QuickBooks How To: Categorizing Transactions

Are you categorizing your transactions in QuickBooks? This will provide a detailed look at where money is coming and going. As a business owner, it’s vital to know which areas of your business are bringing in money and which are draining it. Categorizing transactions will provide detailed insight on your finances. With categorization, expense reports will be easier to read and more useful in strategizing for the future. Categorization can help you maximize your business’ profitability and provide valuable insight on where you can cut costs. 

To categorize transactions in QuickBooks Online, first you need to 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 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 wasn’t logged quite right. This will give you the opportunity to correct it before month-end when you reconcile and run reports. 

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 each month. For assistance with categorization, reach out to a certified bookkeeper or find reputable resources online.