Clearing Account in QuickBooks: How to Set Up and Clear One

A clearing account in QuickBooks is a temporary account you create to pass money between two places when it cannot move directly, then bring the balance back to zero. You set one up from Settings, then Chart of accounts, then New, choosing Bank as the account type so it can be used in deposits and transfers. You post the money into it from one side and out of it to the other, and a correctly used clearing account always nets to zero.

Accountants reach for a clearing account when they need to move an opening balance, transfer between two company files, record a third-party payout like Shopify or payroll before it lands in the bank, or hold a transaction until the full detail is known. It keeps the offsetting entries tidy and traceable instead of forcing a single awkward entry. If the source detail you need is locked in PDF statements, convert them to a .qbo file with the tool above and import the real transactions, so the entries flowing through your clearing account match the bank. Here is how to set up, use, and clear a clearing account in QuickBooks Online and Desktop.

What is a clearing account in QuickBooks?

A clearing account is a temporary holding account used to move money between accounts or to record a transaction in steps. Money flows in from one account and out to another, and the balance should return to zero once both sides are posted. It exists to keep transfers and adjustments clean and auditable rather than burying them in a single complicated entry.

How do I set up a clearing account in QuickBooks Online?

Go to Settings, then Chart of accounts, and select New. Choose Bank as the account type so the account works in deposit and transfer forms, name it Clearing Account, and leave the opening balance blank. Save. You now have an empty account you can route money through and zero out after each use.

What account type should a clearing account be?

Use the Bank account type in most cases, because it lets the clearing account appear in Bank Deposit and Transfer screens where you usually need it. Some accountants use a Cash on hand or Other Current Asset type for specific adjustments. The key is that it stays empty between uses and nets to zero once a transaction is fully recorded.

How do I use a clearing account in QuickBooks?

Post the money into the clearing account from the source, then post it out to the destination for the same amount. For example, record a deposit into the clearing account, then a transfer or expense out of it to the target account. When both entries are in, the clearing account returns to zero and the money has reached the right place.

How do I clear a clearing account in QuickBooks?

A clearing account is cleared by posting the offsetting entry so the balance returns to zero. Open the account register, check what is sitting there, and record the matching transaction out to the correct account, or use a journal entry for the same amount. If a small balance is left from rounding, a journal entry to the right account zeroes it out.

When should I use a clearing account?

Use one when money cannot move directly between two accounts, when you are recording a third-party payout before the bank shows it, when transferring balances between two QuickBooks files, or when you need to park a transaction until you have the full detail. It is a workspace for multi-step entries, not a permanent account that carries a balance.

How do I use a clearing account for Shopify or third-party payouts?

Record gross sales and fees into the clearing account as they happen, then record the net payout out of it when the platform deposits to your bank. The clearing account holds the difference between gross sales and fees until the payout clears, then returns to zero. This keeps sales, fees, and the bank deposit all reconciling correctly.

What is a payroll clearing account in QuickBooks?

A payroll clearing account is a zero-balance holding account that payroll money passes through between the payroll run and the bank withdrawal. You post gross wages, taxes, and deductions into the clearing account, then record the actual bank withdrawals against it. Once every paycheck and tax payment has cleared, the balance returns to zero.

Payroll clearing matters most when a third-party service such as ADP, Gusto, or Paychex runs payroll outside QuickBooks. Book the payroll journal entry as a debit to wage and payroll tax expense and a credit to the payroll clearing account, then match each bank feed withdrawal to the clearing account rather than expensing it a second time. If the account still holds a balance after the pay cycle, a withdrawal or liability payment is missing or duplicated, and the section below on reconciliation shows how to track it down.

How do I create a clearing account to fix an opening balance?

Set up a clearing account, then move the misplaced amount through it with a journal entry: debit or credit the clearing account on one line and the correct account on the other. This lets you shift a balance out of Opening Balance Equity or a wrong account in a traceable way, after which the clearing account nets back to zero.

Can I use a journal entry to clear a clearing account?

Yes. A journal entry is the cleanest way to zero a clearing account. Enter the clearing account on one line for the amount left in it, and the correct destination account on the other line, so the two sides cancel. Date it appropriately and save. The clearing account returns to zero and the balance lands where it belongs.

What is the difference between a clearing account and Undeposited Funds?

Undeposited Funds is a built-in account for one specific job: grouping customer payments into a single bank deposit. A clearing account is a general-purpose temporary account you create for transfers, payouts, and adjustments. Use Undeposited Funds for customer payments and a clearing account for everything else that needs a temporary pass-through.

Clearing account vs Undeposited Funds vs suspense account

All three are holding accounts that should end at zero, but they are not interchangeable. Undeposited Funds is built into QuickBooks and does one job. A clearing account is one you create for anything else that needs a pass-through. A suspense account parks an entry you cannot classify yet.

If a clearing account will not go to zero, the missing side is almost always a payout fee, a refund, or a transaction that was added from the bank feed instead of matched to the entry you already made.

How do I set up a clearing account in QuickBooks Desktop?

In QuickBooks Desktop go to Lists, then Chart of Accounts, right-click and select New, choose Bank as the type, and name it Clearing Account. Leave the opening balance at zero. Use it the same way as in QuickBooks Online: post money in from one account and out to another, then confirm the balance returns to zero.

Should a clearing account have a balance?

No. A clearing account should sit at zero between uses and return to zero once a transaction is fully recorded. A lingering balance means one side of a pass-through entry was never posted. Review the register, find the unmatched entry, and record its offset so the account zeroes out and your balance sheet stays clean.

How do I delete a clearing account in QuickBooks?

You cannot delete an account in QuickBooks, only make it inactive, which is the same rule that applies when you try to delete a bank account in QuickBooks. First confirm the balance is zero, then go to Chart of accounts, find the clearing account, and select Make inactive. The account is hidden from your lists but its history stays intact for the audit trail. Reactivate it later if you need the account again.

Why won't my reconciliation balance with a clearing account?

Reconciliation drifts when one side of a clearing entry posts to a real bank account but its offset was never recorded, leaving the clearing account with a balance. Check that every amount routed through the clearing account has both a money-in and a money-out entry. Once both sides are posted and the account is at zero, the bank reconciliation lines up.

A clearing account is most useful as part of a clean monthly close, so pair this with our guides to reconciling bank statements in QuickBooks and fixing it when your bank balance doesn't match QuickBooks. Related entry guides cover how to record a bank transfer in QuickBooks, how to handle the built-in Undeposited Funds account, and how to enter and fix an opening balance. To bring in older detail the feed never reached, see how to import old bank statements into QuickBooks. If your records also live in spreadsheets, you can convert bank statements to Excel, turn a CSV bank file into a .qbo, or automate accounts payable for the vendor payments that flow through clearing accounts.