Because we have an awesome QuickBooks credit card sync, we’re all about using credit cards in QuickBooks the right way. If your credit cards aren’t set up correctly in QuickBooks (check out our post about downloading credit card transactions) not only can you not use our awesome QuickBooks app, but you can get some pretty messy financial reports. Here are some common mistakes people make when dealing with credit cards in QuickBooks, and the right way:
Mistake: Not Using the Credit Card Register
People are often confused as to how to deal with the credit card statement they get in the mail. They wonder how do I enter the expenses in QuickBooks? How do I pay my credit card bill? Because they’re confused, they enter the charges in a number of crazy ways (check out our previous blog: How NOT To Record Credit Card Transactions).
Basically, if you aren’t using the credit card register, you’re doin’ it wrong.
To correctly record a credit card charge, just click the ‘Enter Credit Card Charges’ button on the home page of QuickBooks!
Here it is in QuickBooks Pro:
And here it is in QuickBooks Online:
Mistake: Entering Check or Vendor Bill With One Lump Sum
I’ve seen a few people make this mistake: they pay the credit card bill by entering in one check or vendor bill, with one lump sum.
There are a few problems with this method, all dealing with lack of detail. First, this method doesn’t explain what the charges were for. In a year, if you went back and looked at this charge, you’d be totally confused – what exactly was this for, again?
Also, this makes job costing for these charges impossible. You could enter in a line item for each charge and assign it to a customer:job, but that seems awfully time consuming, doesn’t it?
Finally, the dates are skewed by this method of entering in credit card charges. It will seem like every item on the credit card statement was purchased the day you wrote the check – which is incorrect!
In order to get accuracy in your credit card charges, you should be using the credit card register and entering the charges as they happen (or let Online Banking do it for you!).
Mistake: Entering Debit Card Transactions as Credit Card Transactions
Sometimes people get confused about debit cards vs. credit cards in QuickBooks. After all, plastic is plastic! However, the nature of these charges are different. When you use a debit card, you’re pulling money directly out of your bank account. When you use a credit card, you’re borrowing money from the credit card company. So, these charges need to be recorded separately.
You should check out our more detailed blog about the correct way to enter debit card charges in QuickBooks, but here’s a brief overview of how you SHOULD be recording debit card transactions: open Write Check, and enter in the transaction. Then, where you see “Check Number,” just enter in “DEBIT,” “DBT,” or whatever you want to designate that it’s a debit card charge.
Note that the credit card register has nothing to do with the process of recording debit card charges.
Hopefully this provided a tad bit of insight about the common mistakes people make when dealing with credit cards in QuickBooks, and will help you avoid them yourself!
Do your employees use company cards? Let them categorize and edit their own credit card expenses with the credit card sync feature of our app! Also, check out all of the ways we integrate with QuickBooks!