Hello again. In my previous post, How to Do a Full Year of Bookkeeping When You Need it Done Yesterday – Part 1, I showed you how you can connect QuickBooks to your bank account and import banking transactions into QBO. I hope you have been busy getting all of your accounts connected and importing all your transactions.
If you did everything in Part 1, you are ready for How to Do a Full Year of Bookkeeping When You Need it Done Yesterday – Part 2. In this blog post, I will show you what to do with all these transactions.
As I said in my previous post, this will require dedicated time and attention. As they say, Rome wasn't built in a day. You can't expect to do one year's worth of bookkeeping overnight. Click To Tweet Rest assured, you will get it done with a little patience and hard work. Grab a cup of coffee and block out any distractions. Now is not the time to send a text, check your social media accounts, or talk to your friends.
What you should have completed
At this point, you should have read How to do a full year of bookkeeping when you need it done yesterday – Part 1 and by now you should have done the following:
- Purchased QuickBooks Online
- Become familiar with QuickBooks Online (by watching my YouTube videos and getting my free ebook “The Simple Guide to Getting Started in QuickBooks Online and Avoiding the Most Common Mistakes New Users Make”
- Connected QuickBooks Online to your business bank and credit card accounts
- Imported banking transactions that didn’t download into QuickBooks Online (from your bank or by using PDF2XL)
You should now be able to see one year of banking transactions in the QuickBooks Online Banking Center.
Learn about working with downloaded banking transactions
If you haven’t done so already, you need to watch my overview video on working with downloaded banking transactions. This video will walk you through the basics of working with downloaded banking transactions in QuickBooks Online.
Categorize banking transactions
The next step is to categorize all the banking transactions. In QBO, click on Transactions > Banking on the Left Navigation Bar.
How to categorize Expenses (Money Out) transactions
At this point, I want you to work with expenses only (the amounts under the Spent column). Also, work with one bank account at a time.
Starting with the oldest transactions, assign a Payee (vendor name) and a Category to each transaction.
The Category list is the same as the chart of accounts. It tells QuickBooks how to categorize the expense. For example, a purchase from Office Depot may be categorized as Office Supplies Expense.
Click on each transaction to edit the transaction. Make sure that you change any categories from Uncategorized Expense to the correct expense category. There should be no expenses added to Uncategorized Expense. Read this blog post if you have accidentally recorded transactions to uncategorized expenses.
For any checks, you’ll need to view the check image to get the Payee name (the name of the person you wrote the check to). Sign into your online banking account to view the check image. Enter the necessary information in QuickBooks Online (Payee and Category).
Make sure to categorize expenses one at a time. Click Add on the right side when you are done with each transaction.
How to categorize deposits (Money In) transactions
I am going to assume that since you haven’t done an entire year of bookkeeping you probably don’t have good records of your sales invoices. If that is the case or if you do not want to manually enter all your invoices into QuickBooks Online, then I’m going to show you how to assign an income category to the amounts in the Received column.
Click on each transaction to edit the transaction. Make sure that you change any categories from Uncategorized Income or Sales of Product Income to the correct income category. There should be no income added to Uncategorized Income or Sales of Product Income. Read this blog post if you have accidentally recorded transactions to uncategorized income.
Make sure to categorize income one at a time. Click Add on the right side when you are done with each transaction.
What if you don’t know how to categorize a transaction?
If you are not sure how to categorize a transaction, you are going to need help. This is the time to consider whether you need help. You may know a friend who can help you or you may need to hire a professional. Either way, leave the transactions uncategorized until you figure out what to do with them. I recommend that you don’t guess.
All transactions are categorized and added – What’s next?
If you followed all the steps I outlined, you should have categorized and added all expense and income transactions into QuickBooks Online. Congratulations! You deserve it!
Your second option is to give your tax accountant access to your QuickBooks Online file so that they can review it and reconcile it for you.
When you finish, give yourself a treat – you deserve it! (I recommend cheesecake or ice cream).
I hope that you find this post helpful and that you apply what you learned on How to do a full year of bookkeeping when you need it done yesterday. Remember, doing a year of bookkeeping will take a little while so hang in there! I have shared with you various tips and tricks for doing your bookkeeping as fast as possible but you still have to put in the time to get it done. Just be patient and consistent and you’ll be done soon. Please share this post with others if it has helped you and subscribe to our updates to ensure that you get the latest 5 Minute Bookkeeping tips.