Reclassify Transactions in QuickBooks – Proper Steps & Benefits

Financial Transactions are always a heavy thing to deal with. Managing your business’s financial transactions, keeping an eye on them […]

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Financial Transactions are always a heavy thing to deal with. Managing your business’s financial transactions, keeping an eye on them can be a daunting task. With the help of QuickBooks Online, you can simplify these steps by using the reclassify transaction tool. This blog will highlight everything about the process of reclassifying the transactions in QuickBooks Online, ensuring your financial data is accurate and up to date.

The aim of the Reclassifying Transactions Tool is to correct any transactions that are incorrectly paired up with classes or accounts in a client’s book. The tool reclassifies income, Cost goods, expenses and balance sheet accounts. We have mentioned different steps that can help you to reclassify transactions in QuickBooks online as well as on QuickBooks desktop.

What is Reclassify Transactions in QuickBooks?

Reclassify transaction tool is a tool that allows you to classify transactions in QuickBooks without any wastage of time. We are aware that categorizing account transactions can be challenging since doing so would require spending too much time classifying each transaction individually. Not only can you reclassify the transactions using the reclassification tool, but you can also categorize them individually to save time and effort.

Know the List of Fixed Transactions

The following transactions cannot be moved after reclassification, therefore keep that in mind if you choose to reclassify the transactions and move them to a different place.

  • It is important to keep in mind that you cannot alter the account for memos or invoices.
  • You are unable to modify the expense account in any other way.
  • You will not be able to adjust your class or account for inventories after this.
  • The account for billable expenses can also be changed, however the income account associated with the income transaction cannot be changed.
  • You will need to access the payroll menu if you would like to modify your payroll transactions.

How to Reclassify Transactions in QuickBooks Online?

Reclassifying the transactions in QuickBooks Online is quite a straightforward process which simplifies your work. It doesn’t matter if you are using QuickBooks Online Accountant or QuickBooks Online Advanced. Here is what you can do to simplify it:

For QuickBooks Online Accountant Users:

  • Launch the QuickBooks Online business of your client.
  • Choose “Reclassify Transactions” after selecting “Accountant Tools.

For Advanced Users of QuickBooks Online:

  • Create an account on QuickBooks Online.
  • After choosing “Settings ➙,” select “Reclassify Transactions.

After reaching the “Reclassify Transactions” section, take the following actions:

  • For the purpose of reclassifying transactions, select the “Profit and Loss” report.
  • Choose the relevant account.
  • Select “Reclassify“.

How to Reclassify Accounts in QuickBooks Desktop?

In order to reclassify the proceedings in QuickBooks Desktop, you can go by selecting the fiscal year to review the transactions and reclassify the same.

Step 1: Selecting the Fiscal Year the Users Need to Review

The following steps are mentioned to enlighten you on how to reclassify numerous transactions or if you have failed to update the fiscal year date range:

  • For the first step, proceed to the “Accountant” menu.
  • Now, you have to pick out the “Client Date Review” alternative from the screen.
  • A window will appear, navigate the section of “Review Date range”.
  • After scrolling the range, now pick the date range of the transactions to be reviewed.
  • A message with “Review Basis” will appear on the window.
  • Now, continue and select “Cash” or “Accrual” from the same.
  • After the subsequent step, choose the “Modify Review” option.
  • In the segment of “Account Balances“, search the Reclassify Transaction Tab.
  • Hit on “Status” and drop-down option to set the status as “In Progress“.
  • Press the “Close” button, once done with the following steps.

Step 2: To Review the Client’s Transactions

Here’s how to do it:

  • From the “Accountant” menu, pick out the “Client Data Review” alternative.
  • Now, select the “Reclassify Transaction“.
  • After selecting the tab, from the “Accounts tab” click on the “View” drop-down menu.
  • Proceed further by selecting your account type from the appeared window.
  • On the right side, you will be able to see the transaction after you select the account to view its transactions.
  • Now, you can choose the “Name” from the drop-down menu from the “Transactions” tab.
  • Once done, pick out the transaction you wish to review.
  • Now, you will be able to view the Transaction list.

Step 3: To Accordingly Reclassify the Transactions

Redirect the transactions to the right records in order to edit or re-enter.

  • You can start by selecting a single transaction or choose the “Select all” option.
  • For reclassifying the transaction via ways of means of account, tab on the “Account to” checkbox.
  • Click on the record where you want to switch the transaction.
  • Select the drop-down menu present next to the Account to option.
  • If you wish to reclassify by class then choose the “Click to” checkbox.
  • After this, for a new class the click on the drop-down menu next to Click to option.
  • To complete, hit the “Reclassify” button.

How to Batch Reclassifying Transactions in QuickBooks Online?

With the feature of batch classification, you can save your time and effort whenever you need to update multiple transactions. Whether it is individual reclassification or multiple reclassification, with the added benefit of selecting multiple transactions at once for reclassification.

Reclassification of Transactions by Running Profit & Loss Report:

  • The first step is to open your client’s “QuickBooks Online” company.
  • Now, proceed to the “Accountant tool” icon.
  • After selecting the icon, you need to press the “Reclassify Transaction” option.
  • A window with Account types drop-down menu will appear.
  • To view expenses and income, select “Profit and Loss” from the menu.
  • You can carry out this step by selecting the “Balance sheet” option as well.
  • Now, click and choose the account with the transaction you wish to modify.
  • Use of the following filters can also be accessed:
    • Class: Click on “class tracking” if it does not appear.
    • Type: Filter by transaction type.
    • Modify: Filter by transactions you will be able to modify.
    • Vendor/Customer: Filter for a specific vendor or customer.
  • For viewing the paid transactions, proceed by pressing the “Cash” option.
  • For viewing both paid and unpaid transactions, proceed by hitting on the “Accrual” option.
  • After the subsequent step, hit on the “Find Transactions“.
  • You now need to select each box for the transaction you wish to change.
  • Once done, click on “Reclassify“.
  • Now to move the transactions, pick out the account from the drop-down menu or create a new one.
  • As for the very last step, hit the “Apply” button.

Reclassification of Transactions via Way of Means of Location

  • Start by logging in to your client’s “QuickBooks Online” company.
  • Then go to the “Settings” option.
  • Now, pick out the “Account and Settings” alternative.
  • After a window will appear, from there proceed and press on the “Advanced” tab.
  • From the “Advanced” tab window hit on the “Categories” option.
  • After this, press “Edit“.
  • Now after the subsequent step, move to the option naming “Track-locations“.
  • You need to navigate to the “Location label” drop-down menu and select “Location“.
  • Now, hit the “Save” option.

Number of Transactions You Can and Cannot Move

To relocate the transactions the tool i.e, Reclassify Transactions is used. However, a few sorts of transactions cannot be relocated due to the linking process with certain accounts.

Here is a list describing different types of transactions you can and can’t move:

  • There will appear a limitation to changing the class or account of inventory because they are already linked to the asset inventory accounts.
  • You will be blocked from being able to carry out any changes with the payment account, such as credit cards or the bank account.
  • Users can, however, make changes with cash memos, classes for invoices, bills and cheques.
  • The accounts are prohibited from any change.
  • You can access the payroll transactions in QuickBooks Payroll without facing any complex glitches.
  • There is room for change in the expense accounts for the respective, billable transactions.
  • A restriction is there to not change the income-related transactions.

For reclassifying any account or concerned transaction, you can without a doubt proceed with the help of Reclassify Transactions Tool.

The following mentioned steps are provided for better grasping and to rectify and resolve any complications while using the tool.

If you are still facing any issues or have doubts concerning the transactions tool, you can get in touch with the Dancing Numbers experts via LIVE CHAT. The team members are skilled and are available at the earliest.

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Frequently Asked Questions (Faqs)

In QuickBooks Online, Why am I unable to Reclassify Transactions?

You might not be able to reclassify transactions for a number of reasons, from user rights to the specific QuickBooks Online plan you have. Make sure you are using QuickBooks Online Accountant or QuickBooks Online Advanced and that you have the required permissions.

Can Transactions in QuickBooks Online be Reclassified?

Yes, users of QuickBooks Online Accountant and QuickBooks Online Advanced have access to a tool designed especially for reclassifying transactions.

How Can I Turn on QuickBooks Online’s Reclassify Transactions?

By default, QuickBooks Online Accountant and QuickBooks Online Advanced come with the ability to reclassify transactions. Depending on your version, you can locate it under ‘Accountant Tools’ or ‘Settings’.

Which 3 Elements of a Transaction Can Be Reclassified in QBO?

In QuickBooks Online, you may usually reclassify the account, class, customer, and job related to a transaction.

What Does a Transaction’s Reclassification Mean?

To make sure a transaction represents the right financial category or segment, reclassifying it entails altering its accounting attributes, such as the account, class, customer, or job.

What are the correct steps to access and begin reclassifying Transactions in QBO?

The correct steps would involve navigating to the ‘Reclassify Transactions’ tool within your QuickBooks Online Accountant or QuickBooks Online Advanced account and selecting the transactions to reclassify.

Will the Reclassification Process Work with the Accounts Payable?

Unfortunately, the answer is No, the reclassification process does not support any change for the accounts payable or accounts receivable i.e, invoices and bills. The users will also be unable to change the type or record of transactions that are interrelated.

Can the Reclassify Transaction Tool Work for the Firm’s Transaction?

Yes, you can use the tool for each firm’s transactions in the QuickBooks Online Accountant Version.

Here’s how to do the same:

  • Remain on the firm’s page.
  • Next, go and choose the “Accountant Tools” option from the page.
  • Once done, hit on the “Reclassify Transactions” to end.

Is there a need to Follow up on the can and Cannot for the Movement of Transactions?

You are advised to browse all the respective information of can and cannot before carrying out the movement of any transactions. It will help the user to get clarity and skip common mistakes.

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