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kari14
October 18, 2023
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Categorizing credit card payments and transfers

  • October 18, 2023
  • 1 reply
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I have my personal bank account conected to Quickbooks self-employed. My credit card is also issued through that bank.

When I pay my credit card each month, I take money from one of my accounts (checking or savings), and I see that amount as a withdrawal with a minus sign. I then see the amount I paid to the credit card as a green amount.

I have categorized the amount I withdrew as a Transfer, since I transfered it from one of my money accounts to the credit card. I categorize the credit card as a Personal Credit Card Payment. 

Is this the correct way to account for these things? Should the money I took from my account to cover the payment be classified as a withdrawal or CC Payment as well? Does this affect my taxes in any way?

Thank you!

Best answer by Kevin_C

You just did it correctly, @kari14. I'm delighted to provide additional insights about categorizing credit card transactions and transfers in QuickBooks Self-Employed (QBSE).

 

You're correct that when QuickBooks downloads transactions from your bank, you can categorize money transfers as Transfers. These transfers aren't business expenses since you're not buying anything. Instead, you're categorizing your payment to your bank or credit card for business purchases you already made. Also, please use the credit card payment category for CC payments only. 

 

Furthermore, if individual expenses appear after a purchase, that's the time you need to categorize those transactions as expenses. If you see records of the money moving to and from an account, categorize both as Transfers.

 

Importantly, QBSE doesn't calculate transfers as part of your estimated federal quarterly tax payments. It also doesn't include them as business income or expenses on your financial reports. Refer to this article for more details: Categorize money transfers in QuickBooks Self-Employed.

 

Also, if you need further assistance on what accounts to use for your transactions, seek help from your accountant to ensure that your books are accurate.

 

On top of that, you'll want to check out this resource about how to get the quarterly and annual tax info in QBSE: Get quarterly and annual tax info from QuickBooks Self-Employed.

 

Feel free to reply below if you have other questions about categorizing transactions in QBSE. I'm just around to help. Have a great day ahead!

1 reply

K
Kevin_CAnswer
October 18, 2023

You just did it correctly, @kari14. I'm delighted to provide additional insights about categorizing credit card transactions and transfers in QuickBooks Self-Employed (QBSE).

 

You're correct that when QuickBooks downloads transactions from your bank, you can categorize money transfers as Transfers. These transfers aren't business expenses since you're not buying anything. Instead, you're categorizing your payment to your bank or credit card for business purchases you already made. Also, please use the credit card payment category for CC payments only. 

 

Furthermore, if individual expenses appear after a purchase, that's the time you need to categorize those transactions as expenses. If you see records of the money moving to and from an account, categorize both as Transfers.

 

Importantly, QBSE doesn't calculate transfers as part of your estimated federal quarterly tax payments. It also doesn't include them as business income or expenses on your financial reports. Refer to this article for more details: Categorize money transfers in QuickBooks Self-Employed.

 

Also, if you need further assistance on what accounts to use for your transactions, seek help from your accountant to ensure that your books are accurate.

 

On top of that, you'll want to check out this resource about how to get the quarterly and annual tax info in QBSE: Get quarterly and annual tax info from QuickBooks Self-Employed.

 

Feel free to reply below if you have other questions about categorizing transactions in QBSE. I'm just around to help. Have a great day ahead!

    K
    kari14Author
    October 20, 2023

    Thank you, that was very useful and informative. I'm glad to hear I'm doing it right and that the transfers won't show up in my tax calculations. Have a great day!

    R
    Rasa-LilaM
    October 20, 2023

    Hello there, kari14.

     

    Thank you for informing us that my peer's solution helped you resolve your concern about categorizing your transaction. This information will surely help other users who are experiencing the same. 

     

    Feel free to browse our online resources if you need help completing your QuickBooks tasks. From there, you'll find answers and advice on how to better handle your business.

     

    Reach out to me again if you have clarifications or questions categorizing your entries. I'm more than happy to answer them for you. 

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