In part one, we covered the ability to import and manage transactions from financial institutions such as banks and credit card companies. Also, covered were the use of other account tools such as:
* How to categorize transactions and mark them as billable.
* Add to the account register and matching them to related transactions or the transfer to a different account.
* The use of Batch actions to process related groups.
Last month’s features included Banking and the ability to work with related transactions as groups.
Included in part 2, will be the process of setting-up rules that will automatically classify your transactions as you receive them from your bank as well as an overview of the Chart of Accounts.
As previously discussed, QuickBooks has the ability to guess how your transactions should be categorized. The “guess” may not always be correct, so you will have the option to change any incorrect information. The program also allows the option to memorize recurring transactions that happen on a regular basis. This option will save you time and improve accuracy. Bank Rules is another way QuickBooks uses automation to help minimize keystrokes. It will scan incoming items and classify them for you based on your input. When you regularly import transactions that share specific attributes, this can be very helpful.
To see how it works, click on Banking in the navigation toolbar, next click on Bank Rules. After you have created your own rule(s), you will see them in the grid on this screen. Now, in the upper right corner, click New Rule.
Here you will tell QuickBooks (see example below) that when a specific condition is met, that specified actions should be taken: assign a Transaction type, Payee, and/or Category. You can also have the transaction automatically added to your books.
You can create Bank Rules in QuickBooks Online that will automatically assign a Transaction type, Payee, and Category to imported items that meet specific conditions.
This portion can be a bit confusing, so it may be a good idea to seek professional help with this task if you have questions. If your business processes a lot of transactions, Bank Rules can be very helpful. However, be sure the rules are setup correctly. If the rules are set up incorrectly, it could take many hours to correct the errors.
Account Registers, Chart of Accounts
In this column, as in Bank Rules, you have been working with transactions that come into QuickBooks directly from your financial institutions, before they show up in your account registers. Once you have viewed or modified a transaction listed under For Review on the Banking page, when you click on Add, you will send it to that account register. You may notice that the QuickBooks registers look similar to those paper registers used for recording checks and deposits in the back of your checkbook.
There are two ways to see your register in QuickBooks. One way is on the Banking page to the right , a link labeled Go to Register. When you click on this link it will take you to the page for the currently active account. The second way to open your account registers is from the Chart of Accounts.
Although the chart of accounts and the banking pages are the heart of your accounting system, you will never deal with or modify these elements of financial management, which contain a comprehensive list of your company’s accounts divided into:
* Equity (along with sub-accounts)
Transactions are assigned to the appropriate account and recorded in the General Ledger. Which, just like the Chart of Accounts is an element of accounting that you don’t have to deal with in QuickBooks.
View your company’s Chart of Accounts in QuickBooks Online, but we recommend you don’t modify it.
When you click on the Accounting tab in the navigation toolbar, then Chart of Accounts, you’ll see your individual bank accounts listed here, along with a View Register link.
A Critical Concept
Although you won’t have to deal with the Chart of Accounts, it’s very important that you understand how to manage downloaded transactions as you move them into your bank accounts in QuickBooks. Mistakes here can trigger errors in reports and taxes, as well as create general confusion.
Don’t get started in the wrong direction, at Summit CPA we offer QuickBooks consultation. If you would like further assistance with your bookkeeping needs, contact our office at 866-497-9761 to schedule an appointment with our advisors.