How to Set Up Credit Card Accounts in QuickBooks 2019
Warch this QuickBooks 2019 video tutorial. Learn how to set up a new credit card account. It’s about the business purchasing items using the credit card.
Well, we’ve made it all the way down to module nine now. In this particular module, I want to talk to you about working with credit cards. We’re talking about credit cards that your company uses to purchase items for the business. This has nothing to do with customers paying you with credit cards (when you invoice them). This is all about the business purchasing items with the credit card.
In order to do this the in the correct way, you need to have your credit card accounts set up in your Chart of Accounts. And then, we’ll talk about how to enter those transactions in those particular accounts.
What you want to do in QuickBooks is go ahead and set up each credit card as a separate account in the Chart of Accounts. Let me go ahead and flip over here. They have a few just to show you how this looks.
If you notice here, they have a QuickBooks credit card and a Cal Oil credit card. The reason you want to set these up this way because you want to be able to see at any time what the balance you owe is on that credit card.
Let me tell you a couple of things. I see people do that are wrong in QuickBooks often. I see people (go ahead and put each transaction) that they’ve charged in as an expense account. Number one, you don’t want to do that because you don’t know how much you owe on the credit card. And these credit cards are actually liabilities to your business in a way because you owe them.
The other thing I see people do is they will actually get their Visa statement in the mail and they will actually put it in as a bill.
You don’t want to do that because here’s what happens. Let’s say, you have a credit card statement and it says you owe a total of $1,000. Then, you go over to QuickBooks, and you enter it as a “bill”, just like we’ve seen. What would end up happening is you would put $1,000 right here, and then you would come down here. Then, break out all your expenses so that they total $1,000.
Now, at this point you would be okay, but here’s where the problem comes in. Let’s say, you only pay $700 towards this, meaning that you owe $300. Next month, when your statement comes in you would enter a second bill and it’s going to say that you owe $300 plus (whatever you charged that month).
So, let’s just say it said you owed $600 total. Here’s where you get in trouble because QuickBooks will think you owe the $600 plus (the $300 from this first bill).
Then the other problem is you wouldn’t be able to break out all the expenses. Because of $300 of those, you broke out on the first bill. And, it just becomes a snowball that grows and grows and grows and will never go away. And is not the right way to do this! So do not enter these as bills at this point.
Here’s the correct way to work with credit cards.
On your Home screen, you’ll notice that you have an Enter Credit Card Charges button. And this is where you’ll enter all the individual charges.
Now, we’re going to do that in the next section. But, I want to go back up and talk to you about how to set up those credit card accounts.
Let me go back to the Chart of Accounts and we’re going to set up a Visa card.
I’m just going to right click anywhere and choose the New option (Credit card is one of your choices). And I’m going to hit Continue. Here’s where I’m going to name the account.
I can name this anything I want! If I wanted to say: “Credit Card”. If I wanted to say: “Operating Card, Visa”, it does not matter. You would put in your general ledger number if you had one.
Here’s a place for the description which is totally optional. You do not need the credit card number, but you will need an opening balance.
What you need to do is get out your credit card statement for the month (when you’re beginning your company file) and put in the ending balance from that previous month, or the beginning balance from the current month. Either way! It’ll be the same number.
Let’s just say it was $1,000. I’m just going to say as of my start date. And then, I’m just going to say that my start date is January 1st of 2023. I’m going to click OK and I’m going to Save & Close.
Now, when you set this up, it will ask you if you want to set up your online services. We are going to talk about that a little bit later. We’re not going to do that right now. I’m going to go ahead and just say No. Now, you’ll see your Visa card here and you have a balance of $1,000.
Now, (when you make the payment for the Visa card), this is the account you put it to right here. This number will go up or down based on any checks you’ve written to make payments or the expenses that will come out of that account.
That’s how you’re going to set up your credit cards.
What we’re going to do now is go over into the second section of this particular module and talk about how to enter those credit card charges individually and they’ll show up in this balance.
Cindy McGuckin
Cindy McGuckin is an IT trainer with over 20 years of experience. Cindy currently manages the IT Training Department at Trident Technical College, she's a Member of the Association of IT Professionals, Charleston, SC chapter and the Treasurer of the South Carolina Association of Continuing Higher Education.Cindy is a Microsoft Office and QuickBooks expert and her online courses have received hundreds of 5-star reviews. Her no-nonsense approach to teaching complicated topics makes her classes engaging and interesting.
