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Clearing Accounts: Make Sure They Clear
Clearing Accounts: Make Sure They Clear

Puzzle uses temporary holding accounts called "clearing" accounts, that should literally clear out. This doesn't always happen at month end.

Luke Frye avatar
Written by Luke Frye
Updated over a year ago

Clearing accounts are sometimes called suspense accounts. Accountants use these to manage the timing difference due to the date a payment may leave one account and be applied to the other.

An example would be for a credit card payment that might go out of your bank account on day 1, but not post on your credit card on day 3. If this all happens in the same month, then usually you'll not notice this.

Regardless, you should generally make sure that all of your clearing accounts clear. That is, that they go to zero. If there is a balance, you should know what it is and why it's there.

Clearing accounts in Puzzle:

You'll know there is a problem if you notice an unchanging balance on the Balance Sheet of either of these clearing accounts. You'll likely be alerted of this problem on the Monthly Checklist or Inbox as well.

  1. Salaries & Benefits: Clearing

    1. If you use Rippling or Gusto, we automated the journal entries for your payroll, so you just need to make sure the cash transaction from the bank goest to Salaries & Benefits: Clearing.

    2. If you don't use Rippling or Gusto, you can also add manual payrolls to automate part of this process for you. If you prefer, and are comfortable with how to account for payroll on your own, you can simply split the transaction without having to enter any payrolls.

  2. Credit Card Payments - Clearing

    1. Use this account to put all of the payments from your bank to your credit card.

    2. If you pay for a credit card out of a personal account (or other account that is not connected to Puzzle), then you should mark that as an Accounts Payable from the business to you or that other business. If you plan to leave the money in the business, you can mark that as a contribution of equity. LLC would be Member Capital, C-Corp would be Additional Paid in Capital.

  3. Employee Reimbursement - Clearing

    1. We automate some of the info from your reimbursements in Gusto or Rippling, but you may need to break the details down further.

    2. The best way to resolve these outstanding balances is to split the individual transactions to match the expense report you relied upon to make the reimbursement.

    3. Alternatively, if you use Ramp, we integrate most-closely with them for accounting for reimbursements automatically.

  4. Bank Transfers in Transit: Clearing

    1. Use this account for all transfers in and out of company bank, treasury, and other investment accounts.

    2. Make sure both sides of the transfer are set to the same account so that they clear each other out.

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