The clearing account: a very handy gadget
What kind of business XE
"clearing account" XE
"checking account:clearing" would
have a fake checking account, with no
money? Many very sound, legitimate
businesses. The clearing
account is just that, a fictitious bank account, with a zero balance, that exists only on your books. Why? Generally, it gets around limitations.
For example, deductions
could be taken from paychecks, for retirement
or medical plans, and you would like to send
them on with online payment. Payroll
liabilities can’t be paid by online
payment. But you can pay the payroll
liabilities out of the clearing account,
taking care not to mark it as
To be printed. Now the clearing
account is overdrawn. The insurance
carrier or investment firm is paid online,
but the opposing account on that check will
be the clearing account. The payee will
not be aware of or concerned about
that. In the clearing account, the
transfer comes in as a deposit, bringing the
balance back up to zero. The purpose is
accomplished, in a very neat and clean manner.
There is no trick to setting up a clearing account. From the Chart of Accounts, it is just
Account|New. The easy part is,
you do not need an opening balance! One
suggestion: open the register, and
click Edit|Change account color.
What color? Any color, but it should be
bright enough to be a strong reminder that
you are in the clearing account.
Clearing accounts do need
a little maintenance. They need to be
reconciled, and checks should not be left
marked as To Print. This is an
accommodation to the Condense Data process,
used when a file gets very large, and
described in Chapter 25.
|