Over the years I have seen many methods of recording credit card transactions. Some of the methods technically work, but they leave something out whether it is accurate dating of the transactions, detail of the individual transactions or the ability to reconcile the account to the statement. Using the method QuickBooks designed for credit cards addresses all of these shortcomings.
Set the Credit Card Up in the Chart of Accounts
I have seen a lot of businesses just make the credit card a vendor, but that method leads to some of the shortcomings mentioned above. Set yourself up for success and create a new item in the Chart of Accounts. In QBO click the gear icon then Chart of Accounts. Click New in the upper right corner of the new screen. Then as shown above, for Account Type select Credit Card, give it a unique name (including the last four digits of the account number), and then select Save and Close. In QuickBooks Desktop products click Company then Chart of Accounts. In the lower-left of the new screen click Account and then New. Choose Credit Card as Account Type and click Continue. Name the account and then click Save and Close.
Enter Transaction Detail
If you just enter the lump sum due to the credit card company you miss out on all the detail of the individual transactions. You will not know how much you spent with each vendor or have an accurate expense total per month since most credit card statements span calendar months. To enter the individual detail of each transaction in QBO click the “+NEW” button and then Expense. For Payment Account, select the credit card account created in the above step. For Category select the expense account that pertains to the specific transaction (e.g., office supplies or meals). In QuickBooks Desktop products click Banking in the menu bar and then Enter Credit Card Charges. As you enter each transaction use the date of the transaction and not the statement ending date.
Reconcile
Get started by click the gear icon in the upper right of QBO. Then click Reconcile. From there you'll see a screen like the above image. Select the credit card account you want to reconcile from the dropdown box. Ensure the beginning balance matches the statement and enter in the ending or new balance. Enter the ending date off the statement, which may not be the last day of the month, and click Start Reconciling.
Compare the transactions on the next screen to the PDF statement checking each one off as you go. The goal is to get a $0 difference between QuickBooks and the bank statement.
If you need help reconciling, setting up a new credit card or one that was never entered properly into QuickBooks drop us a line.
How to Record Credit Card Payments in QuickBooks
When you record a credit card payment for your business, you are keeping track of all your business financial expenses and maintain good report as well. Its importance can’t be overemphasized, and this article will help you with the steps you need to follow to achieve it.
How to Record a Credit Card Payment in Quickbooks
As for Quickbooks credit card payment how to record, please follow the steps below!
- Enter your QuickBooks and choose "banking" from the menu bar on the left.
- From the top side of the screen, click on banking and select the bank account you want to use.
- Select the desired credit card transaction from the options and click on the radio button to change it from add to transfer.
- Then proceed to click on account and select "other account" from the drop-down list. For instance, choose where the payment came if you are editing a transfer on the credit card account.
- Click on transfer and select the other account to display the transaction details.
- Click on the "recognize button and find the desired transaction".
- From the action column, click on "match" and save.
If you have desire for how to record commission payments in Quickbooks, it will help you complete as well.
How to Apply for Credit from an Overpayment
In instances where your customer made an overpayment to your account, QuickBooks automatically set up credit. It is left for you choose how you want to apply the credit and below are some ways you can do that in QuickBooks.
- Apply the credit to an existing invoice; you can do that by following the instructions below.
- Enter your QuickBooks and find the invoice to want to apply the credit to.
- Then click on receive payment once you have found it.
- From the outstanding transactions menu, choose all the invoices you wish to apply the credit to and then proceed to select the credit as well.
- Click on save then close.
- Apply the credit to a new invoice.
- Go to preference and turn the "automatically apply credits" on.
- Access the gear icon and choose "account and settings".
- Click on the advanced tab and then select edit (pencil icon) under the automation section.
- Tick the box beside "automatically apply credits".
- Click on save and then close.
- Then proceed to create the invoice and the credits will be applied automatically.
- Apply credit as a tip
- Follow the instructions as mentioned above to create your invoice and add the tip item.
- If you don’t have a tip revenue income account, then create one.
- This will automatically apply the credit as a tip once you save the invoice.
Best Alternatives to QuickBooks: FreshBooks
FreshBooks is an awarding winning accounting software developed with excellent cloud accounting app. Suitable for small business and freelancer and a great customer support system to make your integration smooth and easy. It is available in about five languages and is supported by many devices; so you rest assured of its function irrespective of where you are.
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Some of its notable features include,
- Invoice customization.
- Ability to accept payments from credit cards.
That and many more is what made FreshBooks one of the best alternatives to QuickBooks in the marketplace.
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