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How to Categorize Transactions in Quickbooks Online

When you link your bank or credit card accounts to QuickBooks, the most recent transactions are downloaded automatically.

It ends up looking for transaction data you've already entered into QuickBooks and attempting to match them up. When you cannot locate a match, it creates a new record of the transaction.

In this guide, we’ll learn how to look over downloaded bank or credit card transaction data and place it in the appropriate accounts.

Get the most recent transactions from banks and credit cards

QuickBooks gets the most recent transactions from most banks each night at approximately 10 PM PT. Some could take a while longer. You also can upgrade your accounts yourself at any moment to see the most recent activity:

  • Go to Bookkeeping, then Transactions, then Bank transactions or Banking.

  • Choose Update.

  • All of the banking information accounts will be updated.

Tip: When you see a text about supplemental verification, follow the instructions on the monitor to resume the update. It's not that all banks need this; however, some do for additional security.

Let's get to the next phase where you can't get your transactions to download.

Review downloaded transactions and categorize them

  • Go to Bookkeeping, then Transactions. Next, go to Bank Transactions or Banking.

  • Choose the account title you wish to review.

  • To initiate your evaluation, click the tab that says "For Review."

When transactions are downloaded to QuickBooks, they are sent to the For Review button. Go over each one at a time.

You can match, add, or look at more than one match for each. Follow the instructions in every segment.

Sync up with a previous transaction

Match means that QuickBooks found a match between the transaction you downloaded and one you already had entered. This connects them so that you don't end up with duplicates.

You only have to ensure that the match is right:

  • Use the Match button in the Action column to locate a downloaded transfer of funds.

  • Write down the Date, the Description, the Payee, and how much you spent or received.

  • To see more, click on the downloaded transaction.

  • Check out the files in QuickBooks that match. This is the transfer you may have already put into QuickBooks.

  • You can find out more about each match by clicking the link beside it.

  • Check to see if this is the right match. In particular, check the Deposit to, Bank account, and Payment method fields on the forms for current transactions in QuickBooks.

  • If that's the right match, finish the transaction that is still open.

  • Choose Match.

QuickBooks now recognizes that the transaction you retrieved is the same one which you had already entered. It ties the two together so that your account doesn't have multiple copies.

Figure out why some transactions don't match up

There are times when certain transactions can't locate a record that matches them. Here are some reasons why:

  • The list of payees is wrong.

  • The numbers don't add up.

  • The dates do not line up or are too far apart.

  • The deal happened more than six months ago.

Helpful tip: If you choose "Find a match," you can still locate a record.

  • The banking account on the payout is not identical to the one where the match is.

  • The money has been counted.

  • The deal is already linked to something else.

  • The exchange rates have a problem with more than one currency.

Verify paired banking transactions

QuickBooks will automatically find outbound and inbound banking transactions between two interconnected bank accounts by comparing the sums and time frames of the transfers.

Once you import a transfer into QuickBooks Online, you'll be asked if you want to pair it with a recommended transaction. If the connection is affirmed, that transaction will be marked as checked in both feeds.

Go to Bookkeeping, click Transactions, and then click Bank transactions.

Verify your matched banking transactions when asked:

  • To make sure the pairing is correct, click Record transfer in the Action column.

  • To get rid of the pair: Choose the transactions you want to see more about, and then click Unpair. Then, choose either Find match or Categorize.

To see the deals that have been settled:

  • Go to Bookkeeping, click Transactions, and then click Bank transactions.

  • Choose Grouped, and then, in the list, locate the transaction.

  • Select Transfer to [...] in the Matched or Added column to see the transaction details.

To change a settled deal:

  • Go to Bookkeeping, click Transactions, and then click Bank transactions.

  • Choose Grouped, and then locate transactions within the list.

  • Choose Undo in the Action column.

  • The transfer will be moved back to the "For Review" tab, where it can be looked over as usual.

Add a fresh transaction

Add means that QuickBooks couldn't discover a transaction that already matched. Rather, it began a second transaction by using your banking account or credit card information.

All you have to do is make absolutely sure there's no match and then, authorize the work:

  • Use the Add button in the Action column to find a downloaded transaction.

  • To see more, click on the transaction.

  • Check out the Category that was suggested. That's the account where QuickBooks would like to put the transaction. For instance, QuickBooks might suggest putting a fuel expenditure under "Travel Expenses" if it is a business cost. You can always alter the account and modify the category.

  • If you need to, you can shift the provider or consumer.

Tip: Choose the Find match option if you think you've already put this transaction into QuickBooks. Look over the range of suggested matches, and if you discover one, choose it.

  • Check to see if any other information is necessary or lacking and add it.

  • If all looks good, click the "Add" button.

This information is used by QuickBooks to build a fresh transaction and add it to your accounts.

Tip: Occasionally, QuickBooks sorts transactions into the "Other Income" or "Other Expense" accounts. These are for a short time. When you can, invariably put transactions right into accounts for income or expenses.

Look at and compare several matches

When you click "View," QuickBooks has discovered one possible match. You just need to choose the correct one:

  • Use the View button in the Action section to find a downloaded transaction.

  • Choose View.

  • Check out the records in QuickBooks that match. These are all the potential transactions you've already put into QuickBooks that could match.

  • You can find out more about each match by clicking on the link beside it.

  • Make sure that one of these fits. In particular, check the Deposit to, Bank account, or Payment method fields on the forms for current transactions. Note: Depending on the money transfer you are matching, the areas you notice may be different.

  • Check out the possible matches.

  • Close all open transactions once you locate the correct match.

  • Choose the right match, then click Match.

Check transactions with pictures

QuickBooks has teamed up with several banks to instantaneously add images of the front and back of any checks that need to be reviewed. It can find things like looking over transactions and matching them up.

When you've already linked QuickBooks to a financial institution that participates, the check pictures will load instantly and you won't need to do anything else.

To see the images of the checks:

  • On the "For Review" tab, choose a downloaded transaction whose "Attachments" column has a number.

  • Choose from the Check Image attachments in the transaction data to see the image.

  • You can see the back and front of your checks in the image screen that pops up, and you can also make the image fill the whole screen.

  • Check the transaction as you normally would. If you add or match the transactions, you could locate the visuals in the Attachments list under Settings.

Tip: Your financial institution is not backed if your linked bank transactions don't automatically include check images. But it may be endorsed in the future if QuickBooks collaborates with more banks.

When multi-currency is turned on, you can't use check images.

Look at the transactions that matched or were added

Once you add or match downloaded transactions, these are added to QuickBooks. In the Reviewed or Categorized tab, you can look over your project and ensure that everything is accurate.

Following your review, it's a smart option to quickly assess this:

  • Go to Bookkeeping, then Transactions, then Bank transactions or Banking.

  • Choose the account title you would like to see.

  • Go to the tab labeled "Categorized" or "Reviewed."

  • To look at the transaction again, follow the link in the Matched or Added column.

Tip: Whenever you need to modify a transaction or shift it to another account, you can nullify or remove its match by taking this approach. Before your monthly accounting, start making all of your adjustments.

Move money between more than one account

You can divide transactions, like a big business trip, across multiple accounts to keep track of them.

  • Go to the tab for "For review."

  • To see more, click on the downloaded transaction.

  • Alter the Find match option to Categorize if the Action column says Match.

  • Choose Split beside the button that says "Add."

This provides a gateway for splitting a transaction.

  • From the Category drop-down menu, choose the accounts you would like the transaction to be split between.

  • Type a sum for every split.

  • For every split, choose a Customer.

  • Once you're finished, click Apply and accept.

Exempt private or redundant transactions

To keep your financial records accurate, leave out personal or repeat transactions:

  • Go to the tab for "For review."

  • Check the box next to each transaction that you would like to leave out.

  • Choose Exclude.

  • Transactions that aren't included transit to the Excluded button.

Common mistakes to avoid

Try to not make the error of adding when you should be matching. When you have physically managed to enter an exchange beforehand, it is essential to match that certain transaction to records, which turn up in your banking feeds.

QuickBooks will attempt to do it for you instantly, and most of the time, it will work. Also, make sure everything is accurate with your reconciliations.

Each month, the reconciliations should be the same. If they do not match, that means there's an issue somewhere else. Make sure that your bank or credit card feeds are processed correctly by making sure that the reconciliation is done without any changes.

If a transaction has to go into more than one General ledger, make sure to add that detail manually.

Conclusion

We hope the above guide has given you a detailed overview of how to categorize online transactions in QuickBooks.

If you have any questions, leave them in the comments section below.