How to categorize bank transactions in QuickBooks Online
Step by step
- Go to All apps, then Accounting, then Bank transactions, and choose the bank or card account. Select Update if you want the latest lines now; QuickBooks also tries to download them every 24 hours.
- Open the Pending tab. Each line is one transaction the bank sent through the bank feed.
- Read the bank description and amount, and decide what the money was for.
- If the line already exists in your books (an invoice payment, a bill payment, a deposit you recorded), choose Match and pick it. See the next section for how to tell.
- Otherwise check the payee and the category: the account the money belongs to, such as Rent or Food sales. Change either one if it's wrong.
- Select Post (or Add). The line moves to the Posted tab and into your books.
Made a mistake? On the Posted tab, select Undo next to the line. It goes back to Pending so you can fix it.
Categorize, match, transfer, split or exclude?
| The bank line is… | Do this | Example |
|---|---|---|
| Something new that isn't in your books yet | Categorize it | A $96.40 electricity bill paid by autopay goes to Utilities |
| Already in your books | Match it to that record | A $240 deposit that's the payment you recorded for invoice #1043 |
| Money moving between two of your own accounts | Record it as a transfer | $500 from Savings to Checking, or a payment to the business credit card |
| One payment that covers several things | Split it across categories | A $150 store receipt: $110 office supplies and $40 cleaning supplies |
| A duplicate, or not a real transaction | Exclude it | The same card charge downloaded twice |
Check the AI suggestions before you post
QuickBooks fills in a suggested payee and category for most lines. On its AI-powered banking page, Intuit marks each suggestion with a review signal:
- Green checkmark: QuickBooks found a clear pattern in your books. A quick check is usually enough.
- Blue information signal: there's some history, but it's handled in different ways. Compare the other suggestions first.
- Orange alert: little data backs the suggestion. Check it and correct it before posting.
The software suggests; you're responsible for the books. A wrong category you post is a wrong number on every report.
The five most common mistakes
| Mistake | What goes wrong | Do this instead |
|---|---|---|
| Categorizing a customer's invoice payment as income | Income is counted twice (once by the invoice, once by the deposit), and the invoice still shows unpaid | Match the deposit to the payment |
| Categorizing a credit card payment as an expense | Expenses are counted twice: once when each charge was posted, again when the card is paid | Record it as a transfer to the credit card account |
| Categorizing a move to savings as an expense | Money that's still yours looks spent | Record it as a transfer |
| Excluding the owner's personal purchase | The bank balance in QuickBooks no longer agrees with the bank | Categorize it to owner's draw (or the account your accountant uses) |
| Posting a duplicate | The bank balance in QuickBooks is too low or too high | Exclude the second copy |
Save time with bank rules
If the same payee shows up every month, a bank rule can fill in the category for you. Rules are under All apps, Accounting, Rules. A rule can just suggest the category, or post the line automatically; Intuit suggests starting automatic posting with simple, regular transactions such as rent.
Common questions
What's the difference between categorizing and matching?
Categorizing creates a new transaction in your books. Matching links the bank line to a transaction that's already there, such as an invoice payment or a bill payment, so nothing is counted twice.
Should I exclude personal purchases from the bank feed?
No. Money left the business account, so it has to be recorded, usually as an owner's draw. Excluding it makes QuickBooks disagree with the bank. Exclude only duplicates and lines that aren't real transactions.
How do I fix a transaction I categorized wrong?
Find it on the Posted tab and undo it. It goes back to Pending, where you can categorize or match it correctly.
How often should I categorize the bank feed?
Little and often, such as weekly. It's quicker while you still remember what each payment was, and it makes the month-end reconciliation much easier.
Related guides
Sources
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