How to do a FULL MONTH of Bookkeeping in QuickBooks Online {Full Tutorial}

Hi, I'm Adri and I'm a bookkeeping licensee with Insight Tax. I've been doing bookkeeping for over 20 years and today we're going to go over one month of basic bookkeeping. Now it's important to note that we're not going to go over any accounts receivable or accounts payable items. We're just going to add and reconcile one month of transactions. This process is super important for any small business and while we aren't going to go into receivables and payables today, This is completely sufficient for most small businesses. Let's get into it. Once you log into QuickBooks, your screen should look something like this. I am going to be walking you through this in Accountant's View, and if your screen looks a little different, it might be because you're in Business View. So to switch to Accountant's View, you'll go to this gear icon here, and then down here it would say switch to Accountant's View, and you'll want to click that. A few other things From this same gear icon, you can go here to update your account, change the email address associated with it, add your tax ID, and change some more specific settings. And then here is Manage Users. This is where you'll be able to invite other people to access your QuickBooks, such as an accountant or an employee, without having to give them your login. The first thing we're going to do is link our bank accounts to QuickBooks. So what you'll want to do is go to Transactions here at the left, or it might say Banking depending on your QuickBooks subscription, and then I'm going to go to Bank Transactions. Now I already have accounts linked, but if we wanted to link accounts for the first time, what we would do is go to Link Account right here. QuickBooks works with pretty much every major bank and most small banks, so what you'll do is search for your bank here, or if you see it here, you can select it. And then once I click Continue, a window is going to pop up where I can actually log in to the bank. Once you've entered your credentials in this screen, There will be a couple more screens that— where QuickBooks is asking you to give permissions for QuickBooks to access the data. Keep in mind that this is very secure. It's read-only access, so QuickBooks will receive information from the bank but of course can't send any information or initiate transactions. So once you've done that, you'll click Continue. And it's important to remember that before you actually import the data, QuickBooks is going to ask you what date you want those transactions to start importing. So for example, if you're catching up your bookkeeping from the beginning of the year, you'll want to select January 1st. If there is a different date range, then you'll enter whatever that date is. Another way to get your bank data into QuickBooks would be to upload the data from a file. So when you log into your bank, you'll probably have options to download your data. The easiest way, of course, is just to connect directly like I just showed you, but you can also download a QBO or QuickBooks file or a CSV or Excel file. In this case, we're going to import an Excel file because I have downloaded and doctored some of the data for the purpose of sharing in this video. So what we're going to do is go to Link Account, Upload from File, and now we can just drag and drop our files right here. Here I'm going to select the account that that Excel file should be linked to. And if you do import an Excel file, you'll want to open it beforehand so that you can answer these questions. In some cases, you'll have 2 columns that show the amounts. In this case, I only have one. And then you'll want to import all of the transactions in that date range. Okay, I'm gonna do the same thing for my savings account. I'm going to select this savings account and hit continue. Continue again, select all of the transactions. If we don't import them all, it will cause our balance to be off and we won't be able to reconcile the account. I'll select yes to import those transactions now, and now we have everything there. So here's the fun part. This is where we get to actually add the transactions to QuickBooks while they're all sitting here. they're not technically on your books. They won't show up in your reports or affect your profit and loss or balance sheet. So once we go through this process of adding them, that's when they're actually a part of your company data. Now it's important to note that when we're recording transfers between accounts or even from our checking account to a credit card, for example, that we have those transactions match each other. So you can see here that there is $1,600 out of our checking account, and if I were to go to the savings account, I see $1,600 into our savings account on the exact same day. So we know that those are the same transaction, just showing up as a deposit on one side and money out on the other. So I'm going to go ahead and record that as a transfer. I'm here in the savings account recording that as a transfer. I will click add, and now if we go to the checking account, it's no longer there because it's already matched it and added it on this side. Here I have a deposit from Stripe. That is income, and what we can do, because there are a lot of Stripe deposits here on my books, I can create a rule so that it will automatically categorize all of my Stripe deposits as income. So I'm going to click on that transaction and then down here click Create a Rule, and I'm going to call this Stripe Income. And Stripe sometimes could be money out if it was, say, a refund or merchant fees, which is why I'm going to name this Stripe income. So this is money into my Chase checking account. I always like to use bank text rather than description because sometimes if we use description, it's going to miss things. So I'm going to say money in with The name, this text right here. I'm going to call this a deposit. The account will be sales, and my PE is going to be Stripe. So now I have to add Stripe as a PE because it isn't already in QuickBooks. So I'm going to go to add new. And I'm just going to call it Stripe. That's great. So I'll click save. And then I usually get rid of this here and let it import whatever description is already coming in from the bank. Now here, this auto-add button is going to— if it's clicked on, it's going to automatically categorize any Stripe deposit as income. If it's turned off, then we have the option to review it before it gets added to the books. So I'm going to go ahead and turn that off and click Save. Okay, so you can see now that this Stripe deposit is being categorized as sales. Another thing that we'll want to make sure is that this box is checked, Copy Bank Detail to Memo, and what that does is just allows us to be able to view whatever the bank detail was when we open any transaction that was imported through the bank feeds. So we'll click Add. Now we can see that not all of our Stripe deposits were included in that rule, which is great. I'm going to show you how to edit a rule. So if we go to Rules here, I'm going to click Edit, and I think I just want to get rid of that extra text there. Click Save and go to your bank transactions, and there we go. So now they're all here. There will sometimes be cases where you need to update a rule, edit the text so that it includes more things. Another thing that you can do with a rule is say if it says Stripe, you can say, um, or contains, and then you can add a different description that might still be the same thing, and you can add that there. So I'm going to go ahead and add These deposits that are all Stripe deposits. Okay, and I would just go down the list and do that same thing. Here's another. Deposit. This one is from Hudson Marketing, so I'm going to go ahead and enter Hudson Marketing. They are a client, so customer Hudson Marketing. I'm going to click save, and this will also go to sales, so I'll just click add. Next we have Canva, which is a software, so I'm going to again add Canva as a vendor. Click Save, and then that will go to my Software Subscriptions expense account, and I'll click Add. Okay, see here we have money out of Stripe. Now you might need to log into your merchant processor to see whether or not money out is a refund or Stripe fees. In this case, I know that it's a refund, so what I'm going to do is add Customer name, and then I want to keep my refunds separate from my sales rather than have it just go against sales. So I'm going to call this refunds, and we can see here that refunds are not— is not already an account in QuickBooks. So I'm going to add new account. This part is super important. I often see clients who add an account, but they accidentally leave it as a bank account. We don't want that to be a bank account. This is an income account. I'm going to call it refunds. Save and close. Even though it's money out, I'm still calling it income because it's just negative income technically, right? It's a refund. So we'll go ahead and add that and keep going. So Z1 Consultants, and they are a consulting firm that we hired. So I'm going to leave that as legal and professional and click add. Betterment is employee retirement. I'm going to call that employee benefits and click add. And then I have these deposits that are from customers as well. So let's say that this $3,870 is really from 2 different customers and I want to be able to reflect that. So what we're going to do is click split right here. And I'm gonna say, okay, I have $3,000 that came from— let's call them— we'll say this one is the marketing again. And we're gonna add a new customer, and we'll call this I'm getting really creative with my names here, but call that Smith Marketing, and that's $870. And QuickBooks won't let you add it until this is zero, until everything matches up with what the deposit amount was. So I'm going to apply and accept. Oops, this also needs to be sales. There we go. And we will say that this one is all from— so now what I have here is that QuickBooks is offering to create a rule for me because it's saying, okay, twice now you've recorded these remote online deposits as coming from Smith Marketing. Do you want them all to go to sales? In this case, That's not always going to be the right thing to do, so I'm going to just say no. We're going to use a different category each time for remote online deposits and close it. Here I have a payment to Craig A., so I'm going to enter Craig. He is a contractor who works with me, so I'm going to leave this here as outside services and click add. Here I have a payroll transaction. Oftentimes with payroll processors, you're going to have 3 or at least 3 different transactions every time you run payroll. You'll have your net wages, you'll have your payroll taxes, and then you'll usually have a payroll processing fee. I like to record each of those separately. So what I'm going to do here is ADP, and I'm going to call this wages. And let's go ahead and create a rule. So we'll have ADP wage will be the name of the rule. Bank text contains ADP wage pay, and Payee is ADP wages. We want our payroll cost, or our— we want our expense account to be employee wages. So that's great. I'm going to delete this and click save. Perfect. So now I have this transaction going to wages. Then we have taxes, same thing. I'm going to Create a new vendor called ADP Tax, and that should go to payroll taxes. We can create a rule again— payroll taxes and ADP Tax. Okay, so we can see here that this transaction goes to wages, this one goes to taxes. Further down, we should see the same thing. We have our ADP wages going to wages and our taxes going to payroll taxes. So scrolling back up, I see that I have a transfer to 1239, and for some reason it isn't recognizing that this is a transfer between 2 accounts that are connected to QuickBooks. So let's see, I can see it here being received, the same amount. Same date. So I am going to categorize this, and we can just call it transfer. And this is going or coming from our checking account. I'll click add. So now on the checking account side. We'll see that, okay, it is matching it now that it can see that those are transfers between the two. So I'll click Match. And here I have a transfer to a USAA account, which is a personal account. So what I'm going to do is click Categorize and call this a transfer. I'm going to call this Transfer to Personal. Just so that there's a difference. And then in this case, we want to have this go to an equity account because this is just going to a personal account. So let's see, I have a contributions account. I don't have a distributions account yet. So I'm going to click add new account again, making sure I'm changing this from bank to equity in this case. We'll call this distributions. It's not a partnership, so I'm going to change that to honor distributions. Save and close and add. Here is another transfer to personal account, so I'm going to do the same thing. Okay, now I showed you how to record a transfer between 2 bank accounts, in this case between checking and savings. Now I'm going to show you how to record a credit card payment. A credit card payment is essentially in QuickBooks a transfer from your bank account to your credit card. But you can also record it as the credit card payment. So that's what I'm going to do. I have this $269.10 that was spent, and if we look at the credit card, we have this $269.10 that was received. I'll go ahead and click Add Card Payment, and now we can look here at this Chase checking account, and that transaction is no longer there because it was matched to The credit card payment that we just added. Here is a bank fee, and since Chase is the name of my bank, I'm going to use that as my vendor name. And it's not a merchant processing fee, bank fee. Add. And here I have some sales deposits from Amazon, so I'm going to Create that customer and then call this sales again. And let's go ahead and create a rule since there is going to be several of those. So Amazon sales money in. Again, I'm not going to want to create an auto-add rule because Amazon money in could be maybe a refund for an online purchase, or it could be sales. So I'll have the rule set up to put them to sales, but since I'm not having it be an auto-add rule, it gives me the chance to review it. before officially adding it to the books. And once again, we have something missing from our rule. We can see here that I have a few different kinds of Amazon income because we're in a few different countries. So I'm going to edit that rule as well. And have it just say Amazon. So now when I go back to my bank transactions, it's covering all of them. And then we'll just want to have a close eye on that to make sure that we aren't recording a refund as sales. In this case, I know that these are all sales, so I'll go ahead and add all of them. Here we have another transfer. And I will add that. Okay, so here are some more ADP fees. These are the actual processing fees, so I'm just going to call this— we can go ahead and use this suggestion, ADP payroll. We'll create a rule. We want the rule to cover— so bank text, ADP, and we don't want it to just say ADP payroll because that could cover a few things. So I'm going to add the word fees because it looks like that came through in the bank text. And my expense account will be processing fees. I'll go ahead and add that. So one thing that we can do if we're adding several transactions at once, and I'm confident that this should go to payroll fees and this should be a sales, we can go ahead and just check the box for all of the ones that we want to add. And accept. Okay, so here we have this Chevron transaction. It says it's going to ADP Tax, and that is because I doctored that Excel file where we imported the transactions and didn't change some of the bank text. So this really should be a Chevron. I'm going to add a new vendor. And then this should be an automobile expense, but we can see that I don't have automobile expenses in my chart of accounts. Add a new account. This will be an expense account this time. And we'll save that. And now we have Chevron going to automobile expenses. Perfect. Okay, now I'm just going to keep going through and adding all of these transactions. So Here I have a payment to an American Express card that is not on the books because it's a personal card. We really want to avoid doing that. It would be better to transfer the money to a personal account and then pay off the credit card or pay down the credit card. But in this case, we didn't do that, so we're going to Click categorize. I'm going to go ahead and just add American Express as a vendor, and then this is technically a distribution because it's a payment to a personal card. All right, and here I have a loan payment. The loan is not yet on the books, and I'm going to show you how to add that. So we can go ahead and just categorize this payment and put it directly to the loan. So let's say it's Payment to SBA. And it's possible that the payments are interest only at this point. A lot of them are, in which case we can just leave it as an interest expense, but we would still want to have that loan on the books. We're going to call this SBA loan, assuming that that isn't an interest-only payment, and the account type here should be a long-term liability, and we can name it whatever it is. So if it's SBA loan like it is here, we'll name that SBA loan. If it was, let's say, an auto loan for a vehicle that we are That is a business vehicle, we would put maybe note payable and then whatever the bank name is for that vehicle. I'm just going to save and close here. Now let's just say for the sake of this video that this is a principal and interest payment. So I'm going to have, let's say, $500 is principal. And then $79 is interest. So I'm going to change the category here to interest expense for $79 and apply and accept. Now what's going to happen is that payment, that $500 that went to principal, is now going to reflect as a— it's going to show that that SBA loan has a negative balance right now. So if I were to go to my balance sheet, you can see SBA loan has negative $500. If there was a deposit on my bank account to show where that loan started, let's say it was a $50,000 loan, we would have $50,000 somewhere here on that received line, and we would record that to the SBA loan. Now let's say I am starting my books at the beginning of the year, but really I took out this loan last year. You'll want to work with your accountant or create a journal entry to make sure that that's properly recorded for last year. So if I, for example, had received that loan December of last year, I would make a journal entry And let's say I received them on 12/31 of last year. A loan for $50,000. And usually we would see that hit the bank account, but that's going to throw off our balance for the purposes of this video. So what I'm going to do is put it to opening balance equity. Truth be told, I hate using this opening balance equity account because it's not telling the best story. For the sake of this video, we're going to use it, but usually you want to know where that loan went. Maybe you used the funds to pay directly for a certain product, or if you use it to buy a vehicle, for example, The account here would be, you know, the vehicle itself. We're going to use opening balance equity for today, but it's really an account that we should avoid using. Okay, so then let me just show you. So that now changed my balance to a positive balance, which is what we want to see. So we have the $50,000 minus the $500 payment, giving us a balance of $49,500. Okay, let's go back to adding these transactions. Now another thing we can do to make this process quicker, especially if you're adding several months of transactions at a time, is to sort your list by description. And then what this is going to do is put like transactions together. So here I have all my ADPs. I can go ahead and just accept all of those. You'll see down here all of my Stripes together, and I can accept all of those. Here I have 2 Walmarts side by side. I know that both of those are office supplies. I'll go ahead and create a rule for that. And now I can add both of those. We'll say that these are all from the same client, so I'm going to go ahead and add these as well. Here are my transfers, 9/1 and 9/5. 9/1 and 9/5. Sometimes it's good to just make sure that you're matching up to the right things on the right dates. So I'll record those. Okay, the last transaction I have to add is an interest payment into my savings account. So I'm going to use that same Chase vendor, and this should go to interest income. Click add, and now we're done. We have added all of our transactions. To QuickBooks. So the next thing that we're going to want to do is kind of review how they were categorized and make sure that things are looking accurate. If I go to reports here, here's my profit and loss for September. Here are our sales and our refunds. Here were all of the expenses. And as a business owner, you'll be able to look at these categories and know if that looks high or low based on the month that you had. So I'm reviewing everything. I know what my numbers should look like, and everything looks good to me. So we're good here. Let's also just pull up a balance sheet. And the balance sheet is important because it will help us to identify if we did create any expense accounts as, let's say, bank accounts, for example. So here I can see I have a negative balance in my Chase account because in the month of September I spent more than I received, but I did have a starting balance here that I'm going to need to add. This won't be the case most of the time. This won't be the case most of the time, but because of the fact that we just imported one month of transactions for this video, I'm going to need to add a starting balance. Typically what you would be doing is importing transactions from the date that the account was opened, so you'll be starting with a zero balance and then importing your transactions, and then this number should be accurate for you. Here are— here's my credit card balance, my SBA loan that we talked about, and then these are my equity accounts. This is the amount of money that I took for myself, and then here's that opening balance equity. There's another $269.10 in opening balance equity because what happens when you link a bank account to QuickBooks is The bank tells QuickBooks whatever your account balance is on the day that you created the import. So today when I imported that credit card into QuickBooks, the balance was $269.10. Without me telling it to do anything, QuickBooks created a journal entry to get us to that balance. Most of the time you're going to need to delete that entry. So what I'm going to do here Is click on that balance, and then I can see here that opening balance equity transaction. I'm going to go ahead and delete it because it's going to throw off my bank reconciliation. Okay. Okay, our next step is going to be to reconcile each account. We already added the transactions, and what the bank reconciliation is going to do is make sure that we don't have any extra or missing transactions on our books. So we will go here, let's see, transactions, and then reconcile. Go ahead and get started. Okay, so you should open up your bank statement when you do this. I'm not going to pull it up on the screen because I don't want to share any personal information, but I know that the ending balance on my bank statement is $41,879.82, and that is my September 30th balance, and I will start reconciling. Okay, QuickBooks is automatically going to check off all of the transactions that were added in the bank feeds, and you can see here I have my ending balance My cleared balance is negative $7,088.41. The difference is $48,968.23. That is because of this journal entry that I created to get to the correct starting balance. If I mark this off, you can see the difference is zero and everything is good. I'll show you a few things here. So these green boxes are indicative of transactions that were added through bank feeds. Here there is no green box, and that's because this transaction was manually added by me and not imported from the bank. Another thing to note is that if you have everything checked off and you feel like it's right but your difference is still zero, Maybe you entered the wrong ending balance or the wrong date, so you would go to Edit Info, and this is where you can correct your ending balance or your ending date. If those are right and you're still off, your next step would be to open up your bank statement and have this reconciliation screen open side by side and go through each transaction one by one. So you would deselect all of the transactions here, and then you would see on the bank statement $4,500 deposit, check it off here. The next thing is going to be, you know, this deposit. You'll go down each one, one by one, making sure that you're seeing it on the bank statement, marking it off here on your bank reconciliation screen, and eventually you'll find that either there's something extra or there's something missing, and then you can either add or delete The transactions that should should or should not be there, and then your reconciliation difference should get to zero. So I'm going to finish now. Ta-da! We reconciled the account. Now we're going to do the same thing for our savings account and our credit card account. All right, and now we are all done. So to go through the steps again really quickly, we imported our bank transactions from the bank by connecting it directly to the bank or by importing either a CSV, Excel file, or a QuickBooks or QBO file. We added the transactions here by giving each one a name and an expense or other category, and then we reconciled by opening up the bank statement, entering our ending balance and date, and then making sure that each transaction was there on the books that needed to be. Now you know how to do one month of bookkeeping. I hope this was helpful. If you have any questions or comments, please let me know.