Blog · Clearing accounts

How do I record a transfer between two bank accounts without counting it twice?

A transfer appears on both bank statements, so it reaches the books twice. Record each half against a transfer clearing account: the money leaving the first account debits clearing, and the money arriving in the second credits it. The clearing account returns to 0.00 and no income or expense is created.

Published November 12, 2026

Why does a transfer get counted twice?

Because two statements report it. The checking statement shows 5,000.00 leaving. The savings statement shows 5,000.00 arriving. If each line is coded by itself, a common result is an “expense” on one side and “income” on the other. Profit looks right by accident, and both totals are wrong.

How do I record it with a clearing account?

Each half goes to the same transfer clearing account.

Money leaves checking:

Account	Debit	Credit
Transfer clearing	5,000.00
Checking		5,000.00

Money arrives in savings:

Account	Debit	Credit
Savings	5,000.00
Transfer clearing		5,000.00

Transfer clearing was debited and credited 5,000.00. It holds 0.00, and nothing touched income or expense.

Can I just record one transfer entry instead?

Yes: one entry that debits savings and credits checking. It works when you enter the transfer by hand. It breaks when both accounts have bank feeds, because the second feed brings the same transfer in again and someone has to notice and remove it.

With a clearing account nobody has to notice anything. Each feed line is coded once, to the same account.

What if the two halves are in different months?

A transfer made on the 31st can arrive on the 2nd. At month end, transfer clearing holds 5,000.00. That is correct: it is money in transit. Note it when you close, and confirm it clears in the first days of the next month.

A balance that does not clear in a few days is not timing. One half was coded somewhere else.

Which payments are really transfers?

A payment from the bank account to a credit card.
A loan draw deposited into checking.
An owner moving money between two business accounts.
A sweep between an operating and a payroll account.

Each one moves money between two balance sheet accounts, so each one should pass through clearing or be a single transfer entry.

How does a close tool check this?

In LedgerDock both halves land in Transfer Clearing, and the month cannot lock until that account is zero or the reason is written down. See how a close works.

Questions people also ask

Is a transfer between my own bank accounts income or an expense?

Neither. It moves money from one balance sheet account to another. If a transfer shows up on the profit and loss statement, one of its two halves was coded to income or to an expense by mistake.

Why does transfer clearing have a balance at month end?

Either one half was coded somewhere else, or the money was in transit: it left one bank on the last days of the month and arrived in the next month. Money in transit is real and clears when the second half posts.

How do I record a credit card payment from the bank account?

The same way. The bank line and the card line are two halves of one transfer. Route both through transfer clearing, or record one transfer from the bank account to the card account and do not add the second line again.

All articles