How to Write Off Bad Debt in QuickBooks Online

If any customer in QuickBooks does not pay your company’s debt, then the original invoices go under the unpaid category. This results in bad debts for your company and makes it difficult for you to reconcile your accounts and run accurate reports. And to fix such issues, you have to write off bad debt in QuickBooks utilizing its Discounts and Credits feature and record the debt. This will keep it organized in a separate register for tax purposes. Because recording the bad debts in your regular customer register can make it difficult for you to track your debts and manage your finances.

So, follow this article to know how you can write off the bad debts in your QB. But, if you require any assistance, then call +1(855)-738-0359:

Verified Steps to Write Off Bad Debt in QuickBooks Online:

Here are the steps that you need to perform in order to write off the bad debts in QB Online:

Step 1: Check If You are Aging Accounts Are Receivable:

Go to the Business Overview tab and go to the Reports section:
Then, find and open the Accounts Receivable Aging Details report:
Check here which outstanding accounts receivable are written off:

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Step 2: Create a new bad debts expense account:

If you have not already made a bad debt expense account, then do this:

Go to the Settings options and click on Charts of Accounts:
Then in the upper right corner, click on New and create a new account:
Now, from the Account Type dropdown, hit Expenses:
Then, in the Detail Type, choose Bad Debts:
Then, in the Name field, enter Bad Debts and hit Save and Close:

Step 3: Create bad debt items:

If you have not created one, create a non-inventory item as a placeholder for bad debts. It is just for balancing the accounting and not a real item:

Go to Settings and hit on Products and Services:
In the upper right corner, select New, followed by Non-inventory:
Now, in the Name field, enter Bad debts:
Then, from the Income account drop menu, select Bad Debts and hit Save, and Close:

Step 4: Create a credit memo for your bad debt:

Select New and then Credit Memo:
Then, choose the customer from the dropdown:
Now, in the Product/Services tab, click Bad Debts:
Next, in the Amount column, enter the amount that you need to write off:
Then, in the: Message displayed on the statement box, hit Bad Debts:

Step 5: Apply the credit memo to your invoice:

First, hit New:
Then choose Receive Payments from the Customers tab:
Then, choose the customer from the dropdown menu:
And from the Outstanding Transactions section, choose the invoice:
Then, choose the credit memo and hit Save & Close buttons:

Step 6: Run a bad debts report in QB:

You can run the Account Quick Report from the Charts of Account section and check if all the receivables you tagged as bad debt:

Conclusion!!
Well, this brings us to the end of the article related to writing off bad debt in QuickBooks. If you face any issues, then connect with our team instantly at our Toll-free number +1(855)-738-0359:

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