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Categorize online bank transactions in QuickBooks Online

by Intuit Updated 1 week ago

Learn how to categorize transactions uploaded to QuickBooks Online.

Review categories for automatically downloaded transactions when you connect your bank to QuickBooks Online. QuickBooks suggests categories based on how you categorize similar transactions.

Note: QuickBooks Online won’t download pending transactions.

For a better experience, open this article in QuickBooks Online. Launch side-by-side viewOpen this link in a new window

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

Download the latest bank and credit card transactions

For most banks, we try to refresh transactions every 24 hours. You can also manually update your accounts anytime:

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

This updates the transactions on all of your accounts.

Tip: If you see a message about additional authentication, follow the prompts to continue the update.

If you have trouble downloading your transactions, you can try other options.

Note: QuickBooks recognizes common vendors from your bank transactions, and will automatically add new vendors into your account. Turn this option off if you don’t want new vendors added. In Bank transactions, go to Settings ⚙ and turn off Add new vendors.

Review and categorize downloaded transactions

  1. Go to Transactions, then Banktransactions (Take me there).
  2. Select the account you want to review.
  3. Select the For review tab.

QuickBooks sends downloaded transactions to the For review tab, and suggests categories for each transaction. Review them one by one:

  • If the transaction says Add:
    1. Select Add if the suggested category is correct.
    2. Change the category by choosing one from the dropdown or adding a new one.
  • If the transaction says Review:
    1. Select Review, then select a category, or add a new one.
    2. Select Confirm.
  • If the transaction already exists in QuickBooks, you may have the option to match or view multiple matches.

Note: You can create a bank rule that automatically categorizes transactions for you. You can also turn suggestions off if you want to manually categorize your transactions. In Bank transactions, go to Settings ⚙ and uncheck Enable suggested categorization.

Choose the right category

Categorize income

Money paid to you from:

  • Sales
  • Customer payments
  • Refunds
  • Fixed assets sold
  • Bank loans received 
  • Money invested

Categorize expenses

Money paid to others. For example, money spent on:

  • Office Supplies 
  • Meals
  • Payroll 
  • Taxes
  • Fixed assets

Note: If you pay yourself (called an Owner pay or Owner draw), this “equity transaction” is also considered an expense for the business.

Other categorization actions

There are a few other options to take to help you properly categorize your transactions.

In QuickBooks Online Plus and Advanced, you can track your expenses by item. You can use it if you keep track of your inventory or need item tracking for your job costing reports. Here’s how to turn it on:

  1. Go to Settings Settings gear icon., then select Account and settings.
  2. Select Expenses.
  3. Select the Bills and expenses Image of the edit icon.pencil icon. Then, turn on Show items table on expense and purchase forms.
  4. Select Save.

Note: To use the Estimates vs. Actuals report in QuickBooks Online Advanced, you need to track your expenses by item. If you're not sure whether you need to use item tracking, talk to your accountant.

You can record an expense in your bank feed using an account from your chart of accounts, using a product or service, or both. 

Note: If you want to record it with both, you need to split the transaction

  1. Go to Transactions, then select Bank transactions.
  2. Under the For review tab, search for the expense transaction that you want to record and select it.
  3. In the Product/service ▼ dropdown, select the product or item from the items list.
    Note: You need to split the transaction if you want to use both the Product/service and Account dropdown on the same transaction.
  4. Select Add.

QuickBooks automatically records money-in transactions in the bank feed as Bank Deposits. If the transaction is a sale, use a sales form like an invoice or a sales receipt.

Once your customer pays the invoice, you’ll need to match the transaction in your bank feed. If you get paid for a sale and it shows up in your bank feed but not in QuickBooks, you can record it as a sales receipt. To do this, select an item in the Product/service ▼ dropdown when you record the transaction. 

Split a sales receipt

You can split the sales receipt from your bank feed among different products and services. 

  1. Go to Transactions, then select Bank transactions.
  2. Under the For review tab, search for the transaction that you want to split. Then, select it.
  3. In the Product/service column, select the items that you want to split the transaction.
  4. (Optional) In the QTY column, enter the quantity of the item. Then, enter the amount in the Amount field.
  5. Select Apply and accept.

To accurately record your accounting transactions, QuickBooks needs to know which category is associated with each product or service you buy and sell. For example, you might use "Contract expenses" for your purchase account and "Billable labor" for your sale account. When you set up or edit a product or service, you specify the purchase and sale accounts.

  • If a purchase account is missing, the product or service won’t appear in the Product/service dropdown for expenses. 
  • If a sale account is missing, the product or service won’t appear in the Product/service dropdown for sales receipts.

Here’s how to add a purchase or sales account:

  1. Go to Sales, then select Products & services.
  2. Find the product or service you need, then select Edit.
  3. In the Sales and Purchasing section, set up the purchase or sale accounts.
    Note: These are necessary to accurately track your itemized sales and purchases.

You can split transactions between multiple categories for better tracking.

  1. Go to Transactions, then select Bank transactions.
  2. In the For review tab, select the transaction you want to split.

    Note: If the option is Match, change it to Categorize.
  3. Select Split (Accountant view) or Split transaction next to Category (Business view), which opens the Split transaction window.
  4. From Category▼, select the categories you want to split the transaction into.
  5. Enter an Amount for each split so the Difference shows $0.
  6. Select a Vendor or Customer name for each split.
    Note: The fieldname may vary depending on the transaction.
  7. Select Apply and accept.

Duplicates may sometimes occur when transactions automatically update from your bank after you’ve manually uploaded them. In these cases, you might want to exclude them.

  1. Go to Transactions, then select Bank transactions.
  2. In the For review tab, 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. If you excluded a transaction by mistake, from the Excluded tab, find the transaction and select Undo.

If you spend money on a personal transaction using a business account, that’s an owner’s draw. If you add personal money to a business account, that’s an owner's investment.

QuickBooks has partnered with selected banks to include check images for check transactions.

To view the check images:

  1. Go to Transactions, then select Bank transactions.
  2. In the For review tab, select the transaction you want to view the check image for.
    Note: Transactions with an attached image will have a number in the AttachmentsAttachments paper clip icon column.
  3. Select the image name, then view the check image in the Explore sidebar.
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