Have you recently bought QuickBooks Online? Or, maybe you’ve been using it for a while to get all of the bookkeeping done for your small business. I’m sure by now you have figured out that there is a banking center where you can connect QuickBooks Online to your bank and credit card accounts. We call that the Bank Feeds. I’m sure that you found it very helpful – but I did want you to know that there are quite a few mistakes that small business owners make with their Bank Feeds. Let’s go over what they are so you can learn to avoid the biggest mistakes.
#1: First of all, the number one mistake that small business owners make with bank feeds is thinking that it is the only way in which you do your bookkeeping in QuickBooks. Perhaps you’ve used a tool like Quicken or some other personal finance tools in which you have connected those tools to your personal bank accounts, and those tools pretty much work off of the downloaded banking transactions. QuickBooks Online has similar functionality, but QuickBooks Online is a small business accounting software and it has lots more functionality and ways of doing things. While the bank feeds are very helpful, you need to understand that that’s just one of the ways in which you can do your bookkeeping. There are many other ways, and we share a lot of QuickBooks Online Tutorials on my blog at 5MinuteBookkeeping.com, so you can learn the full functionality of QuickBooks Online.
#2: The second mistake that small business owners make with their bank feeds in QuickBooks Online is that, when you’re going through all of the transactions that are downloaded from QuickBooks, you just click “add” on every transaction. Unfortunately, those transactions are not yet categorized into QuickBooks. They need to be categorized first before you click add. What happens when you’re clicking “add” on every transaction and then look at your reports, you end up with a bunch of transactions in uncategorized income and uncategorized expense, and then you’re having to go through every transaction and re-categorize it.
What you actually need to do is to look at the transactions that are downloaded from the bank and review the account category on each transaction, to see what it was for. If it was for a hotel expense, for example, then you might need to categorize it to travel. Or, if it was an office supply type of expense, you would put it to office supplies or to office expense. You never want to categorize anything to uncategorized expense or uncategorized income.
#3: The third mistake that small business owners make with their QuickBooks Online Bank Feeds is that they let them accumulate for months at a time instead of working on them every day. Here are the 5MinuteBookkeeping blog, we’re big on encouraging business owners to work on their bookkeeping just five minutes a day. You can do that very easily because you probably don’t have that much activity on a daily basis. If you can work on the bank feeds five minutes a day, rather than waiting a week (or months) before getting to it, you’ll be a whole lot more productive. It won’t be such a big pain to work on all of those transactions, and then you’ll get some small wins. Who knows? You might do five minutes, 10 minutes, maybe 15 minutes a day rather than waiting weeks, months, and even a year to work on your bookkeeping.