Create a Credit Card under a Bank Account

Benjamin Janke · ‎November 25, 2022

I am accounting for a small business and I'm quite new, so if anything below doesn't seem like the most efficient way to do something, please let me know!

I am accounting for a small business and I'm trying to keep track of a bunch of transactions. There are two places which the money for the business has come from: the owner's personal funds and the business checking account. There is only one card associated with the business checking account, but multiple personal cards and cash flows the owner has which he's used to personally fund the business.

I have set up two accounts in quickbooks online. One which is linked to the business checking account and one representing the money coming from the owner's pockets (I renamed the default quickbooks account). I have named these accounts Business Checking Account and Owner's Personal Funds.

I want to create credit cards underneath each of the accounts, but I'm unable to do so. When I go to the Chart of Accounts, hit new, and select a new credit card, I am presented with a screen which looks different then tutorials I've seen about creating credit cards (the picture of what I see is attached below). It will only allow me to create the credit card under the "credit cards" account, but I want the credit card under the personal funds bank account. My first question is how to create a credit card underneath a bank account instead of the "credit card" category.

My second question is, if I create a credit card underneath the business checking account and categorize transactions underneath it, will it mess up the total in the business checking account itself? When I'm on the banking screen, I can see the Bank Balance (as its linked with quickbooks) and the In Quickbooks balance. If I categorize transactions under a credit card under the business checking account, will it still count in the In Quickbooks balance? If so, what should I do instead? In short, will categorizing transactions under a credit card under the linked business checking account, will it mess up the In Quickbook balance and throw off its sync with the Bank Balance?

Sorry if my questions are stupid, but I am brand new to this program. Thanks!

Pete_Mc · ‎November 25, 2022

Let me toss out a few thoughts...

A Credit Card, it is NOT a sub account of any other banking account. You want to set it up in it's own Credit Card type Account. When you go to set up a new account, Credit Card is one of the options.

You also really only want to show the Business Checking (and poss. Savings) Acct in the Business books. Which it sounds like you're doing, but you just wanted to make sure.

For all the Personal Credit Cards, Bank Accts, etc. They DO NOT get their own Acct in QBs, they are not business accounts, so they should not be tracked within QBs. Emphasize to the owner to only use the Business CC for purchases. If the company does not have the funds to pay the CC bill, they can put Cash into the business.

You can use an account called Owners Personal Funds if you want, but there should be an Owners Equity Acct that already exists in the Chart of Accounts and this is the standard name for what you're talking about. And if you do use the Acct you created, make sure it is an Equity Acct, not a Checking Acct.

I'd also suggest you create two Sub Accounts under the Owners Equity called Owners Contribution and Owners Draw. There is nothing technically wrong with putting all the transactions in one Equity Acct, but years from now it may be much easier to track things down if you have one Sub Acct for money coming in and one for money going out. (Note: The money shown here going out is separate from any Payroll.)

So if you get to the end of the month and the owner puts Cash in to cover the CC bill... You'd show the Deposit in the Checking Acct and the associated Account Would be the Owners Equity:Owners Contribution.

Also note that if any of the transactions you're tying to correct go back into 2021 or before, you need to talk to the CPA/Tax Accountant before you make ANY changes. You do not want to change a prior Year End number that they used to file the taxes without talking to them.

Hope this helps a bit.

Benjamin Janke · ‎November 26, 2022

Thanks so much! A few more questions though, will putting transactions under the business credit card mess up the "In Quickbook" balance for the account (example picture attached)? It seems to me, and I might be completely wrong, that creating the business credit card is a separate thing from the business account itself. Will that matter?

When I tried changing the Personal Funds bank account to an owner's equity account, it said "The account must remain a balance sheet account because it is already set up for Online Banking.". Is there a way to fix or get around this?

Finally, what would be some examples of transactions which would fall under the Owner's Draw subcategory? I'm confused of what transactions would fall within that category. Thanks!

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