What Is a Suspense Account in QuickBooks Online? Complete Guide
- Harvey Specter
- 4 days ago
- 5 min read
If you’ve ever come across unexplained transactions or unmatched entries in your QuickBooks records, you’ve probably wondered how to handle them without disrupting your books. That’s where a Suspense Account in QuickBooks Online comes in handy. It’s a temporary holding account used to keep your records balanced until you can clarify the correct account classification.
In this complete guide, we’ll explore what a suspense account is, why and when to use it in QuickBooks Online, how to manage it, and best practices to avoid errors. Whether you're a small business owner, bookkeeper, or accountant, mastering suspense accounts will help you maintain clean, accurate financial records.
Need instant help with your QuickBooks? Call +1(866)408-0544 to speak with a QuickBooks expert now!
Table of Contents
What Is a Suspense Account?
Purpose of a Suspense Account in QuickBooks Online
When Should You Use a Suspense Account?
How to Set Up a Suspense Account in QuickBooks Online
How to Post Transactions to a Suspense Account
Reclassifying Entries from Suspense Accounts
Common Use Cases for Suspense Accounts
Risks of Leaving Transactions in Suspense Too Long
Best Practices for Managing a Suspense Account
FAQs about Suspense Account in QuickBooks Online
Get Help from QuickBooks Experts
1. What Is a Suspense Account?
A suspense account is a type of temporary account used in accounting to record transactions that require further investigation or clarification. The main purpose of a suspense account is to allow transactions to be posted when there's incomplete information available, without leaving the books unbalanced.
In QuickBooks Online, the suspense account functions the same way. It’s used as a placeholder to record transactions until the correct account can be identified.
2. Purpose of a Suspense Account in QuickBooks Online
The primary goal of using a Suspense Account in QuickBooks Online is to:
Prevent your books from becoming unbalanced
Record incomplete or unclear transactions temporarily
Buy time to identify and classify the transaction accurately
Avoid delaying data entry or reconciliation processes
Support monthly or year-end closing procedures
3. When Should You Use a Suspense Account?
There are several scenarios in which using a suspense account is the best temporary solution:
When you receive a payment, but don’t know who it’s from
If you record an expense but aren’t sure which category it belongs to
While importing bank transactions that lack full details
When reconciling bank accounts and uncovering discrepancies
During audits or cleanup of old records where some entries need investigation
4. How to Set Up a Suspense Account in QuickBooks Online
QuickBooks Online may already have a default suspense account. But if it doesn't, or if you want to create a custom one, follow these steps:
Step-by-Step Guide:
Go to Settings > Chart of Accounts
Click on New
Choose Account Type: Other Current Liabilities (or Other Current Assets)
Select Detail Type: Suspense Account
Name the account: Suspense Account
Click Save and Close
Pro Tip: You can choose a different Account Type based on how you want the suspense account to affect your reports.
5. How to Post Transactions to a Suspense Account
Once the suspense account is set up, here’s how to post entries to it:
When entering a journal entry, select the suspense account on the appropriate side (debit or credit).
When reconciling, categorize unmatched entries into the suspense account temporarily.
While recording bank deposits or expenses, choose the suspense account if the category is unclear.
Remember: Always add a memo or note to each transaction posted in the suspense account so you can trace back the details later.
6. Reclassifying Entries from Suspense Accounts
Once the missing information is available, you'll need to move the transaction from the suspense account to its correct classification.
Here’s how to reclassify:
Find the transaction in the Chart of Accounts > Suspense Account
Click View Register or Run Report
Locate the entry and click Edit
Update the category/account to the correct one
Save and Close
Alternatively, use the Reclassify Transactions tool in QuickBooks Online Accountant (for ProAdvisors) for batch editing.
7. Common Use Cases for Suspense Accounts
Here are a few real-world examples of how businesses use suspense accounts in QuickBooks Online:
Scenario | Use of Suspense Account |
Received a bank deposit but don’t know the customer | Temporarily record it in suspense until you confirm the payer |
Expense with unclear vendor or category | Assign to suspense and research the correct classification later |
Imported bank feed has duplicate or unclear entries | Post to suspense and reconcile later |
Accountant finds unmatched balance during audit | Use suspense for journal entries until full correction is possible |
8. Risks of Leaving Transactions in Suspense Too Long
While suspense accounts are useful, they come with risks if not handled properly:
May skew your financial reports (Balance Sheet or P&L)
Cause errors in tax calculations or GST filings
Create confusion during audits or reconciliations
Reflect poor bookkeeping practices to stakeholders
Delay year-end closing and compliance reporting
Best practice: Clear all suspense account entries before closing the month or filing taxes.
9. Best Practices for Managing a Suspense Account
Follow these best practices to manage your Suspense Account in QuickBooks Online effectively:
Review it weekly or monthly to identify and resolve open entries
Always add clear notes or memos for each entry
Use audit trails or attachments to document why the entry was placed in suspense
Set a maximum holding time (e.g., 30 days) for suspense entries
Train your team to avoid overuse of suspense for convenience
Reconcile your suspense account during every accounting cycle
10. Get Help from QuickBooks Experts
Still confused about how to use a Suspense Account in QuickBooks Online? Don’t let accounting confusion slow your business down. Our certified QuickBooks experts are available to help you set up, manage, and clear suspense accounts—fast and professionally.
Call us now at +1(866)408-0544 to get personalized support tailored to your business needs.
Final Thoughts
A Suspense Account in QuickBooks Online acts as a valuable tool for maintaining the integrity of your books when faced with uncertain or incomplete transactions. It's a lifeline for every bookkeeper or accountant who wants to keep operations flowing smoothly without letting unknowns cause accounting chaos.
But like any tool, it’s only effective when used correctly. Regular review, proper documentation, and timely clearing of suspense entries are crucial. If you need help implementing best practices, remember expert support is just a phone call away at +1(866)408-0544.
FAQs about Suspense Account in QuickBooks Online
Is the suspense account the same as an Uncategorized Income/Expense account?
No. Although they serve similar purposes, Uncategorized accounts are used for transactions automatically imported from bank feeds, while a Suspense Account in QuickBooks Online is a deliberate, manually created placeholder.
Can I delete the suspense account after clearing entries?
You can make it inactive, but it's not recommended to delete it as it may be useful in the future for other unclear transactions.
Does QuickBooks Online create a suspense account automatically?
QuickBooks doesn’t create it by default unless an accountant or bookkeeper has done so. You can create a custom one as per your needs.
Is using a suspense account considered bad accounting?
Not at all—when used correctly, it's a smart and professional way to maintain accuracy until all transaction details are confirmed. The key is to clear it regularly.
Can I generate a report for suspense account entries?
Yes. Go to Reports > Account QuickReport > Select the Suspense Account to view all entries and their details.
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