Intercompany transactions in QuickBooks

Record both sides consistently, reconcile monthly, then eliminate on consolidation.

By the ConsoHQ editorial team. Updated 4 November 2026.

Key takeaways

• QuickBooks Online has no intercompany feature on standard plans; record both sides yourself.
• Use dedicated accounts per counterparty, mirrored in both companies.
• Use invoices for real charges and journals for loans and payments on behalf.
• Reconcile each pair of balances monthly and fix differences at source.
• Eliminate matching balances and transactions on consolidation.

What counts as an intercompany transaction?

Any transaction between two companies in the same group. The common ones:

• Loans and funding: the parent funds a new subsidiary.
• Management fees and recharges: the parent charges subsidiaries for shared staff, systems or premises.
• Sales of goods or services: one company supplies another.
• Costs paid on behalf of another company: one company pays an invoice that belongs to its sister.
• Dividends: a subsidiary pays its parent.

Each one must be recorded in both companies, and the two records must agree.

Step 1: Set up dedicated intercompany accounts

In each company, create balance sheet accounts named for the counterparty. For example, in the parent: "Due from Coastline Properties" (asset). In the subsidiary: "Due to Coastline Coffee" (liability). Some teams use a single "Intercompany" account per counterparty that can go either way. Whatever you choose, use one account per counterparty and mirror the names in both companies. Avoid parking intercompany items in general debtors, creditors or suspense.

If there are recurring income and expense flows, also create matching P&L accounts such as "Management fees received - group" and "Management fees paid - group", so they're easy to find and eliminate.

Step 2: Record both sides

Use invoices and bills rather than journals where there's a real charge, such as management fees or sales of goods. That gives each side a document to match, and tax such as VAT or sales tax is handled correctly. Use journals for loans, transfers and payments made on behalf of another company.

Automate intercompany eliminations with Joiin

Step 3: Reconcile every month

At month end, compare each pair of intercompany balances. "Due from B" in company A should equal "Due to A" in company B. Intercompany income in one should equal the matching expense in the other. If they don't agree, the usual causes are:

• Timing: one company posted an invoice in March and the other in April.
• Missing entries: one side recorded, the other forgotten.
• Miscoding: the entry went to a general account instead of the intercompany account.
• Currency: different exchange rates used on each side.

Fix the cause in the right company rather than plugging the difference. Our intercompany reconciliation guide has a worked example.

Step 4: Eliminate on consolidation

When you produce group accounts, remove the intercompany balances and transactions so the group doesn't report money it owes itself or sales to itself. The receivable cancels the payable; intercompany sales cancel intercompany purchases; fee income cancels fee expense. If goods sold between companies are still in stock at month end, the profit on them is unrealised and should also come out. See intercompany eliminations for the full picture.

In Excel, you add elimination columns to your consolidation workbook. In a consolidation app such as Joiin, you mark the intercompany accounts once and they're eliminated every month. In Intuit Enterprise Suite, intercompany eliminations are part of the product.

Policies that keep intercompany clean

• Agree a monthly cut-off for intercompany invoices, for example raised by the 25th.
• Use one exchange rate source for foreign-currency intercompany balances.
• Settle regularly. Large, old intercompany balances are harder to reconcile and can raise tax questions.
• Document recharges. Write down how management fees and shared costs are calculated, and review the basis with your accountant, especially where there are tax or transfer pricing implications.

Monthly intercompany checklist

• All intercompany invoices and bills posted in both companies
• Payments on behalf of other companies recorded on both sides
• Each pair of intercompany balances agrees
• Intercompany income matches intercompany expense
• Differences investigated and corrected at source
• Eliminations applied in group reporting

Tax points to discuss with your accountant

Intercompany transactions can have tax consequences, and the rules vary by country. Points to raise with your accountant:

• Sales tax or VAT on intercompany charges, unless the companies are in a tax group where that applies.
• Arm's-length pricing for management fees and sales between related companies, especially across borders, where transfer pricing rules apply.
• Interest on intercompany loans, whether it's charged and at what rate.
• Withholding taxes on cross-border payments such as interest, royalties or dividends.
• Documentation: written intercompany agreements make all of the above easier to defend.

None of this changes how you record the transactions in QuickBooks, but it can change the amounts.

Intercompany balances in different currencies

If a US parent lends its UK subsidiary money, decide which currency the loan is in and record it that way on both sides. The company holding the balance in a foreign currency will see it revalued each month, creating exchange gains or losses. On consolidation, both sides are translated into the group currency and should cancel. If they don't, check that both companies used the same rate and posted any revaluation. Keeping intercompany loans in one currency, usually the parent's, simplifies everything.

Settling and netting balances

Intercompany balances that grow for years become hard to reconcile and can raise tax questions. Good practice is to settle regularly, for example quarterly, by actual payment or by a documented netting agreement where two companies owe each other. If company A owes B $30,000 and B owes A $45,000, a netting arrangement lets B pay A $15,000 and clear both. Record the netting with matching entries in both companies.

A month-end reconciliation, worked through

Once Coastline Retail posts the two missing items, the balances agree and can be eliminated cleanly.

Intercompany in a multi-ledger group

When one company is on QuickBooks and another on Xero or Sage, the principles don't change, but the discipline matters more. Agree the account names in both systems, for example "Due from Coastline UK" in QuickBooks and "Due to Coastline US" in Xero, and the currency of each balance. Reconcile monthly using exports from both systems. When you consolidate, a tool that connects to both ledgers, such as Joiin, lets you eliminate the matching accounts across systems in one place.

Common intercompany mistakes

• Recording one side only. The most common error. Every intercompany entry needs a matching entry in the other company.
• Using general debtors and creditors. Intercompany items lost in general ledgers are hard to find and reconcile.
• Plugging differences. Posting a "balancing" entry hides the real problem, which reappears later.
• Ignoring tax on charges. Management fees and recharges may carry sales tax or VAT.
• Letting balances age. Old, unsettled balances become hard to support. Settle or net regularly.

Documenting intercompany: what to keep

Good records make intercompany transactions easy to reconcile, audit and defend for tax. Keep a short written agreement for each recurring arrangement: loans (amount, currency, interest, repayment), management fees (what's covered and how it's calculated) and shared costs (the allocation basis). Keep invoices for charges, and a monthly reconciliation of each pair of balances signed off by someone. Store them where the next person can find them. When an auditor, lender or tax inspector asks about an intercompany balance, a one-page agreement and a reconciliation answer most questions immediately.

Frequently asked questions