Learn how to categorize bank and credit card transactions in QuickBooks Online.
A transaction report where you do not have to dig in to understand what is what, you can just run through it and can get the idea on categories of expenses. Well, it is not impossible, actually, it is very much possible with the help of the categorization feature of the QuickBooks Online. This feature lets you categorize your bank and credit card expenses, once you incur them the first time. And after that, it will automatically categorize the similar nature of expenses with the same details.
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The only work you would need to do is review those transactions and add them to the ledger account where you want it to reflect in QuickBooks. The properly categorized transaction helps in efficiently managing the business, it helps in tracking expenses and you can even analyze and apply measures for optimizing the expenses. For using the categorizing transaction feature in QuickBooks online for bank and credit card transactions, you will have to first link your account to the Bank feeds in QBO.
After that, your downloaded transactions will appear in for review tab, from there you can go ahead and categorize them into their respective categories. We will discuss the process in detail in the next section.
Steps to Categorizing Bank and Credit Card Transactions in QuickBooks Online
Follow the below mention steps to categorizing bank and credit card transactions in QuickBooks Online.
Process Steps for Categorizing Bank and Credit Transactions
As soon as you connect your bank or credit card account to the QuickBooks bank feed, it will start downloading the transactions on a daily basis automatically. Now the only work left would be to review each transaction and categorizing them into correct accounts in QuickBooks. You can do so by following the below steps in the same order:
Step 1. At the first step, you need to open QuickBooks and click on Banking from the left menu bar and click Banking again.
Step 2. Once you click on the Banking you will be directed to the page where all your linked accounts will reflect including your checking account, saving bank account, and credit card account. You need to go to the For Review tab.
Step 3. The transactions that appear on for review page aren’t yet there in QuickBooks. So, you need to first categorize them. For this purpose, you need to click on each expense line incurred through your bank account or credit card account.
Step 4. After that, you need to fill in the details like Vendor/ customer name, category of expense (existing or new), project name, billable, etc. Also, you can add a custom label in the tag box to track the expenses and memo number.
Step 5. After you have filled in all the relevant details, click on add. After this, QuickBooks will automatically recognize the transaction with similar details and categorize them in the same category.
Step 6. There are some transactions against which you would see Match option instead of Add. These are the transactions that are already there in QuickBooks, you just need to match them by reviewing them.
The process is the same for Bank as well as credit transactions. Let us now also see how can we link the bank or credit card account to QuickBooks online, just in case you need it:
The Process is the Same for Bank as well as Credit Card Account
Step 1. First of all, click on the Banking menu and click on Add account.
Step 2. Now search your bank and login to your bank’s website by entering your credentials.
Step 3. In this step, select the bank or credit card account you want to connect, type of account and date range from when you want to download the transactions.
Step 4. After that click on connect and follow the onscreen instructions to link the bank/ credit card account.
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Can you let me know the process of classifying credit card payment in QuickBooks?
First, open QuickBooks and go to the ‘New’ button (with + icon). After clicking on new click on Expense or check. Now you need to enter the details required like payment account, amount, interest amount (if any). You will be able to easily track the payment once you classify the payment. Once you have entered relevant details for classification, click on save and close.
Can you please list down the steps to reconcile the Credit card account in QuickBooks?
You can start the process by selecting your credit card and then choosing the credit card you wish to reconcile. Now choose the statement date and enter your ending balance and finance charges (if any). After entering the details and matching the transactions click on reconcile your Account and then click on save. Once you are done you can write a check.
How can I categorize and re-categorize the transactions by batch in QuickBooks Desktop and QuickBooks Online?
Open QuickBooks and select the new transactions from the drop-down list. Now choose enter bills and then go to the item tabs. Now select the type from the drop-down menu. You need to enter all the relevant details as required and press save and close.
How can I create categories and sub-categories for grouping items in QuickBooks Online?
You need to first open QuickBooks and click on classes menu. After that, you need to go to the sales menu and choose Product and services. Now click on More from the drop-down menu and then click on Manage categories. After that, you can select a new category and enter its name and save it. In case you want to create sub-category, you can click on ‘Is sub-category’ check box under the main category.