QuickBooks Online Tutorial: Categorizing dowloaded transactions (2022)

hi folks in this video i'm going to show you how to download and categorize transactions from your banks and credit cards into quickbooks online if you already have a quickbooks online account and has already been set up and connected to your banks and you're sitting there in your categories screen you can just skip to the minutes and seconds below over here if you don't want to go through the setup let's assume that you're setting up quickbooks for the very first time and you're gonna set up a new account if you're gonna do that use my link it's on the description because it'll give you a 50 discount for 12 months and it will also support the channel any of these versions that you see on the screen simple start essentials plus advanced they all do the exact same thing we'll be doing in this video it doesn't matter which version of quickbooks you choose in order to take advantage of downloading transactions and categorizing those transactions everything in this video is available in all versions now these versions have different features that are sort of outside of the downloading transactions world you want to look into them and pick the one that most makes the most sense to you i'm going to pick advanced because that's my favorite one and i'm going to set up a free trial connect the banks and show you the process step by step from scratch in an attempt to make this look exactly like your screen so i'll enter my email my phone number and my password and click on sign up with email it will ask you several questions just go through the prompts and once you go through the prompts and set up your account your screen is going to look something like this we're going to go to the transactions tab on the left hand side and then banking so anything with the word transaction and banking is where we want to go once we click on banking so for the very first time quickbooks will ask me hey would you like to upload the transactions manually from an excel or csv file we'll talk about that in an entirely different video make sure you check the description for links to those type of things but we're going to do a direct connection into the bank so we're going to click on connect account it asks me which bank i'm banking with and then to enter your username and password to log in and authorize and it'll ask you which accounts would you like to connect to quickbooks to download those transactions you basically put a check mark on every one of those accounts that you want to connect and click on next it's going to ask you to go through all the accounts and select whether the account is a checking account a savings account a credit card a money market a trust you're going to go in and just select that and quickbooks will create all those accounts for you once you scroll all the way down to the bottom you're going to select from when when is the starting point in which you would like those transactions to start being downloaded some banks only allow you to do a couple of months others allow you to do a couple of years so you're going to be able to click on custom and you're gonna be able to click on the date picker and click back until you get to the point where you no longer will be able to go back that's the farthest oldest point that quickbooks and that bank connect with each other so you're going to pick the starting date for this example i'm going to pick 1 1 2021 and i'm going to bring in from the beginning of the year all the way to today then i'm going to hit on connect so once everything is done connecting i can click here it says remind me later because i don't want to deal with the pop-up screens and i'm going to show you how to classify or categorize those transactions that were downloaded from the banks and credit cards but the first thing i want to do is i'm going to go into the chart of accounts so i can show you the accounts that were created so i'm going to go into the accounting tab on the left hand side and then click on chart of accounts i can also click on the gear menu on the top right and click on chart of accounts under your company in the chart of accounts you're going to see all the accounts that were connected so you see one two three four checking accounts were connected and then we come down here and we have one two three four credit cards over connected that's just coincidence that happened to be four and four now for credit cards specifically i'm gonna put a link in the description to a different video where i talk about accounts there are sub accounts and usually with credit cards you see banks download each of the actual cards but they all belong to one bank statement or one credit card statement rather and you need to group them all together now check out a different video where i explained that concept for now i'm going to leave them as four separate cards but just so you know for context because all these balances look weird these are actually all sub-accounts of each other so the real balance of the account really should be all of them added together anyway so we're going to go and start organizing or categorizing all these transactions i'm going to click on the transactions tab on the left hand side and then i'm going to click on banking so the initial page of the banking screen you're gonna have a drop down menu here in the top that shows you all the different bank accounts that have been connected uh what the current bank balance is and the number of transactions that are pending to categorize you will also see the credit cards there if you want to reorder these in whatever way shape or form just click on reorder accounts and you can click and drag these after you click on the pencil button you can click and drag these and move them in whatever order you want so obviously you want to put maybe all the checking accounts uh in the top and and then we'll leave all the credit cards in the bottom so that's really up to you whatever order you want that's going to be you customizing your screen now under this drop down menu right below it you're gonna see these big cards here that represent each of the accounts i can click on the left arrow and i can go all the way to the first account or click on the right arrow a couple times to go all the way to the last account on the right if i want to hide these big cards because they do take a lot of space in the screen in my opinion we can click on this little carrot icon and hide that and we can still choose the account that we happen to be working on from the drop down menu which is my preferred choice so i'm going to select the very first account here checking account 8300 and i'm going to start categorizing these transactions now i happen to connect the banks around march 5th so that's why we get transactions being downloaded all the way to march 5th if i click on this little triangle and change the order you're going to see they're going to go all the way back to the 1st of january 2021 which is when i when i told it hey this is how old or how far back i want you to go with the download of course the longer you go the more transactions you're potentially going to see here now in order to gain a little bit more real state and have the screen be as comfortable as possible i'm gonna get rid of this left navigation bar that's really not that useful for categorizing i'm gonna click on this three little lines next to my company name and i will get rid of that that gives me a little bit more space i can hit control plus or control minus command plus command minus on a mac to zoom in and zoom out that screen so i can choose how i want that screen to look so i want to have that zoom to be optimal based on my screen size and based on my screen resolution i'm going to click refresh after i zoom in so the whole screen gets filled up again i'll collapse the left navigation bar again the next thing you want to look at is you get a couple of columns here we're going to have the date column that's going to be the transaction date we're going to have the description that's the cleaned up description we'll talk about that in a second then we have the amount which is represented in a negative for an expense or a positive for a deposit and then we have assigned to which is quickbooks guessing what category in your chart of accounts that category should be categorized too in some cases quickbooks does a great job at guessing in some cases to do a horrible job and this is why you have to be really really careful so let's start with the first one here's a payment to best buy for 195 if that's best buy the store i went to the store to buy something that's probably going to be office supplies or office equipment or something like that so as long as it is a business expense and it's something like office supplies and software that is the right category at this point i could just click confirm and move forward there's a little bit of an issue with that and i'll show you in a second i'm gonna go ahead and click on confirm and that's gonna confirm the transaction now i don't like doing that i skipped a step and i'm showing you on purpose because this is the way the screen will look like if you are doing this for the very first time i'm going to click on the magnifying glass on the top right and i'm going to click on the most recent transaction i created which is this expense account for 195 i'm going to click on that and you're going to see the screen the entire screen show up you're going to see that it's very obvious that this is best buy in the description you get to see a whole bunch of information and in here we can discern that it is best buy because best buy is in there however notice at the top right where payee who did you pay that's empty in quickbooks is a best practice to create those payees create those vendors because you want to be able to run an expenses by vendor report and you also want to be able to program these expenses so they automatically get categorized it's a lot harder when you have missing payees or missing vendors so i'm just going to add it on this screen i'm going to click on add new and create a vendor called best buy now of course the the bank is going to download a whole bunch of data and you're going to have to discern from that data what is the actual payee name and put stuff that makes sense to you you also don't want to clutter that vendor list with a bunch of junk so we're going to keep that best buy and this needs to be a vendor just a quick note when you're creating payees in the banking you should make everybody a vendor unless you know for a fact they are a customer and for the most part you're not going to be paying employees through banking employing goes through payroll anyway so for the most part 99 of times when you're creating payees it would be a vendor so i'm going to click on save and then click on save and close so i'm fixing that transaction by going back and adding the payee name now the problem with this is quickbooks in this screen right here what you're seeing here doesn't make it very obvious on where you're supposed to put the payee name if instead of clicking confirm on the right hand side i click on the transaction the transaction expands and now it gives me a whole bunch of options he gives me categorize that's the most common thing we're going to be doing find match and we're not going to be covering matching on this video i'm actually going to cover matching in a special detail advanced webinar i'll put links to that below that's going to go live or you can ask questions and you can also watch the recording later matching is an entire world which has to do with matching your current bills with the banking or matching the current invoices with the process coming in the bank we're going to be focusing on categorizing expenses and income that's not being matched invoices on this video because matching again we can have to slow things down and see more context and see the link below in the description if you're interested in learning that stuff in a more advanced type of webinar it is a paid it's part of my premium training that i do where i go really really in-depth but either way this video should be really helpful on the categorizing of expensive stuff that doesn't involve matching then we have record a transfer that's specifically when we're moving money from bank account to bank account or bank account to a credit card or bank account to pay a loan basically staying within balance sheet accounts we're going to cover uh transfers and credit card payment in that advanced webinar right now we're going to be focusing only and solely on categorizing which is the title of this video so this is into it this is my vendor into it and that's me paying a quick book subscription um and so i'm going to go ahead and put here where it says vendor i'm going to actually type into it so i'm creating the vendor from scratch i'm just typing it in there click on add select vendor or leave vendor then click on save and the category here office supplies and software if i believe that should be a different category i would click on the drop down menu and pick at the different categories so let's say for whatever reason i think this should be advertising and marketing that's actually not the right category i would select advertising and marketing however this is software uh and office supplies so i'm gonna leave that category there and then i'm going to click on confirm i can click on confirm on the green button there or i can scroll a little bit down and i can click on confirm the green button in the bottom as well there either way it's going to give you the exact same results i'm going to click on confirm so there we go we enter the second transaction now i'm going to go into a different payee here i'm going to scroll down here and we got this one called a you lease right so i can click on that and i get a little bit more information and then here it says online payment to auto lease so that's probably leasing a vehicle most likely of course every business is going to be different so you got to figure out what that is this is going to be let's say rd this is a a lease for a car rd car so i'm going to make sure it doesn't do record transfer i kind of want to avoid that especially in the context of this video we're not going to do transfers at all we're going to click on categorize i'm gonna click on vendor type audi and click on add and save create the vendor and then here i'm gonna put auto expense or car expense okay you need to have it in your chart of accounts already and if not you can create it on the fly we'll have a different video that talks about chart of accounts that's an entirely in-depth conversation for now let's work with what we have and select what's in here but yes you can create your own accounts while you're doing this so i'm paying artie it's current truck it is the lease of the vehicle then i'm going to click on confirm and that gets that done now one of the things that kind of slows you down is having to click on each one in order to be able to open up this vendor customer vendor drop down screen so one of the things you can do is you can click on the gear menu on the top right click on that gear menu and you're going to turn on this checkbox called payee awesome checkbox to turn on it would actually open up that column and allows you to select that vendor right there on that screen or preview the vendor if quickbooks is automatically detecting it there's a lot of awesome tools in here like the grouping the editable field the showbank details we'll go back to that one in a second all these tools have deep meanings and depending on the context on type of banks that you work with how you do the accounting the type of business that you have these things might be worth it to have on or off right depending on the context for now let's just turn on payee and kind of see what that looks like so let's say for example here 27 that's a payroll fee payroll processing fee i paid to my payroll company so i'm going to click on that and then i'm going to read the whole description here so i can just go through the description and see what it is and try to figure out a discern through that what it is that's basically a payroll company i have so i'm going to go into vendor and type payroll company and this is actually a payroll processing fee this is a the fee to process payroll not the actual paychecks or the employee so i'm going to click on save and quickbooks is guessing wrongly guessing as a contractor that's wrong that's not close to being accurate obviously that is an issue so i can look for a category like payroll processing fees and i'll type payroll and there's nothing on in there so i can just delete that click on the drop down menu and go through my expenses and see if any of these match if you're not comfortable creating accounts you can just put that into on categorize so you can review it later or put it into other business expenses which will basically become your big miscellaneous account not a big fan of that for obvious reasons as an accountant i want things to be categorized correctly but if you don't know what something is you know pick a category that you know you're gonna we have somebody review later on so for now let's put in other business expenses and then we're gonna click on confirm now so the difference is that now you get to see in this column you get to see the payees so when another transaction came up again so for example look at best buy came up again for 195 maybe had another purchase for the same dollar amount quickbooks now is saying hey based on the last transaction your your vendor best buy should probably be the vendor best buy you created and you should probably use the same category so what ends up happening the process starts getting sped up so i'm going to click on confirm and then confirm that now as we go on and we look at other transactions again this particular bank account it's pretty much all transfers into it and best buy it looks like so there really isn't a lot of variety i'm going to switch over to a credit card that's going to have a lot more flavor a lot more different expenses just so we can see how this categorization plays same so i'm going to click on the drop down menu here at the top and then i'm going to pick one of my credit cards let's pick this one and there's 172 transactions so we're going to see a lot more things happening here actually that's a checking account let's go through the credit card pick the wrong one sorry so 164 transactions that's a good one to use we have all sorts of different vendors in here now do notice that the vendors seem pretty cleaned up in the description section but under payee is blank it's because this is not in my database i'm actually going to sort it by vendor or by description in this case so we can see a few that are all the same patterns you know things that i spend every month or over and over chevron is a great example so i'm gonna do uh categorize one so you can see the effect of all of them so i click on the first one i'm gonna create the vendor called chevron click on add again these are not in my database let me spell this correctly and and i'm adding it to the database creating a vendor for it and then clicking on confirm quickbooks guess correctly this is current truck but then after i categorize one quickbook says hey you know what i might as well just categorize all of them because they all kind of follow the same pattern now what's interesting about this is the information that comes from your bank if you were to log into your bank account online on the website or download the statement it's not going to say chevron super cleanly like this it's going to have more information tacked onto the chevron name if you want to see the original bank information that quickbooks is version cleaned up version of it we click on the gear menu on the top right here and then we click here says show bank details showback details will no longer show quickbooks version of the vendor it will show the original bank version of the vendor in this particular case this is all chevron and the same number next to it that's the gas station number that's the gas station uh that that business owner is going to over and over and over probably the one next to the office or next to their house that's why you kind of see that pattern but you're going to see later on how there's other vendors in which you have different numbers and variations at this point i can accept all these as current truck if i want to i can click on the first one hold the shift key on my keyboard click on the very last one that selects them all in one group all the ones that have the vendor on it again the pay is on it the category is correct i'm good to go i'm going to batch enter all six of these in one shot by clicking on confirm in the top and that's the quickest fastest way to categorize your transactions now quickbooks is going to say on top of this whole thing says would you like to create a rule now rules are a little bit interesting rule is you telling the quickbooks brain don't even ask me about this just categorize it moving forward so when you click on create rule it creates a rule and no longer if i chevron shows up again i have to actually categorize it that rule i created is called an automatic rule i'm going to go back to rules here for a second and then i'm going to show you right here you got this rule credit card 8 900. i'm going to click on it and click on edit and you see right here all the things that the conditions it says look if the transaction comes out of this credit card and it has the word chevron in the description categorize it to current truck and put it under chevron and then under auto confirm automatically categorizes it and takes it out of the screen puts it into your ledger if i unclick auto confirm then it doesn't automatically put it into your ledger but it does automatically classify it for you i'll show you i'll pick a different credit card that maybe we went to chevron as well and kind of see what happens so i'm gonna click on save here and then i'm gonna switch over to banking and i'm gonna switch over to a different credit card i'm kind of crossing my fingers that the chevron will show up again let's see if chevron shows up again not on this one let's go to the next one let's go to this one no it doesn't show up on this one either and let's go to the last one maybe it does okay not a good example this one didn't show up again so we don't get to see chevron we do get to see exxon mobil a little bit of a different example but it is kind of contextually um how it works so let's see maybe we can catch it with exxon mobil so notice that these exo mobiles all have different numbers different different stores different gas stations these two are the same but the third one's a different one so i'm going to click on the first one type exxon mobile click on add to create that vendor click on save confirm all the other ones will be automatically set up i'm going to select both of them and then click on confirm all in one shot quickbooks will ask me would you like to create a rule for this and then i'm going to click on create rule i didn't cover this but if i click don't show me this again or i click on the x in the top ignores the rule and basically quickbooks will continue to categorize a transaction based on the last thing you did but it won't do it consistently based on the rule we're going to cover in that webinar that we're talking about i'll put the link in the description we're going to go really in-depth in rules just because we do need like three hours to talk about rules and matching and all that stuff for now let's skip rules let's create the rule but let's skip the concept of rules for now um just for the time being do create those rules but there are situations where you're going to have to edit those rules something you have to think about really really important so to speed things up categorize a couple more things let's say here 7 11. so i will click on that and one of the things i can do is i can copy and paste from the memo copy and paste into the vendor or customer and then click on add that way it adds it probably faster than typing it select current truck if that's the right category click on confirm and let's move on anthony's is a restaurant quickbooks is guessing meals entertainment that is correct so i'm going to click on that one copy the name of the vendor paste it up here click on add save then click on confirm then because it's two of them i'll select the second one and confirm it as well let's see what else we have we're going to continue to be creating those rules we're going to scroll down and look at these ones there's another restaurant called the cheese course i'm going to select all of them i'm gonna hold the shift key click on the first one hold the shift key click on the last one that selects all three i haven't put the payee name in there so i'm gonna do select the transactions first then i'm gonna click on update here in the top click on update and then i'm going to click here on expense it's going to be an expense transaction categorize the same thing payee i'm going to put here cheese course click on add not a customer a vendor click on save and then we make this meals and entertainment click on apply confirm and that does all three in one shot again we're going to continue to be creating these rules we're going to go back and look at the rules to see what they look like and you can delete them anytime you want to let's say this chick-fil-a here are personal expenses they're not meals entertainment so we'll categorize those as well i'll click on the first one hold the shift key click on the last one four transactions have been created i'll click on update i will create the vendor select expense appear create the vendor call this chick filet so create the vendor as a vendor not as a customer on the categories i'm gonna put it under owner's pay and personal expenses because they're not business expenses they're personal i'm not saying they always are i'm saying in this context they are so i'm gonna click on apply and confirm and that will categorize those i'm gonna create the rule so in the future they get automatically categorized as that you could always go back and change that that's just kind of a good thing that it has even though the rule is set and quickbooks is categorizing you can go back and change that category the rules are there to help you not to force you to do something in a certain way let's go down here let's see this kennedy space center let's say this is a personal travel so i'll select the two hold the shift key select the second one click on update and then i'm gonna put here expense pay i'm going to put kennedy space center let's say i wanted to abbreviate it put that as a vendor click on save and then on the category i'll put it in personal and owners pay click on apply confirm or i can click on apply notice if i click on apply and not apply confirm it just does the payee and the categorization here and then it awaits for you to then press confirm one by one or then click confirm here so with the update you can apply and confirm or just apply and confirm afterwards so i'm going to create the rule again i'm friendly towards rules generally i like to create the rules so quickbooks is doing their work for me now we got here nordictrack those are personal expenses so we'll select these two go to update and then put here expense ignore the track create that as a vendor again depends on the context right i'm telling you for this particular customer that i'm doing the accounting for this is going to be a personal expense i'll click on apply there you go so and then create the rule so that's basically how it is you can go and categorize each one or you can categorize a whole bunch there's a lot of extra things in here for example you can do splits so for example here we got this one that's 159 dollars let's say that uh 50 i'm sorry 156 dollars let's say that 56.29 is a personal expense and 100 is business i can split that so i can open that transaction i can click here where it says split transaction it will open up basically a pop-up window i can put here publix this is a supermarket chain in florida i'm going to click on add add as a vendor and let's say that this is um we bought let's say stuff for the office uh office supplies like coffee and napkins or whatever and that's gonna be the first hundred dollars and then the balance is gonna be a personal expense or something like that again depends on you know your context the transactions this is 56.29 so you can actually split transactions into two categories not necessarily business and personal it could be two entirely different two different business categories i can click on apply and confirm and that does a split of course you know quickbooks doesn't really know once you do a split on whether or not the other transactions in the future should be split as well so quickbooks is not going to suggest any more splits but what we can do is and we'll do a little bit of rules i'll tease you up in the rules we can create rules where we can say look publix if it's more than a hundred dollars make it a personal expense if it's less than 100 make it a business expense let's say that's a rule that we want to follow so we're going to go up here where it says rules and then we're going to click on new rule on the top right and then we're going to call this rule publix and then let's say we're going to do it out of all the accounts all banks and all credit cards on the description we'll put here publix and then we will put here a second condition second condition it would be the amount would have to be greater than let's say what do we say 100 so greater than 100 we're going to call this one publix more than 100 and this is going to be a business expense right do we say tell how we did it or personal actually so let's put it under personal so under 100 personal under 100 is business so a personal payee here we put publix again we have to select it from our database and then so everything over 100 is going to be personal so we'll click on save so there's one rule then i can take the same publix rule i can edit it and click on copy it so just basically duplicate it and then we're going to call this one publix under 100 under 100 and then we'll put here is less than and then we'll put here 99.99 in this case and then we're going to make this a office supplies and software of course just office supplies in this case so we're basically told that depending on the on the dollar amount categorize these for me so i'm gonna click on save that's how rules work rules are pretty awesome and amazing there's all sorts of crazy things you can do with rules that's just an example one of the real simple things you can do i'm going to click here under banking and then i'm going to go down to publix i can actually search and filter only publix so i can put publics hit enter so i'm only looking at publix i notice this transaction under 45 office supplies this one over 100 or under 100 and over 100 you see the categories there very clearly i'm going to sort this by amount that way they're a little bit easier to see and notice all these things that are 100 or more are going to owners and personal expense and all the ones that are under are going into office expense and supplies really really cool what you can do with that i'm going to select all of them click on confirm and then i'm going to click on this little x on the public public so i'm no longer looking at the filter let's say we have here state farm it's an insurance company right it's two months worth so i'm going to select both of them click on update and then go to expense and then we have state farm click on add save category we'll put this under insurance again depending on the context it might be personal business it could be liability insurance it could be auto insurance depending really how you want to categorize it right now our chart of accounts is pretty simple uh you know you have to look at different video that has to be chart of accounts i'll put it on the description below let me click on create rule and basically this is how you start categorizing your transactions you can proactively create those rules if you want to you can create them on the fly as you're doing this you can do the batch categorization all sorts of things you can do there now i do want to cover something that gets asked quite a bit which is what are these um record transfer for and another one called credit card payment now right now what i'm going to do i'm going to switch over to a bank account and i'm going to hope that i'm working with a bank account that's transferring with other accounts so i can show you the context so right right now you see right here look we're transferring with this other account which is account 8200. so how would you categorize that i'll click on the first one and then i'll click on record transfer and then i select the other bank account that is going to be transferring to again transfers get a little bit tricky especially with uh credit card payments or transfers to a credit card and that sort of thing but for the time being that's how the concept works basically you have to look at the description hopefully the bank brings that data if the bank doesn't bring the data you have to look at the actual bank statement or look online to see what that transaction is supposed to be and if the bank account is a business bank account of the same business that account should exist in your chart of accounts and it should be there ready for you to transfer if the bank account is not a business account and it doesn't exist in your chart of accounts maybe it's somebody's personal account then you got to figure out am i transferring to a vendor and therefore i'm not going to be using transfer that would be categorized i'll categorize that as a contractor or cost to control whatever category i'm going to do that or if the bank account is the owner's bank account which could happen then that needs to go into categorize and it goes to go into that personal expense so again the record transfer is only to transfer across accounts that are inside your accounting or are supposed to be inside your account accounting because they both belong to the business that you're um that you are categorizing so i'm gonna click on confirm and i did that uh that transfer notice that quickbooks sees the pattern and sees all of these transfers i'm gonna go ahead and click on the first one and shift click on the last one let's say i agree with all these these are all accurate i'll click on confirm that transfer happened it says here would you like to make a rule in this case there's no payee because i'm i'm not paying a third party so i can leave the payee blank that's okay and then i can create the rule and i can create that rule now i want to switch over to the other bank account where i transfer the money to i'll select this other one you're going to notice here that some of these have this word review on it and review is uh when quickbooks is not sure what it is and it's asking you to do something because it can't really figure out what it's supposed to be so just puts it under on categorize in this case and that's one type and the other ones are are transfers those transfers that i did from the other account so i'm going to sort this by amount here and then you're going to notice that the ones that are coming from the other bank account so these here from this 5100 account they have a little note here that says records found anytime you see records found that is the equivalent of a match again this is not matching to a invoice or matching to a bill that's a whole other ball game that's a more complex thing we'll cover that in the in a more advanced webinar this is just matching transfers so i did the transfer on one side it's accurate now quickbook is telling me don't categorize this i shouldn't categorize this because this is the same transaction like i moved from bank account to bank account so in this case i can just hit confirm so all these ones that say records found you might want to just click on that transaction or the little link so you can expand it and see what is the underlying transaction and if you agree that that's accurate that's the transaction that was supposed to match that then you leave it on find match and then click on confirm if there's more than one potential matches you're gonna see two matches here and you have to select which is the better one there will only be two matches if there's two transactions with the same dollar amount right so that gives you a general idea there's a lot of cool tools here on the gear menu i can also click here it says turn on grouping and what grouping does is it groups the transactions based on how you have sorted so if i have it sorted by date i'll click on date it will sort them by month so notice it will only the ones for january in this particular case right if i click here on description it will group them by description or by potential payee if i click here on amount it will do all the money outs and all the money ins in two separate groups if i click on assign to it will group them based on where they are so i'm just collapsing all these just so you can see quickbooks is guessing that i'm just gonna continue to collapse them here quickbooks is guessing that five transactions are bank uh charges and fees i'm going to expand it i can look at them and say you know what those are actually accurate these are all service charges but they're missing a payee so i'm going to select them all hold the shift key select them all click on update and then under pay i'm going to put here chase because chase is the one the bank that's charging me the fee make sure i put that as a vendor click on save and then the category would be bank charges and fees then click on apply and confirm boom five transactions all in one shot i can create a rule no problem i'll continue to do that okay then we have other things that we have these payments to uh credit card these are payments to a credit card so these are not bank charges and fees that's the wrong category quickbooks could be mistaken that happens quite a bit this is actually a payment to my credit card so what we need to do is make this a transfer or easier credit card record payments or credit card select that and then i select my credit card so i go in my drop down and see which credit card this is supposed to let's say it's supposed to be this one i'll select that and under vendor i can put chase visa i'm gonna make it a little bit different than the other chase because i'll reserve the regular chase for bank fees and chase visa if anything has to do with a credit card in itself so i click on save and then this is what record a credit card payment is supposed to be so i am showing you them it's just that there's a lot of nuances in terms of when you have a lot of accounts uh and it could get a little bit confusing but at least you understand exactly what all these mean at least through this video you're understanding what this mean so i'm gonna click on confirm accept that one and then hopefully quickbooks will catch them it didn't right so i have to manually go in and fix all of them so i'm gonna select them all click on update quickbooks actually doesn't allow me to do credit card payments to the update so i could do it through expense i just have to make sure that the category here needs to be the underlying card so it actually doesn't matter whether or not i pick this credit card payment transaction an expense transaction works as well as long as a category is not an expense and it's the actual credit card that's being paid that works as well and the other payee will put here chase visa so they both would work in this context that's what i meant by all the different nuances that i'm going to click here on apply and confirm and i will do those let's open current truck so we're paying here tv out of finance and volkswagen credit again we can select all the volkswagen credits here hold the shift key select all of them click here where it says update and then i'm going to put here expense under pay i'll put vw credit let's say these are vehicles that we are leasing and these are not finance vehicles finance vehicles are treated separately that's why i'm particularly saying these are leasing so i'm going to click on current truck and click on add to confirm that adds them all in one shot i'll create the rule for those here's td out of finance on the customer vendor i could put tv auto create the vendor again you're watching me create vendor every time i'm not skipping on that really important and i'll show you there's one specific reason why that's super important now click on confirm let's see what else we have here insurance so we got fg life and philadelphia insurance let's say this is life insurance this is called fg life and i'm going to categorize that not on their insurance uh let's say under personal because most of the times life insurance is not deductible through the business that's a whole other conversation let's just assume this is personal expense business owners personal insurance will click on confirm categorize that as personal but this one philadelphia insurance or affiliate insurance or copy let's say that's liability insurance so i'll create that vendor and i will categorize that under insurance then i click on confirm let's say we have here under contractors let's see if this is accurate it's not accurate quickbooks is just guessing that because i'm writing a check it needs to be a contractor this is not right and the way we make it right is we actually going to have to look at the actual underlying check image we're gonna have to go into the bank go into the checkbook and find out who we wrote these checks to and what these categories are supposed to be so let's say that these eight thousand dollar ones are rent so i'm gonna click on the first one i'm going to put my event my landlord's name so i put here landlord whoever i'm um writing the check to so i'm going to put vendor landlord again the real landlord's name in this case and then category in this case will be rent rent or lease and then i click on confirm i'll do the same thing with the other check for eight thousand dollars put here landlord rent or lease and confirm that now quickbooks automatically thinks all my checks are rent or lease obviously that's incorrect so again you have to be very careful with the stuff that quickbooks is guessing and look and for no rhyme and reason it's assuming that this one is contractors and this one's rent and lease again you cannot trust what quickbooks says you have to actually go look at that underlying check figure out what it is let's say this is my cleaning lady or so i'll put here uh cleaning lady and then i'm gonna put this create as a vendor and put that under repairs and maintenance and put that as confirm let's say that these hundred thousand dollars is prepaying personal taxes let's just say that's where it is so i'm going to put here irs and go to add and this is the owner of the company taking business money to prepay their own personal taxes so this would just be a personal expense and we'll put here under the memo i'll append to it i'm going to leave the check 1001. i'll leave it there i like that i like to know what the check number is and i'll put here uh owners personal tax so this is the first time you're watching me actually put something in the memo something i encourage all the time regardless let's say this hundred thousand dollars it's a loan to another business so let's say we have another business called um hector's taco truck add that as a vendor click on save and we'll put here loan to http right which is make it easy simple like that click on add loan to http i'm creating the accounts again i said i wasn't going to cover that but i'll cover that a little bit just chart of accounts it's a whole other world and you have to be careful you want to just create a bunch of accounts again i'll put a link below where i talk about chart of accounts in depth that's an entirely different lesson so i'm going to put this under um say other asset i'm lending a company hundred thousand dollars detail type i'll put here oh this is not even within this category so i'll just put it here under other long-term assets the category that might show it is uh in this case other current assets and you're gonna see here uh loans to others right but this is actually a kind of a long-term asset so i'm gonna select to put it as an other asset because it's not short term and then i'll put it here under other long-term asset again that discussion is a chart of accounts discussion and we'll talk about that in a different video check that out in the description so click on save and close i will put that under loan to http click on confirm again you i think at this point uh you get it you see exactly how the process works i am going to cover um deposit sales or income uh really quick so i'm going to go down here to these quickbooks is guessing sales and it's because these are all deposits and notice that these deposits are not negative signs these are positive signs so quickbooks is guessing naturally these are sales or deposits okay so i'm actually gonna confirm that these are truly these are deposits so let's say we have google paying us to say google's one of our customers so i'll create google as a customer because they are one of our customers if i'm paying google also as a vendor i want to create a separate vendor called google inc or something like that as a vendor so i differentiate the customer that's paying me and the vendor that i'm paying out so i click on save leave that under sales click on confirm now we see both of these that have the same payee get matched select these two and click on confirm then we have uh click on create there then we have let's say our credit card company so intuit payments it's my quickbooks payments account when uh when you enable payments inside quickbooks that's what it looks like in the bank again again if you're creating an invoice in quickbooks you should be matching these to an invoice we're skipping matching all together so this is not a good example for people to actually create invoices and have to match the deposits to the invoice that's an entirely different video another training but i'm going to assume that i'm not doing invoices in quickbooks i'm just going to accept all of these as sales so i'm gonna click on the first one hold the shift key click on the last one all the ones that contain the same name per se i'm gonna put here update under transaction type this is gonna be a deposit now under payee i'm gonna put into it i'll put various customers paid via card again i'm not keeping details of who my customers are because i'm not creating invoices in quickbooks not necessarily a best practice this is just the example we're doing because we're not going into matching i'm going to put this into sales and click on apply and confirm okay so that does all those i'm going to create the rules so in the future it automatically categorizes then we have all these checks being deposited again i should be matching them but again i'm just going to select all these here i'm going to hold the shift key click on update make this a deposit and just put miscellaneous customers paid via check click on add and then i'm gonna make it as a customer save category same account call sales apply and confirm and then i have this other customer here called method okay so i'm going to put here method inc and it says the name of my customer so when i when i can identify the customer i'll do it because it's not that much extra work but when it's a credit card payment or a check payment uh cash payment that i'm not keeping track of that stuff then i won't even keep track of it um so we did all that so for now let's just stop it there and let's go into a report just kind of see what this looks like so i'm going to go into reports here i'll click on reports and then we'll pull up a profit and loss report kind of so we can see what's going on here and then we'll do it for this here today so notice we have all the sales categorized up here and then we see all the expenses categorized as well we see sales for 42 000 expenses about 22 000 my net income is 19. there's still plenty of transactions that still need to be downloaded but this gives you a really good idea of how this works now i like having the payees for one specific reason let's say for example i want to review car and truck i want to see what's in there i'll click on the dollar amount and it'll show me a whole bunch of transactions okay if i don't have the payee in here this will be blank and then i have to depend on memo and description which is fine however one thing that's really cool here is i can click on group by group by vendor something i couldn't do if i'm choosing to not put the payee name in there so put that group by vendor click on run report and then it groups them by the vendor and they become a lot easier to look at so i'm looking at this report i'm seeing how they're organized this will start making a lot more sense all of a sudden you start looking at patterns potential errors for example you got this one uh volkswagen credit two different dollar amounts obviously that's two cars so as an accountant maybe you want to go in and say you know is one of those accounts personal it's one business are they both being leased is this being financed again you get to ask the good questions trying to understand after you categorize everything is it on the right category so that's why i like this option to group by vendor and that only works if you select a payee i'll show you that example just because i think it's that important i'm gonna go back to transactions and go into banking and open it in a different tab just so we can stay on that screen and then what i'm gonna do is i'm gonna categorize let me switch over to one of these credit cards and i'll categorize a bunch of these things without putting the pay notice that payee is blank so i'm going to accept what quickbooks gave me as a category and i'm not going to actually even go through the motions not even to put a pay in there and i'm gonna select all these transactions and confirm them so i'm basically allowing quickbooks to categorize however they want i'm not going through that that process and i'm also not taking the effort or the time to select those uh payees let me do it with this entire screen as well i'll click on confirm again not a good practice at all it's a really really bad idea to categorize things this is not what i'm teaching you i'm teaching you to do each one analyze each one i'm just doing a whole bunch for you just so i can show you the effects of not doing it correctly or not putting the payee in there so i'm going to go so i finished okay let's go through all of them and then click on confirm so they're all there basically i'm done categorizing magic right so let's go back into the profit and loss and let's see what this looks like i'll click on run report now we're going to see different numbers same sales a lot more expenses notice that now i have a negative net income i have a lot more expenses of course now i can take a look at any of these that say i wanted to audit one of these or just making sure this is accurate take a look at current truck expense as a huge number let's take a look at that i'm going to open that and then we get to see all the expenses under it now if i were to try to group it notice that all these payees are missing here because and here as well on the circle k and that's it and the problem with that is if i were to group this by vendor and click on run report i'm going to go all the way down and there'll be one that says not specified so it's not as clean so that's why i like having those vendors in there those payees in there all right anyway so that's basically what the process is you're going to connect the banks you're going to choose how far back you're going to go you probably should go back to your chart of accounts make sure all the categories that you want are in there then you're going to add the payee the pay to each of those transactions you're going to categorize one by one you're going to create those rules and you're going to do the shift selection and mass updating and mass categorization to do your accounting as quick as possible this might take a couple months to master but trust me this is the one single feature inside quickbooks online that i think i believe to be the best thing that quickbooks has as an accountant that does this type of work for like 100 people per year i save hours and hours and hours of labor using this tool but you have to master it the best way to do it is with your own accounting if you own a business obviously you want to practice with your own let's say you don't own a business that might what you might want to do is create a free trial of a quickbooks online account you can use my link free 30-day trial and connect your own personal bank accounts and play with it like that you do need to have a real bank account with some transactions in order for you to play with it and get a feel for how this works anyway i hope you like this video subscribe to the channel any other educational videos on this topic or similar to this topic will be posted into youtube and check the description below for the advanced courses that i teach where i help people get a lot more in depth than this stuff but i think in you know in a nutshell this is a 40 minute video this should be plenty useful for you to at least get started thank you and i'll see you on the next one

Channel: Hector Garcia CPA

Views: 166,781

Keywords: quickbooks, tutorial, online, accountant, bookkeeping, accounting, quickbooks online, quickbooks tips and tricks, qbo, categorizing expenses, categorizing, categorizing downloaded transactions, qbo 2021, quickbooks 2021, quickbooks online tutorial, quickbooks online 2021 tutorial, bank feeds, downloaded transactions, classify expenses

Id: RoNoBkMwKfE

Length: 53min 25sec (3205 seconds)

Published: Mon Mar 08 2021