Booking of insurance premiums

To book insurance premiums in QuickBooks, you’ll need to create journal entries that accurately record the cost of insurance. Here are the steps to do it:

Step 1: Create a Journal Entry:

  1. Go to the QuickBooks homepage.
  2. Click on the “Create” button (usually represented by a plus “+” sign) at the top of the screen.
  3. Under the “Other” column, select “Journal Entry.”

Step 2: Record the Insurance Premium Payment:

In the journal entry:

  • Debit the appropriate expense account to record the insurance premium. This is typically an account like “Insurance Expense” or “Insurance Premiums Paid.”
  • Credit the bank account from which you made the payment. Enter the amount as a positive value.
  • Provide a description or memo to specify the type of insurance, policy number, or other relevant information.

Step 3: Review and Save:

Review the journal entry details to ensure accuracy, and then save the journal entry.

Step 4: Reconcile Your Accounts:

After recording the insurance premium payment, it’s important to reconcile your bank account in QuickBooks with your actual bank statement to ensure accuracy.

Step 5: Periodic Insurance Accrual Adjustments (if needed):

If you’re prepaying insurance premiums for multiple months or quarters, and you want to match the expense to the period it covers, you may need to create monthly or quarterly adjusting journal entries. This involves debiting the insurance expense account and crediting a prepaid insurance account initially when you make the payment. Then, each month or quarter, you reduce the prepaid insurance account and expense a portion of the premium.

Step 6: Consult with Your Accountant:

Consult with your accountant or financial advisor to ensure you’re correctly categorizing the insurance premiums and to address any specific accounting or tax considerations related to your insurance expenses.

Recording insurance premiums accurately is crucial for managing your business expenses and financial records. Your accountant can provide guidance on the best accounting practices for your specific situation.

Contact us today to learn how our experienced bookkeeper for small business can optimize your accounts payable and accounts receivable processes, giving you more control over your finances and more time to concentrate on your business goals.