Credit Cards and QuickBooks can be a Perfect Pair

Most small business owners have to use credit cards for purchases related to their businesses. It's a great way to keep track of what business expenses are incurred and where the funds are spent. Smart business owners typically use an accounting system such as Quickbooks to manage the day to day finances of their business. It is important if a business is using credit cards and QuickBooks to keep accurate records especially for tax purposes.

When deciding how to handle and record credit card payments within your QuickBooks file, you have some options. Credit card bills can be treated just like any other vendor and can be paid upon arrival of the statement. With the Write Checks function of QuickBooks, you can create a direct disbursement and pay off the entire balance each month when you receive the statement. If you pay the whole balance each month, this is the way to go.

If you prefer more detailed recording, the credit card bill can be treated as a liability and each individual transaction can be entered separately. This allows you to track each transaction as it happens and when the statement arrives, it is easy to reconcile the transactions with the bill and decided how much you are able to pay towards the credit card balance.

Within the chart of accounts, there must be a separate account for each credit card that is used. To do this in QuickBooks, choose Credit Card as the account type and make a new account for each card. When more than one card is used, one account can be created for credit cards and subaccounts can be created for each individual card. This way, QuickBooks can give a total of all of the open balances whenever a balance sheet report is run.

Credit card charges should be treated just like ATM transactions and entered as they are made. It is possible to enter them manually as charges are made or they can be set up with your bank online and can be downloaded into QuickBooks. Each bank and credit card company will need to be contacted to find out the specifics of their online banking instructions. Under the Banking tab of QuickBooks, a credit card charge window can be found where credit card charges can be entered by hand. No matter if you enter them manually or choose to download from the bank, it is important that each individual charge is recorded. If charges are not recorded individually, the result could be hitting snags at tax time as well as inaccurate Profit and Loss statements.

Credit cards can also be used to pay vendor bills within QuickBooks. Under the Pay Bills window, the payment can be made and tracked which comes in handy when using online payment systems set up by the vendor or if the vendor has been given the credit card number directly for payment of the bill. Just be sure to record the payment once it is made so that the Accounts Payable balance will be correct.

Correctly handling credit card charges and payments is a must for business owners and QuickBooks makes it simple. By taking the time to keep accurate financial records throughout the year will certainly prevent the headaches that can come at tax time when things just aren't adding up.



Want to find out more about getting QuickBooks help in San Antonio? Then visit Nancy Froelich's site on how to find the best San Antonio QuickBooks help for your needs. Contact her today at 210.525.1852.