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Level 2

How to set up account for credit card

I have a client that has opened a business credit card account and is using it for both business and personal transactions. How do I record this in Quickbooks? I am thinking setting up a liability account to record transactions and apply those charges to the appropriate accounts creating an ongoing liability.  The personal transactions I am recording as distributions from equity. He is making payments to the credit card account from his business checking account but so far just the minimum payments.

If I am on the right track on this what happens if anything at the end of the year when there is an outstanding liability on the books?  Is my thinking on the right track?  Thank you.

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Best answer 01-08-2018

Best Answers
ProAdvisor

Re: How to set up account for credit card

Set it up as a credit card type acct.

All personal charges apply to the owner's equity or equity acct. depending on the business type.

 

You are on the right track for sure.  Reconcile the credit card monthly when the statement comes in.  Create the minimum payment once you reconcile.  I just click pay bill in full and then change the amount to the amount actually paid.

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4 Comments
ProAdvisor

Re: How to set up account for credit card

Set it up as a credit card type acct.

All personal charges apply to the owner's equity or equity acct. depending on the business type.

 

You are on the right track for sure.  Reconcile the credit card monthly when the statement comes in.  Create the minimum payment once you reconcile.  I just click pay bill in full and then change the amount to the amount actually paid.

View solution in original post

Level 2

Re: How to set up account for credit card

Thanks Lynda.  I have set up a credit card account in the Chart of Accounts and will get these transactions in there.  It doesn't say what the "credit card account" is but I'm assuming it's a current liability account.  Quick question, what's the difference if I do it this way or just set up a current liability account? I'm asking just to learn something.

ProAdvisor

Re: How to set up account for credit card

They are the same.  I think Intuit added the "credit card" type because most users don't understand what a current liability is.

Level 2

Re: How to set up account for credit card

Thanks for your help.

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