146: Reconciling Credit Cards In QuickBooks Whether You Are Starting A Business Or Side Hustle
146: Reconciling Credit Cards In QuickBooks Whether You Are Starting A Business Or Side Hustle, A Solopreneur, Entrepreneur, Mompreneur, Freelancer, Bookkeeper, Virtual Assistant, Business Owner, Or Self-Employed
Reconciling credit card transactions in either QuickBooks Desktop or QuickBooks Online is easy to do as long as you have the correct procedures in place to do it accurately. Over the years, I have seen many different ways businesses have recorded their transactions and how quickly their financial reports can reflect inaccurate data. When I walk clients through the correct way to record these credit card transactions, they are amazed at how simple and accurate it can be. In today’s episode, I am going to walk you through one of the best processes for recording your credit card transactions. It makes reconciling these accounts simple and accurate so that you can ensure you have all your transactions accounted for. Whether you are starting a business or side hustle, you’re a self-employed individual, a solopreneur, entrepreneur, mompreneur, freelancer, small business owner, a remote, virtual, online, or in-house bookkeeper, or a virtual assistant or VA; if you are tired of struggling to record your credit card transactions and you are looking for a solution to make it simple and accurate, this episode is perfect for you…
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Show Notes:
Reconciling credit card transactions in either QuickBooks Desktop or QuickBooks Online is easy to do as long as you have the correct procedures in place to do it accurately. Over the years, I have seen many different ways businesses have recorded their transactions and how quickly their financial reports can reflect inaccurate data. When I walk clients through the correct way to record these credit card transactions, they are amazed at how simple and accurate it can be. In today’s episode, I am going to walk you through one of the best processes for recording your credit card transactions. It makes reconciling these accounts simple and accurate so that you can ensure you have all your transactions accounted for. Whether you are starting a business or side hustle, you’re a self-employed individual, a solopreneur, entrepreneur, mompreneur, freelancer, small business owner, a remote, virtual, online, or in-house bookkeeper, or a virtual assistant or VA; if you are tired of struggling to record your credit card transactions and you are looking for a solution to make it simple and accurate, this episode is perfect for you…
Welcome Back…Recording and reconciling your credit card accounts is the best way to ensure you are reflecting each of your credit card transactions accurately in your financial statements. If you are currently unsure if the way you are recording your transactions is correct…or if you are just holding off recording these transactions because you are unsure how to do it and you don’t want to mess up your books, today’s episode will help you create a process so that you can feel confident in the way you are recording your credit card transactions. If you don’t record any of your credit card transactions, your financial reports will be inaccurate since you will be missing this valuable information. Today I will go over the process for recording credit card transactions that works best for most businesses. Not only will you walk away with how to record your transactions correctly, but you will also learn the best way to record payments to your credit card account and how to reconcile your credit card statement to ensure you are accounting for every single transaction…and some tips on how to keep your credit card receipts.
First, I will start by mentioning how I often see credit card transactions being entered. I have seen many times where the only way credit card transactions get recorded is when there is a payment made to the credit card account. I will say that if you pay off your credit card balance in full, this option may work for you, but if you consistently have a balance due on your credit card account, which many businesses do, then this process starts to get difficult to track which expenses are being paid and how and when to record them. Let’s take, for example; you have a credit card payment of $500 you are making. All of the $500 was from purchases made on your current statement, and this will pay off your credit card balance. In this situation, you know exactly what is making up the $500 that you are paying by looking at the credit card statement. It may be office supplies, telephone expenses, etc., but you know exactly how to categorize each dollar of that $500 payment. For the next example, let’s say you are making a payment of $500, but in this scenario, you have a prior balance of $1000 already on your account, and this month’s transactions equal a total of $200. In this case, you would need to go back to your prior statements to see where the $500 of expenses came from so that you can categorize them correctly…and then, what about the $200 worth of new charges? How do you categorize these? This is where it gets really complicated, and that’s exactly why I want to share a better process for you to record your credit card transactions in either QuickBooks Desktop or QuickBooks Online.
You will want to make sure that you have the appropriate credit card account or accounts set up in your chart of accounts. I recommend you set up a separate credit card account for each of the credit card statements you receive. You can view your chart of accounts by “type” and see if you have any credit card accounts set up. If you don’t already have your credit card set up in your chart of accounts, you will need to add it. When you add this new account, make sure that you name your account with something you will be able to recognize…especially if you have more than one credit card account. I recommend adding the last four digits of your credit card to the name, such as Visa Credit Card 1234. You will also want to ensure you have this new credit card account set up as a “credit card” type. You will see this as an option when you are setting up your account.
Now there are a couple of options for recording your credit card transactions depending on if you are using the bank feeds in QuickBooks or not, but I recommend you record each of your transactions separately. So, the next step would be to record each and every credit card transaction into your QuickBooks file. If you are using QuickBooks Desktop, you can do this by clicking on the Banking tab on your top menu bar and selecting enter credit card charges. If you are using QuickBooks Online, you will click on the + New button and select Expense. For each of these options, you will select the credit card account that the transaction is coming from and then proceed to enter the payee, date, amount, etc. You can also upload a copy of your receipt if you would like and then save and close your entry. When you record transactions like this, you will be increasing the amount you owe on your credit card account. One of the main benefits of recording your credit card transactions this way is that you are able to look back at each vendor to see your purchase history.
If you are using bank feeds in QuickBooks and you have your transaction entered already, you will be able to simply go to your bank feeds and match the incoming transactions to the transactions you have entered in that credit card account.
When you are recording a payment to your credit card account, you would go to your checking account or whichever account you are making the payment from and enter your information to make the payment making sure that you select your credit card account as the category or account you are recording it as. When you do this, it will reduce the balance you have accumulated in QuickBooks, and your balance sheet will reflect the correct balance on your credit card account. There is no need to struggle to try to find out which expenses you are paying for this specific payment as you have already recorded each of the individual transactions, and now you are simply just reducing the balance you owe by making the payment and recording it as your credit card account for the category or account.
When you receive your credit card statement, I highly recommend you go through each transaction and make sure you have a receipt for each and every transaction so that you have all the proof you need if there is ever an audit or have a situation where you are looking for a receipt for a return. You could match the receipts to the statement and keep those receipts with the statement if you would like, or make sure you have uploaded a copy of each receipt in your QuickBooks file.
After you have matched all the receipts and you know you have all the credit card transactions entered in QuickBooks, it is time to reconcile your credit card statement. Just like when you reconcile your bank statement, you will go to the reconcile screen, and you will check off each of the credit card transactions that show up on your credit card statement, including any payments or credits that you may have encountered during that month’s activity. Once you have everything checked off, your reconciliation should be in balance, and you are all set. If you happen to find a transaction that hasn’t been recorded yet, you can simply add that transaction at that time and continue to finish reconciling your credit card statement.
Once you have reconciled your credit card statement, you know that you have accurately recorded all your transactions and payments, and your balance sheet and income statement should reflect these accurate amounts.
One last thing I would like to mention quickly is the difference between using your credit card and using a debit card if you have one. When you use your credit card, you are increasing the balance you have to pay back on your credit card – or your liability to that credit card company. When you use a debit card, it is subtracting the amounts for each transaction from the account you have your debit card with. Most likely, it is your checking account. Recording these transactions will be done differently than recording your credit card transactions, so be sure that you understand the difference and how they are reflected in your financial statements.
When you implement this process for recording and reconciling your credit card transactions, you’ll find it will take less time, and you can be confident that your financial statements reflect accurate credit card information. Creating processes like this helps build confidence and saves you time. I work with business owners and accountants all the time to help relieve the stress and overwhelm they feel from the pressure of owning a business, deadlines, and the workload they face every day. If you are struggling with this as well and would like some help developing a solution, help strengthen and maintain your emotional health, increase your well-being, create a more positive, happy, and joyful life, set and achieve your goals, and manage your relationships, I’d love for you to join me in my Balance Life Coaching program so that you can live a more purposeful life. Each week we meet privately, one-on-one, and you get to bring whatever is on your mind on any given week. It could be your highest priority you want to work on, whatever you want more of in your life, or if there is something that is weighing on you heavily that you need coaching on, and we’ll work through it together. Having a certified life coach like me helping you through all of this allows you to feel so seen and cared for, and the results are amazing. Everyone benefits when they work with a certified life coach. After every call, you feel energized, and you know exactly what to do for the week to come, and relief knowing we will meet again the next week to go over anything that comes up after the call. You’ll gain self-awareness while you take each step toward your goals. This is a new coaching program, and I am opening it with special pricing for a limited time. The investment is an easy yes for you. I’ve set this program up in the most supportive way for you. If you are ready to join the Balance Life Coaching program, you can go to www.FinancialAdventure.com and click on the work with me button. You’ll see the link to join as well as additional information about the program. Sign up now. There are limited spots available for this program due to the one-on-one aspect, and it will sell out. If the payment link is gone, you can get on my waitlist to join the program when additional spots are available. I help people get results and live a more joyful life. I coach everybody on everything. Everyone has something they want in their lives, and I help them get it. I know this is something you’ve been waiting for. I’ve been asked by many of my listeners to create this exact program, I made the final touches on the program, and it is now available for you. I know how much you wanted it. The faster you get access to the program, the quicker you’ll see the possibilities available to you. I also have a risk-free guarantee. I believe so strongly that everyone benefits from coaching that when you sign up today, if for any reason you are not satisfied with your first session, you can send us an email, and we’ll refund you immediately. Are you ready to enjoy your life now, or do you want to wait? Make this investment for yourself. Take the journey with me…make it happen for yourself. Ask yourself why do you need this program in your life right now. Are you ready to make bigger, bolder, stronger life goals? I’m looking forward to meeting with you soon and digging deeper to see where you currently are in your business or career and start creating actionable steps so that you can reach your vision and goals for the future, not only in your business or career but also in your personal life. I’m ready to work with you, see all of your successes, and watch you thrive in your business or career while creating your best work-life balance. I’ll post links to this and other valuable resources for business owners and accountants where you are listening to this podcast.
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