Credit cards can attract hefty interests if the bill isn’t paid on time. Hence, “managing credit cards” is one of the essential tasks for a QB user.
With the ever-growing adoption of plastic money, credit cards have been able to gain a name for themselves. Credit cards enable a user to borrow a said sum of amount for a specific period of time after which the user needs to pay a fine. But the question is what type of account is a credit card in QuickBooks?
- 1 Know about QuickBooks Credit Cards
- 2 Steps to Create & Set up a New Credit Card Account in QuickBooks
- 3 Steps to Enter Charges to Credit Card Account in QuickBooks
- 4 Create Multiple Credit Card Reports:
- 5 What is Credit Card Dues in QuickBooks?
- 6 Recording Service Charges in QuickBooks
- 7 Get solutions to all of your accounting and bookkeeping problems with industry leading experts
Know about QuickBooks Credit Cards
Users need to configure the account and settings for a credit card in order to use and manage them efficiently and effectively with QuickBooks. Also, you can keep track of all the transactions that happen for a particular credit card by opening up the specific account associated with it. Credit card accounts aren’t available as default accounts in QuickBooks.
You need to create specific accounts for credit cards. You can also use different sub-accounts for entering details of different credit cards. This way, you won’t have to create multiple accounts for handling multiple credit cards.
Steps to Create & Set up a New Credit Card Account in QuickBooks
Learn how to create and set up a new credit card account in QuickBooks. Follow the below-mentioned steps:
- Log into QuickBooks,
- Go to the Lists menu,
- Click on Chart of Accounts,
- To view drop-down options click on Account.
- Click on New.
- Select Credit Card under the type of account and click on continue.
- Enter all the necessary information in the new window for the credit card account.
- Enter name and Type of the credit card. Also, enter the balance by clicking on entering opening balance.
- You can use the bank statement for filling in the information.
- Hit Save and Close.
Steps to Enter Charges to Credit Card Account in QuickBooks
After setting up a credit card account, you need to enter transactions and charges to it. You can easily enter all the credit charges in QuickBooks. For entering charges to credit card account, follow the steps provided below:
- Select Banking. This you can find on the left side of the screen.
- Enter all the charges that you want to add to the credit card account.
- Hit Credit Card. From the drop down options select the credit card account that you want to put the charge on.
- Choose the appropriate option:
- Purchase/ Charge: If you want to enter a charge on the credit card.
- Refund/ Credit: If the money is being charged as a refund
- Purchased from. Select the vendor from the drop down list.
- Add a memo to make the charge more descriptive.
- Enter the expenses you want to track by going to Expenses or Items. Make sure to track them as a credit card purchase.
- Hit Save and Close.
All the charges will be directly added to the credit card account. If you set up subaccounts, then the transactions will be posted there. Still, you will be able to access all the charges and payments from the parent account.
Note: All the charges and purchases are displayed on the credit side of the credit card account.
Create Multiple Credit Card Reports:
You can use the above-entered transactions for creating multiple useful reports. Reports can be created by going to the chart of accounts. You can select the credit card account and apply multiple filters to create a more comprehensive report. You can create both summary and detailed reports for credit cards.
What is Credit Card Dues in QuickBooks?
While adding charges is essential, paying and recording credit card due amount is also just as essential. While charges are recorded on the credit side, payment of credit card due amount is recorded on the debit. This helps in balancing out the entire account. This will also help you in reconciling accounts and in creating more accurate balance sheets and other financial statements.
Steps to Record Credit Card dues in QuickBooks:
- Select Banking from the left navigation menu.
- Click on Write Checks.
- Select the bank account that you want to work with. Select the bank through which you will pay the credit card dues. For selecting a particular bank account click on the Bank Account option. This will bring up all the bank accounts that have been created in QB. You can add a new bank account by clicking on Add New button.
- Fill in all the necessary information such as Payment Date, name, and information of credit card provider, amount to be paid against the total due amount.
- Open the Expenses tab.
- Select the credit card account that you want to work with
- Hit on saving and close.
Make sure to tally the debit and credit sides of each and every credit card account and subaccount. In case they aren’t equal, track all the charges and payments added to the account. Make sure all the data is entered correctly. Keep on working on the data till both the credit and debit side of the credit card account and all its sub-accounts are equal.
Recording Service Charges in QuickBooks
Recording Credit Card service charges is just as vital. These charges can be monthly or yearly based. Further, recording these transactions will be beneficial as they will enable you to create more accurate financial statements. Also, these transactions need to be taken into account when filing taxes. Let us take a look at how we can record service charges on credit cards in QuickBooks.
Steps to Record Credit Card Service Charges in QuickBooks
- Go to the chart of accounts from the List menu.
- Select the credit card account to which these service charges are to be added.
- Select the Credit card provider by clicking on Vendor.
- Enter the service charge amount.
- Select the account through which you want to track this expense. Make sure to select an expense account instead of an income account.
- Hit Record.
After completing the aforementioned steps, you can easily track all credit card service charges via the expenses account that you connected while performing the steps given above. However, it is not a compulsion to record and manage credit card service charges with a credit card account. You can do this easily with a simple expense account.
Hope you learned something new today. And you were able to get the answer not only for “what type of account is a credit card in QuickBooks”, but also successfully find the answer for:
- How to create a credit card account in QuickBooks?
- How to set up a credit card account?
- How to enter charges to credit card in QuickBooks?
- How to create credit card reports?
- How to record service charges related to your card?
If you are clear with what we had to offer then great but if you are still facing difficulties request you to get in touch with our ProAdvisor. Our certified QuickBooks professionals are here to help all 24/7. You can even give us a call at our QuickBooks Support for the USA, Canada, and the UK and talk to our ProAdvisor now.