Categorizing Transactions in QuickBooks

Are you categorizing your transactions in your bookkeeping? There are many reasons why you should - one being that you can have a much clearer picture of where money is coming and going. As a business owner, it’s essential to be aware which areas of your business are bringing in money and which are taking it. Categorizing transactions will provide additional insight on the financial side of your business. With categorization, expense reports will become easier to read and more helpful in strategizing for the future. Categorization can help you maximize your business’ profitability and provide valuable insight on where costs can be cut.

If you have QuickBooks Online, sync your bank account(s) and credit card(s) to your QB account for automatic entry, categorization, and matching. QuickBooks typically downloads new and available transactions around 10 p.m. every night. If for some reason you don’t think your QB is synched up with your most recent transactions, you can request an update. Select Bookkeeping > Transactions > Banking > Update. This will pull the latest data to your QB account for your review. 

You should get in the habit of consistently reviewing your downloaded transactions to ensure they are matched and/or categorized correctly. If QuickBooks cannot determine a match, it will create a new record. Although QB is reliable, it’s always a good idea to double and triple check on the off chance something slips through the cracks.

To review QB’s automatic entry and categorization, select Bookkeeping > Transactions > Banking > select the account you want to review > For Review. From there, you can choose to match, add or view each transaction. All downloaded transactions will be sent for review. Once you match or add the downloaded transactions, they will be recorded in your QB account. 

To review the work you’ve done to double-check for accuracy, select Bookkeeping > Transactions > Banking > select the account you want to review > Categorized/Reviewed > Add or Matched. If you catch an error, you can undo or un-match the transaction and re-categorize. 

It’s important to complete the categorization step of your bookkeeping prior to reconciling - you want your books to be as accurate as possible before making sure everything is balanced. For assistance with categorization, reach out to a certified bookkeeper or find reputable resources online.