 worth of transactions. She just kept using the item, not realizing that it was coming up uncategorized. When she contacted me, I asked her if she had that little red circle there, and if you just hover over it, it can tell you that it's not allowed to be changed. So if you can imagine, it's time-consuming to open all of these to change them. So how do you change it? Well, let's go to the product and services list, and you can clearly see it was set up to be uncategorized income, and you'll need to edit this and correct it. I added these 2 columns. They don't come up automatically, and how to do that is you come over to this little spot that is a gear, and like SKU, I don't use SKUs, so I take that one off. And I added the income and expense account so I can see exactly where my product and services columns go. And you can take, like, I don't use costs, so in my business, but anyway, so you can change this just so you can easily view this. Obviously, to move the columns wider, you come over here and just pull it when you see the 2 arrows going either way. So I'm going to come over and just edit this. So you would think simple correction, right? Just come over and edit it. I'm going to put it in my services and put it in my income account that I use and save and close it. Now, Uncategorized Income Account is an account that is used for— it's used for online banking, and it's in there. I wish they didn't have it, but it's in there so that you can If you forget to put an account in and you click OK and drop it in without putting an account, it'll automatically default to that. So that's the reason for Uncategorized Income. There's also Uncategorized Expense if you happen to have that come into play with your— an expense that you drop in. Say you get a check or something that comes through online banking and you just click OK and it didn't have an account. A lot of times that will default into that account depending on your chart of accounts. So I'm going to go back to my reclassify and hit refresh and see what happens. Well, nothing happened even though I updated my item. The problem is, is when you create an invoice, it's preserved in time, right? So it stays there, and you have to actually manually go in, change the item to a different item, and then change it back. So second thought she thought she could do is outsmart the system. So she came over to her chart of accounts. Came into here, found Uncategorized Income account right here, and said, well, I'm going to just rename it Services, right? That should work, and then I can change it. So I'm just going to change the name to Services. I believe it is— let's see here— it's Service Income, and I'm going to hit Save and Close. So I'm going to merge these 2 accounts. That should change all the accounts and the category. Works perfectly. So I'm gonna get a little warning saying you want to change the detail. You can't merge this because it's reserved for online banking. Great. So that didn't work. So my next thought for her, and the simplest thought for her, if she didn't want to go in and change all the invoices, the easiest way for her to do this is to do a journal entry. I didn't backdate it, so we can just date it today's date, which is the 23rd of May. I'm just going to come in here and do Uncategorized Income. I'm going to debit it for $1,000 because I'm taking it out of the credit side, which is where your income would be. And she could do this for the, the whole total just to make her records right for year-end, for tax purposes, and then go forward, use a new— use the updated item. And then I could just say to Reclassify to proper income account. And then just come over to the services income account and then credit it. So now I'm going to hit save. I'm going to go back to my report, refresh the report, just hit run. And now you can see it's zero. It's going to hang out on that account because there was transactional data in there. One way to get it off, so you don't— maybe you don't want the CPA to see that it's there, is click custom Customize, come into the Filter, Rows and Columns, and then just show non-zero. Run the report again, and it takes it off. So you can see that it's gone. So that will help you get that off, and then you can just save that customization on your report as well. So not the best fix. Obviously the best fix, if you wanted to do it right, maybe you only have a handful of those things, is you could actually come into that Reclassify tool again, grab this invoice. If you only have like, if you only have like 10 or 15, then just change them. So even though it says cleanup file and we changed the account, it's not going to show that because this was preserved in time. So you just think it created a PDF, kind of like when you do a bank rec, it creates the PDF and it's preserved as what it was. So I just need to come over here and I will just change this to bookkeeping services. I'm going to click Save, and then I'm going to come back over here and click Cleanup File and click Save. And now if I come back to this report, that will now change it. Of course, now I've got to remove that journal entry, which if I do All— actually, if I go back to the report, now I've got to fix the journal entry because the journal entry is going to throw that off. And I'll just remove the journal entry. And there's things hidden here. Under here you can delete it. And now my records are fixed. That's the optimal way to do it. Go in and refresh every single invoice after you've changed the item and updated it. So just save it and then go back in and save it again with the new— with the old item that's been refreshed and targeted to the correct income account. I know it's a lot of work. Personally, I like things clean. That journal entry fix, not the greatest. But if you're looking at hours of your time, you have to weigh what works. I hope that was helpful. If you have any questions, comments, Would like any future videos? I'd love to hear from you again. Linda Ardisani, Ardisani Bookkeeping. Yes, I'm also a yoga teacher, hence the peace sign on my shirt. But yeah, if you have any questions, please feel free to reach out to me. I wish I had a better fix, but it's a little bit of a manual one, but it's a fix. Thanks. Bye now.
