How to Record Sales in QuickBooks Online

Recording sales correctly in QuickBooks Online is the foundation of your financial reporting. Getting it right ensures your income statement is accurate, you know who owes you money, and you can make informed business decisions. This guide breaks down the process for the two primary methods: sales receipts for immediate payments and invoices for when a customer will pay you later.

Invoices vs. Sales Receipts: Choosing the Right Tool for the Job

Before you enter anything, you must first understand the fundamental difference between an invoice and a sales receipt in QuickBooks Online. Choosing the right one determines how the transaction is recorded in your accounting system. The decision comes down to one simple question: Am I getting paid now, or am I getting paid later?

Use a Sales Receipt When You're Paid Immediately

A sales receipt is for "point-of-sale" type transactions. Think of it as a digital record of an immediate exchange. If a customer pays you on the spot—whether with cash, a credit card, a check, or a bank transfer—you use a sales receipt. QuickBooks records the income and the corresponding increase to your bank account in a single step.

Examples where a sales receipt is appropriate:

• A coffee shop sells a latte to a customer who pays with a debit card.
• An online store receives an order, and the customer's credit card is charged right away.
• A consultant meets with a client who pays for the session with a check at the end of the meeting.
• A retail store sells a product to a walk-in customer who pays in cash.

The Accounting Entry: When you create a sales receipt, QuickBooks debits your bank account (or Undeposited Funds) and credits your sales income account. Cash comes in, and revenue is recognized simultaneously.

Use an Invoice When You'll Be Paid Later

An invoice is a bill you send to a customer for products or services they've already received. It formally requests payment by a future date and creates an account receivable—an official record that this customer owes you money. This is the correct method for any transaction based on an extension of credit, even for a short period.

Examples where an invoice is appropriate:

• A graphic designer completes a project and bills the client with "Net 30" payment terms.
• A caterer provides services for an event and sends a bill to the host the following week.
• A wholesale company delivers goods to a retailer and invoices them for the shipment.
• A monthly subscription service bills its users at the start of each billing cycle for post-paid services.

The Accounting Entry: Creating an invoice debits your Accounts Receivable account and credits your sales income account. The sale is recognized, but no cash has changed hands yet. When the customer pays, you'll record a separate payment transaction that debits your bank account and credits Accounts Receivable, clearing the customer's balance.

How to Record a Sale with a Sales Receipt (Paid Immediately)

When a customer pays you on the spot, follow these steps to record the transaction quickly and accurately. This ensures your bank balance and income are updated in real-time.

1. Start a New Transaction: From your QuickBooks Online dashboard, click the + New button in the upper-left corner of the screen.
2. Select "Sales Receipt": In the dropdown menu, under the "Customers" column, select Sales Receipt.
3. Enter Customer Information: Choose the customer from the dropdown list. If it's a new customer, you can click "+ Add new" and enter their details directly from this screen.
4. Fill in the Details:
   • Payment date: This should be the date you received the payment.
   • Payment method: Select how the customer paid you (Cash, Check, Credit Card, etc.).
   • Reference no. (Optional): You can enter a check number or other transaction identifier here.
   • Deposit to: This is a critical field. Select the bank account where the funds were actually deposited. If you're holding multiple checks or cash to be deposited later in a single batch, choose the "Undeposited Funds" account. This tool allows you to group multiple payments into a single deposit that will match your bank statement, making reconciliation much easier.
5. Add Products and Services: In the line items section, select the product or service you sold. Filling out the "Products and Services" list beforehand is a best practice. It connects the sale directly to the correct income account on your Chart of Accounts and automatically populates the description and rate. Enter the quantity sold, and QuickBooks will calculate the total.
6. Verify Sales Tax: If the item is taxable, ensure the correct sales tax rate is selected. QuickBooks Online has a powerful sales tax tool that can automatically calculate rates based on location if you have it set up.
7. Review and Save: Double-check all the information for accuracy—the customer, date, amount, and deposit account. Once you're certain everything is correct, you can select "Save and send" to email a copy to the customer or "Save and close."

How to Record a Sale with an Invoice (Pay Later)

Creating an invoice alerts your accounting system that a customer owes you money. This process establishes an Account Receivable and begins the clock on your payment terms.

1. Start a New Transaction: Click the + New button in the upper-left corner.
2. Select "Invoice": Under the "Customers" column, select Invoice.
3. Select the Customer: Choose the appropriate customer from the dropdown list.
4. Set Payment Terms: This is a very important step for invoices. From the Terms dropdown, select the payment terms you agreed upon with the customer (e.g., Net 15, Net 30, Due on receipt). QuickBooks will use these terms, along with the invoice date, to automatically calculate the payment due date.
5. Enter Dates:
   • Invoice date: This is the date you are issuing the bill, which is usually the day the service was completed or the product was shipped.
   • Due date: This will be calculated automatically based on the invoice date and terms, but you can override it manually if needed.
6. Add Products and Services: Just like with a sales receipt, a properly configured "Products and Services" list makes this simple. Select the item(s), enter the quantity, and verify the rate and amount. Make sure each line item points to the correct income account.
7. Check Sales Tax: Confirm that sales tax is correctly applied according to your local regulations and the customer's status.
8. Customize and Review: You can add a personalized message to the customer, attach relevant documents, and preview the invoice before sending.
9. Save and Send: Once you've verified all the details, click Save and send to email the invoice directly to your client. They will receive a professional-looking bill, often with a link to pay online if you've set up payment processing—a great way to get paid faster.

How to Receive Payment Against an Open Invoice

Your work isn't done when you send an invoice. Recording the subsequent payment is the final step that clears the customer's debt and updates your cash balance. Neglecting this step will leave your Accounts Receivable artificially high and your cash balance low.

1. Find the Customer's Invoice: The easiest way to do this is to navigate to Sales from the left-hand menu and then click on the Invoices tab. You'll see a list of all your invoices with their statuses. Find the open invoice you need to receive payment for.
2. Select "Receive Payment": Click on the corresponding row for the open invoice, and in the action column, you'll see a link to Receive payment. Clicking this opens the payment screen.
3. Enter Payment Information:
   • Customer: This field will be pre-filled.
   • Payment date: Enter the date you received the money.
   • Payment method: Choose how the customer paid.
   • Deposit to: Again, choose the correct bank account or "Undeposited Funds" if you will be batching this payment with others.
4. Apply Payment to the Invoice: The open invoice should already be checked in the "Outstanding Transactions" section at the bottom. The amount you enter in the "Amount received" field at the top will be automatically applied. If a customer is making a partial payment, adjust the "Payment" amount in the line item to reflect what they paid.
5. Save the Transaction: Once everything is filled out correctly, click Save and close. QuickBooks will now show the invoice as paid (or partially paid), your Accounts Receivable balance will decrease, and your cash (or Undeposited Funds) will increase.

Final Thoughts

Mastering sales receipts and invoices in QuickBooks Online is fundamental to sound bookkeeping. Accurately recording sales as they happen ensures your P&L statement, balance sheet, and accounts receivable aging reports are always reliable, giving you a clear view of your business's financial pulse.

As your business grows, straightforward sales can lead to more difficult tax questions about revenue recognition, multi-state sales tax obligations, or managing deferred revenue. When those complexities arise, sorting through official guidance can be time-consuming. We built Feather AI to eliminate that friction, giving you instant, citation-backed answers from authoritative IRS and state tax sources so you can make confident decisions.