In this post, I’m going to walk you through how to transition from the journal entry method of Etsy bookkeeping that I call the Etsy Bank Method to using the Sync with Etsy App for QuickBooks Online. If you'd like to watch a video tutorial of this process, click here.
Since Sync with Esty came out around February 2021, many of us had already done our January bookkeeping. So there are a few adjustments we need to make if we’re going to make the switch to Sync with Etsy as of 1/1/21. By choosing a 1/1/21 start date for Sync with Etsy we keep the bookkeeping method for the entire year consistent, however we need to make sure that the January bookkeeping we have already done does not create duplicate information in QuickBooks.
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Step 1: Recategorize Transactions
The first step in this process is to recategorize all of the deposits that came from Etsy. This means all the transactions that we previously categorized to our old Etsy Bank account since the beginning of the year. (Remember that Sync with Etsy gave us a new Etsy Bank account.)
To complete this step, we need to go to the Categorized tab of our checking account bank feed and undo any deposits that went to the old Etsy Bank account for 2021. Remember, we connected Sync with Etsy as of 1/1/21, so we just need to undo 2021 Etsy deposits that we already categorized, prior to setting up the Sync with Etsy app.
Once we’ve undone these deposits, our next step is to navigate over to the For Review tab and categorize all of these Etsy deposits to the new Etsy Bank account created by Sync with Etsy.
Step 2: Delete The Journal Entry
Once we’ve completed this, the next step is to delete our January 2021 journal entry that we already made. To do this, we're going to go to the bank register to our old Etsy Bank account. Just select the journal entry and delete.
While we are here in our old Etsy Bank Register, we're going to verify that we don't see any deposits in 2021 that are still remaining as categorized to this Etsy Bank account. There shouldn’t be any since we just took care of that.
Step 3: Record The Transfer
Most likely we have an ending balance in our old Etsy Bank as of 12/31/20 that we need to transfer to our new Etsy Bank account. Pay attention to what that ending balance is in our old Etsy Bank register.
Next click New → Transfer. We're transferring the balance from our old Etsy Bank to our new Etsy Bank. This was the new Etsy Bank account created by Sync with Etsy will start off with the correct beginning balance.
For this transfer, our date is 01/01/2021, and the amount was the balance we just saw in our old Etsy Bank register. Select the transfer accounts, type in the amount, enter in the correct date then hit Save and Close. If we refresh this page, we'll see that our old Etsy Bank account is now going to have a zero balance, which is what we want. And if we go to our new Etsy Bank register, we're going to see that everything looks good.
That's all there is to it. We just had to recategorize the deposits since the beginning of the year, delete that journal entry, and record the transfer. Those are the three steps you need to take if you have a duplicate time period when you were using the old Etsy Bank method and Sync with Etsy. If you’d like to check out the video tutorial of this process, you can see it HERE.