How to Record Your Company Purchases
Which were Charged on a Company Credit Card 

The most common error I see when reviewing company files is the Credit Card Module, or lack there of.

Utilizing this feature is extremely important especially if you charge company purchases of more than $100 per month.

When using the "Enter Bills" and "Pay Bills" module instead of posting your credit card purchases correctly, the data showing "Expenses by Vendor Summary " will be incorrect. It may look something like this:

              Expenses By Vendor Summary
             January 1, 2010 - September 30, 2010

ABC Insurance Company	$  1,269.00
Beatle Bank	$  9,965.00
Cal Oil Company	$    885.00
Capital One Credit Card	$ 17,255.00
QWest Phone	$   2,230.00
R Rental Corp	$ 16,000.00
Z Utilities Company	$   1,860.00
Office Max Supplies	$   4,450.00
Beatle Bank MasterCard	$ 12,998.00
TOTAL	$  36,598.00

Even if you posted the correct categories when paying your charge cards, as you can see, the actual vendors are unknown.  You really have no idea which vendor was used when making nearly $30,000 worth of purchases.

In order to make good business decisions - you must have good information!

 Here are the steps to record your business credit card charges correctly:

1. Set up a Credit Card Account in your Chart of Accounts for each card you have.  If your business has several, you may want to set up one main CC Account and then add each card as sub-accounts.

You also need to set up your Vendor to make the payments. If you have a charge card with the same bank you make your tax deposits, you may want to name the Vendor " Visa - US Bank " and in the Vendor Field "Print Check As" list it as US Bank. That way you can keep your tax deposits and credit card purchases separate.

2. You can either enter the charges as they are made, or wait until the statements comes in and post them all at one time. Either way is fine, just remember to be consistent!

3. Choose Banking > Credit Cards > Enter Credit Card Charges >  Make sure the correct card is showing in the top drop-down list. Tab thru the screen using what ever reference # you decide. Save and New until the last charge is entered. Save and Close.

4. There is also an option to post a credit, if needed.

5. After all the charges are posted, select Banking > Reconcile. Choose the Credit Card you are working with. Enter the Ending Balance and correct Closing Date. Here is where you post the service charges and interest fees, if applicable.

6. Mark the cleared charges and payments the same way you reconcile your bank account. Once you have finished and there are $0.00 discrepancies, click Reconcile Now. I suggest you always print a detail and summary reconciliation report.

7. A screen will appear asking if you want to Make a Payment Now or Enter a Bill and Pay Later. Always select Make a Payment Now.

A check will show with the Vendor Name already filled out  and for the entire amount the of Credit Card balance. Change the dollar amount to how much you would like to pay, and either click the "To be Printed" box or enter the check # if you will be writing the check by hand. Save and Close.

The remaining balance ( if you do not pay it in full ) does not show up in the Accounts Payable module. The Credit Cards are recorded as a liability, SO THEY ARE NOT AN ACCOUNTS PAYABLE ITEM.

Your new " Expenses by Vendor Summary"  Report will now show each Vendor that was used regardless if you paid them by check or if you charged your purchase.

Janet Stiffler, Certified Professional QuickBooks Advisor 

                    

                        Questions or Comments???? We would love to hear from you!
                             You can reach us at etr@etrdirect.com or 208.525.8813

 

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