30 QuickBooks Tips In 30 Days-Day 6

OK, so I already missed a day in my 30 day series but I’m making up for it now!  Today’s tip has to do with business credit cards.  For more details on this topic, check out episode 11 of my podcast “Tracking Credit Cards In QuickBooks“.

Tip #6 of 30:  Enter individual credit card charges, not monthly totals

A lot of small businesses use a business credit card to pay for expenses such as gas, office supplies, travel and meals.  And a lot of bookkeepers don’t enter each charge individually, they just wait until the credit card statement comes in the mail and they enter the total amount onto a bill or check.  Sometimes they break it down into multiple expense accounts but for many businesses there is an expense account called “Credit card expense” and the whole amount goes there.

This is not a good bookkeeping practice for several reasons.  Most importantly, there needs to be a proper accounting of all expenses.  So if there are 10 transactions on a credit card statement for gasoline purchases, 3 transactions for restaurants and 3 transactions for office supplies, then at least 3 separate expense accounts should be posted to (Auto Expense, Meals, and Office Supplies).  Also, there is a problem with the timing of the transactions.  If everything gets entered on the same date (the date of the credit card statement) it could distort reality for 2 different accounting periods.  Say your credit card statement starts on the 15th of the month and ends on the 14th of the next month.  If all the charges get posted as totals on the date of the 14th, then expenses aren’t getting charged to the proper periods.

Another issue is that of reporting and tracking.  If individual credit card charges aren’t getting recorded with the actual vendor names then you are losing a whole layer of information that could be useful.  You’ll never know which vendor you spend the most money with and it will be more difficult to track down the details of any one specific charge.  And you’ll have a much harder time discovering any bogus charges if you never see any actual paper receipts.

So my tip is this:  enter each credit card charge individually, using the real vendor name and the real date of the transaction and post it to the proper expense account.  Devise a system to make sure you get the credit card receipts from the person(s) that are using the credit cards and just do it.  It only takes about a minute to record a charge and it has many benefits, as mentioned above.

Did you find this tip useful?  If so, I would love for you to leave a comment below.  I would also love to hear some of your favorite QuickBooks tips!