Course 4: Categorize Your Transactions in QuickBooks Online

Use your Chart of accounts to organize the transactions downloaded from your bank feeds. This course covers reviewing, matching, and categorizing transactions. Reconciliation is covered separately in Course 5.

Before you begin, have your receipts, invoices, and other supporting records available. Menu and button names can vary by QuickBooks version.

Watch the videos

Video 1

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Video 2

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1. Open the transactions waiting for review

  1. Sign in to the correct QuickBooks Online company.
  2. Go to All apps, Accounting, Bank transactions, or the equivalent banking menu in your version.
  3. Select the bank or credit card account you want to review.
  4. Open Pending, called For review in some versions.

2. Review what each transaction represents

  1. Open a transaction to inspect its date, amount, bank description, and suggested category or match.
  2. Compare it with the receipt, invoice, or other supporting record.
  3. Identify the actual purpose of the payment or deposit. Do not rely on the merchant name alone.
  4. Check whether you already recorded the transaction in QuickBooks before adding it.

Downloaded suggestions are a starting point, not confirmation that the accounting is correct. If you cannot identify a transaction, leave it pending and ask for clarification rather than guessing.

3. Match a transaction that is already recorded

  1. If the transaction already exists in your books, review the suggested match or available matches.
  2. Compare the amount, date, customer or vendor, and supporting record.
  3. Select the correct existing record.
  4. Confirm the match using the button shown in your version.

Match links downloaded activity to a record already in QuickBooks. Categorizing and adding it as new instead can create a duplicate. Existing records may include payments, expenses, checks, transfers, or credit card payments. Do not select a match solely because its amount is the same.

4. Categorize a transaction that has not been recorded

  1. Open the downloaded transaction.
  2. Choose Categorize if needed.
  3. Select the appropriate account from Category.
  4. Review or enter the payee and other applicable details.
  5. Check the amount and description against the supporting record.
  6. Select Add or Post, depending on your screen, to record the transaction.

Use the accounts established in Course 2. For example, a purchase of ordinary office stationery may belong in your office supplies expense account. Choose the category based on the actual transaction and your bookkeeping setup.

5. Identify transactions that are not ordinary income or expenses

  1. Check whether money moved between your own business accounts.
  2. For transfers and credit card payments, review any existing record and the corresponding account before posting either side.
  3. If the transaction is a loan, owner contribution, owner withdrawal, refund, or purchase of a long lived asset, review the appropriate account with your bookkeeper.
  4. Record or match the transaction according to its actual purpose, rather than treating every deposit as sales or every withdrawal as an expense.

A transfer between your own accounts is not new sales income. A credit card payment is not a second copy of the purchases already recorded on the card. Personal spending from a business account also needs appropriate accounting treatment; do not automatically exclude it to make it disappear.

6. Split a transaction across multiple categories

  1. In Pending or For review, open the transaction.
  2. If the option is Match, change it to Categorize when you need to create a new split record rather than match an existing one.
  3. Select Split.
  4. Choose the categories required for the different parts of the transaction.
  5. Enter the amount for each part using the supporting record.
  6. Confirm that the amounts total the downloaded transaction and Difference shows zero.
  7. Complete the applicable details and select Split and add, or the equivalent confirmation button.

Use a split when one payment genuinely belongs to more than one account. Do not add the full payment separately under each category.

7. Exclude only when appropriate

  1. Confirm that the downloaded entry should not create another record, for example because it is a verified duplicate.
  2. In Pending or For review, select its checkbox.
  3. Select Exclude.
  4. Review the Excluded tab if you need to find it later.

Excluding a download does not correct a separate transaction already recorded in your books. If you excluded the wrong download, select it in Excluded and choose Undo to return it for review.

8. Review the remaining transactions

  1. Continue reviewing each transaction in the selected account.
  2. Check uncertain entries with your bookkeeper before posting them.
  3. Repeat the process for each connected bank and credit card account.
  4. Review posted activity for duplicates and incorrect categories before moving on to reconciliation.

Bank rules can help with repetitive transactions, but establish the correct treatment first. Do not automatically accept suggestions or apply a category to a group of transactions unless you have checked that it is appropriate for each one.

You are ready for Course 5: Reconcile Your Accounts. Categorizing the bank feed does not by itself reconcile an account to its statement.

References

Intuit: Categorize online bank transactions
Intuit: Match bank and credit card transactions
Intuit: Exclude downloaded transactions

Presented independently by J.R. Harris Bookkeeping. QuickBooks is a trademark of Intuit Inc. This is not an official Intuit course and is not endorsed by Intuit. Screens and available options may vary.