Many QuickBooks Online users are unsure how to record a credit card payment. Should you write a check or create a transfer? How should you categorize it?
Many users will mistakenly record the payment as an expense. When this happens, the payment doesn’t reduce the credit card liability account on the balance sheet as it is supposed to. It also incorrectly doubles up expenses on the Profit & Loss statement. You should have already entered these expenses individually in the credit card’s bank feed.
To address this, QuickBooks Online developed the “Pay down credit card feature.”
Let me show you how it works.
- From the +New menu, select Pay down credit card in the Other column.
- Select the credit card account that you have paid.
- Enter the amount of the payment.
- Enter the payment date.
- Select the account that answers the prompt, “What did you use to make this payment?” You also have the option to record it as being paid by check.
- Add any memos or attachments if desired.
- Save the transaction.
Now that you see how easy it is, why not try it yourself. QuickBooks Online offers a great tool in their sample company, “Craig’s Landscaping.” You have the opportunity to try new features without worrying about “messing up” your books.
You can access it here: Craig’s Landscaping
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