Welcome to the Fit Small Business QuickBooks Online training course.
In this lesson we're going to cover how to reconcile business credit card accounts
in QuickBooks Online. To follow along with me
login to your QuickBooks Online account now, or click the link below for a free
30-day trial of QuickBooks Online. You can also click this link to access our
full QuickBooks Online course and other helpful resources. Let's get started.
Similar to your personal credit card accounts, it is important that you
reconcile your business credit card accounts on a monthly basis.
Reconciling is the process of matching the transactions on your credit card
statement to what you have recorded in QuickBooks. Preparing business credit
card reconciliations on a regular basis, will help to ensure any discrepancies
between your records and the credit card company's are resolved in a
timely manner, and that timely notification of any fraudulent transactions take place.
So for example if you notice transactions listed on your credit card
statement that you did not authorize, you can notify the bank as soon as possible
so that they can investigate. In addition, reconciling your credit card transactions
in QuickBooks helps ensure every transaction is noted
in your books. This helps keep your financial
statements like profit and loss and balance sheet up to date. Click the links
below to learn more about the profit and loss and balance sheet reports. Before we
go into the reconciliation steps, be sure that you have your credit card statement
handy for the credit card that you want to reconcile. We will refer to the credit
card statement often during this process. Now let's go ahead and walk through the
steps to reconcile your business credit card account in QuickBooks Online.
From the home page go ahead and click on the gear icon located in the upper right
hand corner. And below the tools column the third option is reconcile.
So go ahead and click on that.
The first thing you want to do is select the account that you would actually like
to reconcile. So from the drop-down we want to go ahead and select the credit
card account that we want to go ahead and reconcile. One of the things that you
might see is a notification that your beginning balance of your account is off.
So what this means basically is since the last time you reconciled this
account there was an amount that had previously been reconciled that was
changed, and that could either be the dollar amount was changed or the date
was changed. So what's nice is you can actually click this link here that says
'we can help you fix it' and go ahead and follow the steps to fix that out of
balance before you start reconciling the current month. From your credit card
statement you want to go ahead and enter the ending balance that appears on that
statement, and also your ending statement date in this field here. Once you've done
that you can click the start reconciling button at the bottom. Now here is the new
and improved reconciliation tool that Intuit released about a couple of months
ago now. Alright so let's talk about some of the information that you will
see on this screen. The statement ending balance here: this is the amount that we
entered in the previous screen from the credit card statement. Be sure to double
check this amount because it will cause you to be out of balance if it is incorrect.
Your beginning balance here as we discussed earlier is basically your
ending balance from last month's credit card statement. This will automatically
be populated by QuickBooks for you. The cleared balance is going to change as
you start to reconcile items. So as you select your items in this screen that
you want to reconcile, this dollar amount will continue to change.
The charges dollar amount will increase as you select credit card charges from
the transaction section down below. And your payments as well will also change
as you select payments from the transaction section below. The difference
here is automatically calculated by QuickBooks, and it's the difference
between your statement balance and the cleared balance. Our goal is to get to a
difference of 0. Down in the transaction section it is separated by
charges, payments, and all transactions. So as you can see you can easily filter
between the type of transactions that you want to take a look at, or you can
look at all of them at one time. If you are new to reconciling, I recommend that
you reconcile the area with the least number of transactions first. Our goal is
to make sure that every charge and payment listed on the credit card
statement is marked as cleared in this reconciliation window. To mark an item
cleared you want to simply click on the radio button to the right of that item
in this final column. Let's start with our payments first. We've just got three
payments here, you can select them individually or you can go ahead and
just click the radio button at the top to mark them all as cleared if they
appear on your credit card statement. And it'll just confirm that you want to
select all when you do that so we'll say yes. So once you've selected your total
payments you want to verify that the total payments that you've cleared here
in this window matches what total payments add up to on your credit card statement.
So in this example our credit card statement has payments totaling $1,240, and the
items that we have marked as cleared in this reconciliation window also total
$1,240. So in this situation our payments do match and we can move on to charges.
However if your payments do not match, stay with me because I'm going to
share some troubleshooting tips in a few minutes on how to fix the out of balance.
So we'll go ahead and repeat the same steps for charges. And so with charges
you'll probably go one by one and select items here. So we'll go ahead and just
assume all of our items are on our statement and confirm that yes to select all.
And then again you want to make sure that the total amount of charges that
you have marked as cleared in QuickBooks, this $1,869.15
is in fact what appears on your statement for total charges. Once all
charges and payments match the credit card statement, you should have a
difference of 0 here which is our goal. Behind the scenes, QuickBooks will
mark all of the charges and payments that have been reconciled as cleared.
So we'll go ahead and click the finish now button to generate the credit card
reconciliation report which we'll take a look at next. Alright here is our
credit card reconciliation report. So the top section here is a summary of the
items that cleared for charges and for credit card payments. And then down below
is each individual item that cleared the credit card statement for this month.
Now I want to share with you a couple of tips when it comes to reconciling your
credit card accounts. Tip number one: it's important that you save all credit card
reconciliation reports for every credit card account. To do this you can create a
folder for each credit card account and keep these reports in the folder.
For more tips on how to organize key financial reports and
humans check out our small business bookkeeping guide. You can click
the link below to access this guide. Tip number two: credit card reconciliation
reports are one of the top five reports that auditors will request from you
during an audit. In my experience as an auditor, if you are not able to provide
these reports that audit may not go well for you. Now let's talk about
8 troubleshooting tips for reconciling credit card accounts in QuickBooks
Online. You want to go ahead and try some of these tips if you're having trouble
getting to the 0 difference. Tip number one: if possible narrow the search
down to transaction type. Figure out if you are out of balance with the charges
or with the payments. If you're out of balance for both charges and payments,
which is tip number two, tackle them separately. In other words balance your
charges first and then move on to your payments or vice versa.
Tip number three: look for the exact dollar amount that you are off.
For example if your difference is $50 then look for a transaction for this amount
on your credit card statement, and then look for this amount on the charges
section and the payments section of the reconcile window. Tip number four: triple
check the information that you entered from the credit card statement and that
would be your ending balance and the ending statement date. Remember, either
one of these -- if either piece of information is incorrect this will cause
you to have an out of balance. Tip number five: check to see if there are any
transactions in the reconcile window that you did not select. If the
transaction is on your credit card statement, then make sure the radio
button next to it is selected. Tip number six: if you do have a transaction on the
credit card statement that is not in QuickBooks, then you will need to add it
to QuickBooks. For a missing charge, enter it as you normally would.
In our how to manually enter business credit card transactions lesson
we walk you through step by step on how to enter credit card transactions in
QuickBooks. Click this link to access this video tutorial. If the missing
transaction is a payment, enter it as you normally would. In our how to enter
credit card payments lesson we walk you through step by step how to enter
credits into QuickBooks. Click this link to access this video tutorial.
Tip number seven: take a break. If you've been at it for a while and you need a break
clicking the finish later button will save the work you've done so that you
can easily pick up where you left off. Sometimes taking a breather and coming
back and help you spot what's causing the difference. And finally tip number
eight: while it might be tempting, I recommend that you don't click that
reconcile button until you have a difference of 0. The problem will not
go away. The difference will just carry over to the next month until you figure
it out. If you do happen to hit the reconcile button by accident and you've
not figured out the difference, QuickBooks will record the out of
balance amount in a miscellaneous expense account called 'unreconciled
discrepancies'. Of course, if we're talking a small amount, for example $5
or less, then it might be worth your while to move on. At the end of the day
you get to determine what amount you're comfortable with. Reconciling your credit
card accounts does not change your financial statements. However in the
credit card register, reconcile charges and payments will be marked with the
letter R as you can see here. Typically, once a credit card transaction is
reconciled you do not want to make any changes to it. This is primarily due to
the fact that you have balanced it with your credit card statement. You can edit
the account if you need to. So for example if you categorized something as
a registration fee, and it should have been office supplies, you can definitely
make that type of change without impacting your financial statements.
But you do not want to make any changes to the amount field
or the date field. If you do it can cause your financial statements to be
inaccurate and you will no longer be in balance with your credit card company.
That wraps up the lesson on how to reconcile business credit card accounts
in QuickBooks Online. To access our full QuickBooks Online course or any of the
other lessons in this series, click this link. You can also find a link below this
video for a free 30-day trial of QuickBooks Online. If you have feedback
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