73: Managing Your Bank Feeds And Bank Rules In QuickBooks Whether You Are Starting A Business

73: Managing Your Bank Feeds And Bank Rules In QuickBooks Whether You Are Starting A Business, You Are Self-Employed, A Solopreneur, Entrepreneur, Small Business Owner, Remote Virtual Online Bookkeeper, Virtual Assistant Or VA

As a business owner, you are always looking for ways to save time in your business, but you want to make sure you are not cutting corners in one place and causing additional problems down the road. This holds true when you are doing your bookkeeping as well. I always tell my clients when they are setting up their bookkeeping systems to make sure that they are capturing information that will be helpful for them when it comes time to prepare their tax returns. But tax compliance shouldn’t be your only concern when you are doing your bookkeeping. If there are certain items you want to track in your bookkeeping, you need to set those processes up in the beginning so that you can see the results at the end of the month, quarter or year. Remember the saying garbage in is garbage out? This is true in your bookkeeping as well. When you are utilizing a computerized software system to track your bookkeeping, I’m sure you’ve noticed how easy it is to have your banking transactions automatically feed into your bookkeeping system. There are also ways that you can have them automatically categorized for you by using bank rules. In theory, this is a great system, but it can cause problems in your bookkeeping if you are not careful about how everything is set up from the beginning. In today’s podcast episode, I am going over what bank feeds and bank rules are and how to ensure you have everything set up appropriately so that you can have accurate financial statements which allow you to make sound business decisions. It doesn’t matter if you are just getting started with your business, you are a self-employed individual, a solopreneur, entrepreneur, small business owner, a remote, virtual, online or in-house bookkeeper, or a virtual assistant or VA, you want to make sure you are utilizing the processes available to you in a way that you are truly saving time and not creating another task that will take even more time to straighten out in the end. I’ve seen how easily this can happen to business owners when they think they have everything recorded correctly only to find that their financial statements are a mess, and their tax preparer won’t prepare their return. I’ve had lots of projects like this come through my business just in the last month, so I want to help you to avoid this costly mistake. Listen in, as I walk you through steps you can take today to ensure your bookkeeping is on the right track. It doesn’t matter if you are using a computerized software system like QuickBooks, Xero, Wave or FreshBooks for your business finances, or if you are doing your bookkeeping manually with an Excel spreadsheet or even a Google Document, this episode will be helpful for you…

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Show Notes:

Welcome Back…I wanted to take some time today to talk to you about how to manage your bank feeds as well as your bank rules. These options are normally available to you if you are using a computerized software system for your bookkeeping, but in today’s episode, I will be referring to QuickBooks and QuickBooks Online specifically. Much of what I say will also relate to other computerized software systems, so make sure you follow the tips to manage your bookkeeping system whether you are using QuickBooks or another computerized software system.

For a quick introduction, when you use a computerized software system for your bookkeeping, you normally have an option to link your bank account to your bookkeeping software system so that you don’t need to manually enter each transaction. This is indeed a time saver, but you need to know that even though these transactions don’t need to be manually entered, you still need to take the time to record them properly. In a typical situation, your bank will bring in your transactions and you will see them in a download area for your review. In QuickBooks, you can look in your banking tab to see your bank accounts. You can then select which bank account you want to view, and you will see all the transactions that have been downloaded and are ready for review. You can also view the transactions that have been downloaded and have been categorized or excluded in this area by selecting the appropriate tab in the banking area.

Each transaction that has been downloaded and is in your for review area will need to be reviewed and added to your books. If you have already recorded the transaction, you will have the option to match the downloaded transaction to your original entry. For example, you may have already entered a check for your utilities for the month. When this check clears the bank, it will be included in your for review area and you can then match this transaction to the check that you already entered in your books. This is the first area that I want to stress the importance on today. When the transactions are downloaded, there is normally a category that is suggested for you to use when you need to add the transaction to your books. Don’t just assume that this category is correct. Make sure you actually take time to review the transaction and if the category that is suggested for you is incorrect, you have the option to change it to the correct account or category. All you need to do is click on the transaction and you will have the option to categorize it to the correct category or account. You also have the option to split the transaction into multiple categories or accounts as well. This is helpful for whenever you have a transaction that involves multiple items. Let’s say for example, you made a purchase at an office supply store where you bought office supplies as well as a new telephone. You can easily categorize the total for your office supplies as office expense and your new phone could be categorized as telephone expense. The total of both split categories will equal the total of the transaction. This is also where you would split the principal and interest portions of a loan payment that you pay so that your loan balance and interest expense would always reflect the correct amounts.

Once you see how the bank feeds are coming into your bookkeeping software, you can take being efficient with your bookkeeping a step further. You can set up bank rules so that you can have QuickBooks automatically pre-fill information for you in the transactions that have been downloaded into your bookkeeping software. When you set up bank rules, you have the option to set up the rule so that QuickBooks will suggest the information you set up in the rule, or you can also have the bank rule automatically record the transaction into your books. To set up a rule, you would click on the downloaded transaction just like I mentioned previously when you want to change the category or account and then you will see the option to create a rule. When you click on create a rule, you are able to name the rule as well as create the rule around that specific transaction. You can specify the transaction type, category, payee and select if you’d like this rule to automatically confirm the transaction. Make sure that the information you provide in this are is accurate. If you like the thought of having QuickBooks automatically know which category and vendor you want this transaction to go into, but don’t quite feel comfortable with having the transaction automatically confirmed, you don’t need to select the Auto-Add option. It will still save you time by having recurring transactions automatically populated with the correct information.

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