Many new QuickBooks Online users are disappointed when they realize that banking transactions don’t automatically get recorded in QBO. They become even more overwhelmed when they actually starting working with the banking transactions. However, this process does not have to be an overwhelming headache and I am here to help!
The most recommended process is to work items in the following order;
Step 1 – Money Out (spend) transactions
Step 2 – Money In (received) transactions
Step 3 – Transfers between accounts and credit card payments
Step 1: Money Out transactions
“Money Out” banking transactions include expenses and amounts in the “Spent” column of the Banking Center.
You can work with Money Out banking transactions in QBO in the following ways:
Add
Split
Batch Actions
Match
ADD – HOW TO ADD MONEY OUT BANKING TRANSACTIONS IN THE QBO BANKING CENTER
When you “add” transactions from the Banking Center, they are entered directly to QuickBooks.
Let’s work through an example using the QuickBooks Online Sample Company. Click here to access the QuickBooks Online Sample Company.
To add transactions, go to the Left Navigation Bar and click Banking.
The Banking Center window will open.
Click the “For Review” tab to add transactions.
Click on the Checking account to select it.
Click a transaction to view its details. In this example, let’s click on A Rental for $1200.
The transaction will expand to show you more details.
It is important to verify that each transaction has a Name (vendor/payee) and Account (Category from the chart of accounts list). Memos (descriptions) are always helpful.
Let’s add the vendor name and account category. We’ll add Ellis Equipment Rental as the vendor name and Equipment Rental as the account category.
Click Add to add the transaction to QuickBooks Online.
SPLIT – HOW TO ADD SPLIT BANKING TRANSACTIONS IN THE QBO BANKING CENTER
What if the expense you want to add needs more than one account category? Let’s go through an example with another transaction.
Still working with the Checking account – scroll down to the 08/06/2018 transaction and click the “Hicks Hardware” transaction to view its details. The transaction window will open to show you more details.
Click Split to open the split transaction window.
From the split transaction window (as shown in the image below), enter the following:
The vendor name (Hicks Hardware)
The account categories (We are splitting the transaction between two account categories – Office Expense and Supplies)
The amounts for each account category (We are entering the corresponding amounts for each account category)
Click Save and add to add the transaction to QuickBooks.
BATCH ACTIONS – HOW TO ADD MULTIPLE MONEY OUT BANKING TRANSACTIONS IN THE QBO BANKING CENTER
A great way to save time is to use Batch actions in the Banking Center. Rather than clicking Add on every transaction, you can add them in Batch.
Make sure that you have added a payee and account category to each transaction.
Click on the boxes next to the transactions you want to add (A Rental).
Click Batch Actions then click Accept Selected.
MATCH – HOW TO MATCH MONEY OUT BANKING TRANSACTIONS IN THE QBO BANKING CENTER
If you have already manually entered banking transactions in QBO (like Checks or vendor Bill Payments) and then download them from your bank, you will see that QBO will show that the downloaded transactions are marked at “Matched” in QBO.
Don’t worry, these transactions are generally not duplicated, QBO already knows that they are entered in QuickBooks. Simply click on “Match” on the right to accept these transactions.
Expert tip: Pay careful attention to ensure that you enter transactions in QuickBooks with the correct date and amount. Sometimes transactions do not match because of incorrect dates and amounts.
Expert tip: You can also use Batch action to add multiple matched transactions at the same time.
Step 1: Money In transactions
“Money In” transactions in QuickBooks Online are amounts received or deposited. Amounts received are listed under the “Received” column in the banking center.
As a general practice, Money In banking transactions in QBO should generally be Matched. Let’s go over this concept.
MATCH – HOW TO MATCH MONEY IN BANKING TRANSACTIONS IN THE QBO BANKING CENTER
As I mentioned, it is best to match most Money In transactions into QuickBooks – especially if you invoice customers. Depending on your workflow and specific business needs, you may match Money In transactions in two ways (Method #1 or Method #2).
MONEY IN METHOD #1
With this method, you will enter a customer invoice, receive payment, record a bank deposit and THEN Match the bank deposit to the corresponding transaction in the Banking Center.
After you enter the invoice, customer payment, and deposit, you will Match the deposit in the Banking Center, as shown below:
Click “Match” on the right to match the transactions (or use Batch actions).
MONEY IN METHOD #2
With this method, you will enter a customer invoice in QBO and THEN find a Match to the corresponding transaction in the Banking Center.
LET’S GO OVER AN EXAMPLE:
Let’s assume that we entered two invoices in QuickBooks for $108 and $300.
Let’s also assume that we received one payment for $408 dated 8/23/2018, as shown below.
Click on the transactions to view its details. Then click Match.
The Match transaction window opens. Find the transactions that make up the deposit received and click to select them.
Scroll to the bottom and make sure that the difference is zero.
Click Save. The transaction is added to QuickBooks.
Which method do you prefer? I like Method #2 because it requires less data entry. Others like Method #1 because you can be more proactive about tracking Accounts Receivable. Both methods are great either way so pick the method that best suits your specific business needs.
ADD – HOW TO ADD MISCELLANEOUS MONEY IN TRANSACTIONS
You may have transactions like credit card credits or refunds from vendors. We call these “Miscellaneous Deposits”. Let’s go through an example.
Let’s assume that you received a credit card credit from Amazon for $50.00.
First, you should know that credit card credits and refunds from vendors are recorded to the account category originally used to record the purchase.
In this case, the original purchase from Amazon was recorded to Supplies.
Click the transaction to view its details.
Enter the vendor name (Amazon)
Enter the account category originally used to record this purchase (Supplies)
Click “Add”
Step 3 – Working with funds transfers
Did you know that you use Transfers in the QuickBooks Online Banking Center to record transfers between bank accounts and also to record credit card payments? I’ll show you the basics:
Let’s work through an example:
Let’s assume that you made a $200 transfer from your checking account to your savings account.
Looking at the savings account, we can see that the money was received into the savings account.
So, what do you do now? You record the transfer.
Click the transaction and then select Transfer.
Since this amount was received into the Savings account we will select the Checking account as the account category.
Once you have selected the savings account, click Transfer (the green button on the right).
RECAP
Congratulations! If you’ve made it this far then I know that you are serious about mastering banking transactions and reconciling accounts in QuickBooks Online. I have shown you: