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.
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.
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:
Now we need to connect the account in QBO with your credit card account:
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:
The next step is reconciling the credit card account which we covered in a separate article!