Tracking Credit Card Expenses on QuickBooks
Mistakes & Solutions
Using QuickBooks should be efficient and straightforward. Until, well, it’s not. Amatics CPA Group can help!
Not using QB’s features properly limits the accuracy of your reporting. Entering credit card expenditures is a critical part of tracking your business activity. And doing it accurately helps business managers substantially.
These are a few common QB mistakes when it comes to credit cards . . . and how to fix them.
Mistake 1: Not setting up credit card accounts
You should set up each credit card as its own account, clearly labeled. Also, connect your credit cards to Online Banking. QuickBooks will then track your expenses (and payments) as they occur and your books will be perfectly synced with your credit cards. With the effective use of rules, this program will recognize the categories into which each expense falls based on where the purchase was made. For example, it will recognize US Postal Service as an item to be categorized under Shipping Expenses.
Mistake 2: Excluding vendor details
Set up vendors and use them when recording every expense to be as accurate as possible. Then you can easily hop into the Vendor Center to see invoices, bill payments and checks for that particular vendor.
You can also make use of memos which are excellent resources when referring back to your expenses. To use the travel example, if you travel frequently, use memos to enter where you went and the business purpose of the trip. This allows you to easily see these details later rather than referring back to the source document.
Mistake 3: Improper use of credits
This places your books in a lethal situation. If the credit is reconciled, you won’t be able to delete it without messing up your beginning balance for future reconciliations.
A payment on the credit card should always be made from the “Write Checks” or “Pay Bills” screen. Credits should only be used for refunds on items purchased and should point to the original expense category to offset the expense.
Mistake 4: Only entering payments
QuickBooks allows users to reconcile credit card accounts the same way they would reconcile a bank account. We highly recommend clients use this module.
We coach clients to enter each transaction, preferably, from the source receipt. When you receive your credit card statement, you will reconcile all charges entered to the statement. This method helps confirm that expenses are all entered accurately and ensures you have supporting documentation (receipts) for all of the charges that were made on the credit card.
To learn more about creating credit card accounts and recording credit card activity, get in touch with Amatics.