How to properly apply a single bank account transfer to multiple sub accounts within another bank account
Hello. My accounts are setup so that I have a single sweep account that receives all deposits. I have automatic transfers setup from this bank account to other bank accounts.
I have sub accounts setup, in QB only, under the bank accounts receiving the transfers that I want to "move" this money into because it is earmarked for different purposes.
Example Chart of accounts:
- Sweep account
- Savings account 1
- Savings account 1: Tax Reserve
- Savings account 1: Insurance Reserve
Auto transfer is setup to transfer $100 from Sweep account to Savings Account 1. This happens in reality in the bank accounts and is what shows up on the the statements.
However, I want to further divide that $100 transfer into $50 to Tax the sub account and $50 to the Insurance sub account
The second two transfers are virtual. Meaning they only happen in my books, not my bank account.
I have identified 2 ways of approaching this and I am not sure which is correct.
Option 1 - setup 2 separate $50 transfers from the Sweep account to Savings Account 1 and then apply the deposits to the sub accounts when reconciling.
Option 2 - set up 1 $100 transfer to Savings Account 1 and then make 2 additional transfers from Savings Account 1 to the Savings account 1 sub accounts (ie. $50 to insurance and $50 to tax)
I think either will result in the correct balance in the parent account but I am not sure how this will impact reporting and reconciling. I have read that only the party account should be reconciled with the bank account.
What is the best way to go about this?