Quickbooks Parent vs Sub Accounts: What’s the Difference?

Quickbooks supports a multi-tiered hierarchy for creating and using accounts. You can use both parent and sub accounts, for example. By taking advantage of Quickbooks multi-tiered account hierarchy, you’ll be able to track your business’s financial transactions with greater ease. So, what’s the difference between a parent and sub account?

What Is a Parent Account?

A parent account is a top-level account used for accounting purposes. It’s called a “parent account” because it contains one or more other, lower-level accounts. The parent account is the primary account under which lower-level accounts, also known as sub accounts, are placed.

What Is a Sub Account?

A sub account, on the other hand, is a lower-level account, that’s placed under an existing parent account. All sub accounts must be attached to a parent account. For example, you may want to place a sub account for your business’s electric expenses under a parent account for utilities. In addition to electric expenses, other sub accounts you may want to place under the utilities parent account include gas and internet (if applicable).

How to Create a Sub Account

In Quickbooks Online, you can create new sub accounts in just a few easy steps. Start by logging in to your account and clicking the gear icon, followed by “Chart of Accounts” and then “New.” You should then see a window asking for more information about the account. Tick the box labeled “Is sub account” and choose the parent account under which you’d like to place it. You will then need to enter a name and description for the sub account. When finished, click “Save and Close,” at which the sub account will be added to Quickbooks.

How to Convert an Existing Account Into a Sub Account

You can also convert existing accounts into sub accounts. This is done by going back to the home screen and clicking the gear icon, followed by “Chart of Accounts.” Rather than creating a new account, though, you should choose an existing account by clicking the downward arrow. Click the account that you’d like to convert into a sub account and select “Edit.” Next, tick the box for “Is sub account” and choose the parent account under which you’d like to place it. You can then finalize the conversion by selecting “Save and Close.”

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