What is an Inactive Account in QuickBooks Online?

If you have a lot of categories or accounts in your chart of accounts in QuickBooks Online that you do not use, you may want to remove them.  If you remove the categories you will no longer see them as an option when you are entering transactions.

In QuickBooks Online you cannot permanently delete an account or category.  You can make it inactive.

To make an account inactive in QuickBooks Online you can select the option from the edit account option on the chart of accounts page.

I walk you through the steps in this video:

Be sure that you don’t have any information in the accounts you inactivate.

If you do, a better option may be to merge the accounts.

When you run your reports, be sure that they make sense to you, and that the categories you use are the ones that are useful for your business.  To properly manage your expenses you may need to see things broken out a little differently to the suggested categories set up in QuickBooks Online.  If you are regularly looking at your Profit and Loss statement you will know if you have extra categories, or accounts so similar, they appear to be duplicated. Those are the accounts or categories that you would want to inactivate.

If you would like assistance to clean up your reports, and create reports that work well for your business, don’t hesitate to reach out.

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Video transcript

Hi, Kerry, here from My Cloud Bookkeeping. I work with small businesses and entrepreneurs to help them to get their books in order so that they can make better decisions about their business on a daily basis. Today, we're going to look at inactive accounts. So perhaps when you're looking through your chart of accounts and all of the categories, you have some that you don't use. You don't really why they're there. Perhaps they meant something in the past. So what we're going to do today is make them inactive, remove them. So when you choose to categorize your transactions, they're no longer an option.

To illustrate this, we're going to have a quick look at our income statement, the profit, and loss. So we'll pop here to reports, we'll run our profit and loss report and we'll scroll down and we can see we some expenses here in legal and some expenses in legal and professional fees. Something's kind of gone wrong here. It doesn't look right that we'd have these two things separate. So we are going to decide that we just want legal and professional and we no longer want to have this account here, legal. So let's pop in and see what's in it. We have an expense to City Lawyers, so we'll open up this expense and we're going to change it to legal and professional fees because we don't want to be having things posted to legal. And obviously, we don't want to inactivate something that has transactions in it. Now I believe you'd get a warning and probably be unable to do it, but please don'tin activate an account that has anything in it. Okay.

So now we can see the entire amount is in legal and professional fees, and we want to make sure that nobody makes that mistake again. So we're going to go and we're going to make legal inactive. So we'll pop back here into our chart of accounts and we can see we have legal and legal and professional fees. I have found these by doing the filter, by the way, just in case you're wondering. So if I don't have that filter, everything's there, then I just filter by name and I can see them both. So what I'm going to do with this one here is I'm going to make it inactive. And yes, I'm sure I want to make it inactive.

So now let's have a look and see what happens. Next time we get an expense from the lawyers. We pop up here to expense and City Lawyers. Don't you love it when it's the sample company and you can make whatever you want, and it automatically populates with legal and professional fees, and that word legal it's just no longer an option because the account is inactive. Now, if for any reason you wanted to be able to see which ones are inactive and which ones are active, we can scroll down here, or, where are we? This time I'm doing this scroll on purpose. So it doesn't show up at all legal and professional fees. But if you pop up to the top here and you select ‘include Inactive’, then when we scroll down, we'll be able to see here. And it says that it's deleted and we do have the option to make this account active if for any reason we decide, we'd like to use it again.

Now, another option would've been to merge these two accounts so that everything in legal got merged into legal and professional fees. And that would be a good idea if you're doing some sort of a big cleanup where you've kind of got stuff all over the place, but you're consolidating your income statement so that it makes more sense for you, merging the accounts might make more sense. And there's a link to a video to show you how to go about that.

I hope that was helpful. Be sure to have al ook through your income statement, your profit, and loss on a regular basis. Make sure it makes sense to you. Are the categories you're using helping you to manage your business, or are there things there that don't make sense or that you'd like to see broken down into more detail? Make sure that your reports are working for you, not just for the end of the year or your sales tax filings. And that way you'll be able to be more successful in your business every day.

Now, if this video was helpful, click like, subscribe to my channel and I'll see you again soon.

Cheers.