Pass through accounts (PTA) are used when we collect money on behalf of another organization, then pass it along to that organization at a later time. Record this type of transaction correctly, and not as income. Here are two ways to do it, depending on how many organizations you have.
This is a good way if you only have one or two organizations for which you will be collecting money.
1. Go to the Chart of Accounts (COA) by pressing Control-A. Press Control-N to set up a new account.
2. In the Add New Account screen, select Other Current Liability. Click Continue.
3. Give the account a name such as, “Pass Through for Children’s Charity.” Make it memorable.
4. Complete the other information in this screen, if needed.
5. Click Save & New if you want to create another account for another organization. Click Save & Close if you are finished.
1. When you receive money for the organization, open the Make Deposits screen. Fill in the correct information here. In the Account box, be sure to select the correct Other Current Liability account you created above. Save the transaction.
2. When it’s time to send the money to the organization, go to
the COA and locate the other current liability account for this
organization. Check the balance - make sure it's correct.
3. Go to the Write Checks screen. Use this screen even if you are paying electronically.
4. Enter all of the correct information in the top half of the screen, as you would for a normal transaction.
5. In the lower half of the screen, in the Expenses tab, select
the Other Current Liability account you created for this organization.
6. Make sure the amount is correct – if you pay the organization
more than the balance in the Other Current Liability account, that
account will show a negative balance.
7. Click Save & New if you wish to do another. Click Save & Close if you are finished.
If you have many organizations, create a single PTA as outlined in above, except don’t give it a specific name. Name it “Pass Through for Multiple Organizations,” or something similar.
When it’s time to pay one organization, verify that organization’s balance:
1. Locate the pass through account in the COA. Press Control-R to open the register.
2. Locate that organization’s name in the register. Highlight it and right click. Select QuickReport. QuickBooks displays a list of all transactions for that name appearing in this register. This shows the balance of the organization – what you owe. If this is a negative number, then you paid the organization more money than you collected.
3. Go to the Write Checks screen as shown above and pay the organization.
I hope this answers your questions about setting up and using pass through accounts.
Much happiness to you...