As I work with many small business owners and their bookkeepers, there is one particular task that seems to cause more issues than any other – properly recording credit card transactions in QuickBooks.
Most people tend to make the mistake of recording credit card charges at the time when the credit card is being paid, recording the total amount paid out for the credit card against the business checking account on which the payment was made.
What if you are only making a partial payment on the credit card? At this point it becomes trickier to enter these charges accurately. Following is a better method for recording your charges and payments on your credit card accounts.
In QuickBooks, you should have a credit card account set up for each of your business credit cards as part of your Chart of Accounts. When a charge is made on your business credit card, this charge should be entered into that register with the date and amount of the charge, categorizing the transaction with the proper expense category for each entry. Then, when a payment or transfer is made from your business checking account to your credit card company, you will use the credit card account from your Chart of Accounts as the category for the transaction from your checking account. In this way, the charges will be reflected as part of the financial reporting for the current month rather than recording all of the transactions at the time that the credit card is paid.
One last step that should be taken each month is to reconcile your credit card accounts at the time that the monthly statement is available in the same way that you reconcile your business bank accounts. In doing so, the credit card register in QuickBooks will now reflect the proper balance to match your credit card records.
Our RAD staff are experts at setting up these credit card accounts and managing them appropriately. We can assist you with these and any other bookkeeping tasks that are taking up your valuable time. You deserve the peace of mind that comes with knowing your taxes and bookkeeping are handled confidentially, securely and accurately – empowering you to better manage your business.
With offices in Williston and Rutland Vermont, Davis & Hodgdon Associates CPAs has been assisting Vermont’s residents and entrepreneurs for more than 30 years. Call our office at 802.878.1963 (Williston) or 802.775.7132 (Rutland) today.
Written by Martha Leonard, RAD Bookkeeper and QuickBooks Online Certified ProAdvisor