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Categorize online bank transactions in QuickBooks Online

SOLVED•by QuickBooks•3688•Updated 2 days ago

Learn how to review downloaded bank and credit card transactions.

After you connect your bank and credit card accounts QuickBooks automatically downloads the latest transactions and suggests categories for these transactions based on how you, and other customers, categorized similar transactions. This helps identify tax deductions and tells you where your business makes and spends money.

Note: QuickBooks Online won’t download pending transactions. It only downloads transactions when they’re no longer pending and are officially posted on the bank site.

To watch more how-to videos, visit our video section.

Step 1: Download the latest bank and credit card transactions

For most banks, we try to refresh the latest available transactions every 24 hours. Some may take a little longer. You can also manually update your accounts anytime:

  1. Go to Transactions, then Bank transactions (Take me there).
  2. Select Update.

This updates all of your bank and credit card accounts.

Tip: If you see a message about additional authentication, follow the prompts to continue the update. Not all banks require this, but some do for added security.

Here's what to do if you have trouble downloading your transactions.

Step 2: Review and categorize downloaded transactions

The option is on by default, but may create unnecessary vendors if not turned off.

The switch is found in the For review settings for Banking.

  1. Select ⚙️.
  2. Turn off New vendors for Add automatically.

600px_newVendorSwitch_QBO_US_Ext_081823.png

No new transactions you download should auto-create vendors. Turn back on to auto-create vendors for newly downloaded transactions.

Note: The Enable suggested categorization ⚙️ setting in the banking window helps to auto-categorize transactions with similar bank details.

  1. Go to Transactions, then Bank transactions (Take me there).
  2. Select the tile for the account you want to review.
  3. Select the For review tab to start your review.

QuickBooks sends downloaded transactions to the For review tab. Review them one by one:

  • If the category field is blank:
    • Choose a category from the dropdown.
    • Add a new category to the dropdown.
  • If the category field has a category suggested by QuickBooks: 
    • Confirm that category
    • Change that category by choosing another one from the dropdown or adding a new one.  

To streamline the process, you can create a bank rule that automatically categorizes transactions for you.

If the transaction already exists in QuickBooks, then instead of categorizing it, you may have the option to match, add, or view multiple matches.

How to choose the right category

  • Categorize income—money that was paid to you—to show where the money came from, like sales, customer payments, and refunds. The business might also receive money if you sold a fixed asset, received a bank loan, or you invested in the business.
  • Categorize expenses—money paid to others—to explain how money was spent, for example, on office supplies, meals, payroll, taxes, and fixed assets. If you pay yourself (called an Owner pay or Owner draw), this “equity transaction” is also considered an expense for the business.

You can split transactions between multiple categories for better tracking.

  1. In the For Review tab, select the downloaded transaction to expand the view.
    • If the option in the Action column is Match, change the Find match to Categorize.
  2. Select Split (Accountant view) or Split transaction next to Category (Business view), which opens the Split transaction window. 
  3. From Category▼, select the categories you want to split the transaction into.
  4. Enter an Amount for each split.
  5. Select a Vendor or Customer name for each split.
    Note: The fieldname may vary depending on the transaction.
  6. When you're done, select Apply and accept.

It’s rare, but you might find duplicate transactions in your bank feed. This generally happens if there is an issue with your bank connection so you upload the transactions yourself, and then a second (duplicate) copy is later downloaded from the bank. If this happens, you should exclude the duplicates. 

  1. Go to the For review tab.
  2. Select the checkbox for each transaction you want to exclude.
  3. Select Exclude.

Excluded transactions move to the Excluded tab. They won’t be added to QuickBooks or downloaded again.

It’s a best practice to use personal accounts for personal transactions, and business accounts for business transactions, but sometimes you may end up with a personal transaction you need to account for. Don’t worry — there’s a way to do this.

If you spend money on a personal transaction using a business account, that’s an owner’s draw: you (as the owner) drew money out of the business, and used it to buy something for yourself. If you add personal money to a business account, that’s an Owner Investment.

QuickBooks has partnered with a number of banks to automatically include front and back check images for any check transactions awaiting review. This can make it easier to review, categorize, and match transactions.

If you've already connected QuickBooks to a participating bank, the check images load automatically, and no further action is required.

To view the check images:

  1. In the For Review tab, select a downloaded transaction that shows a number in the Attachment Attachments paper clip icon column. (In Business View, you’ll just see theAttachments paper clip icon.)
  2. In the transaction details, select one of the Check Image attachments to view the image.
  3. In the image panel that appears, you can view the front and back of the check, and expand the image to full screen.
  4. Review the transaction as normal. If you match or add the transaction, you can later find the images in your Attachments list, under Settings ⚙. They will also be attached directly to the transaction form itself.

Note: If your connected bank transactions don’t have check images automatically attached, your bank is not supported. However, it may be supported at a later date as we work to partner with more financial institutions.

After you categorize or add downloaded transactions, you can match online bank transactions in QuickBooks Online.

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