How to Properly Set Up a Credit Card in QBO

| 2 min read

How to Properly Set Up a Credit Card in QBO

Credit card accounts are an essential part of any business. Paying vendors is easier and more secure than cash and many credit cards provide points or rewards. Having a credit card that is paid in a timely manner builds your business credit file and assists with obtaining financing. It is also a great way to ensure that all of your expenses are utilized as a tax write-off.

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Sometimes bookkeeping is overwhelming, particularly for a small business. Business owners are busy running the business and don't have time to make individual entries and balance the credit card statement every month. The problem is that without regular entries and reconciling, you run the risk of going over the credit limit, missing expenses, or forgetting to make the payment on time. This is where properly setting up a credit card in QuickBooks Online comes in handy.

First Things First

One of the best features of QBO is its ability to be connected with your various banking and credit card accounts. Transactions automatically download and all you have to do is assign vendor names and categorize them. To do this, complete the following steps:

  1. Hover over the gear icon in the top right-hand corner. Under Company, choose Chart of Accounts.
  2. Select New, then Credit Card and Continue.
  3. In the window type in all of the necessary information.
  4. Select Enter Opening Balance and enter this data. Then choose Save & Close.

Now we need to connect the account in QBO with your credit card account:

  1. Go to Banking in the left-hand margin of your QBO screen.
  2. Select Connect Account or Link Account.
  3. In the search box, type in the name of your credit card company.
  4. Hit Continue and enter your account sign-in and password information.
  5. Follow the prompts until you reach the Account Type dropdown. Locate the name you entered for the Chart of Accounts entry.
  6. Complete the section to indicate how far back you want the transactions to go.
  7. Select Connect. The system will connect with your bank and begin downloading expenses and payments from your credit card account.

Matching Transactions

For each expense, you will need to categorize where the money was spent. For example, a credit card charge used to purchase copy paper and pens is listed as Office Supplies. QBO allows you to create Rules for repeated items like a Home Depot charge that would always default to the Repairs & Maintenance category.

When your credit card account is connected to QBO, transactions automatically download. When you are ready to match, do the following:

  1. Choose Banking from the left-hand side menu.
  2. Click on the box that contains the credit card account you are working on.
  3. Ensure that the dates of transactions you want to match are downloaded. If they aren't, click on Update in the right-hand corner of the screen.
  4. Click on the For Review tab.
  5. Choose a category for each transaction. If the transaction is a payment and you paid it from your checking account which is also connected to QBO, you can match it to the payment in checking.

The next step is reconciling the credit card account which we covered in a separate article!


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