Credit Card/Debit Card, Same Thing, Right? No.

 In Tuesday’s Tips

A debit card transaction is just that – an immediate debit from your bank account. But a credit card represents not-yet-paid expenses, and therefore, it is actually a liability account. The data entry is similar, but they are handled slightly differently in QuickBooks.

The “write check” function is obviously for writing checks, but how about non-check transactions such as debit card purchases, ATM withdrawals, transfers to personal accounts, and online/ACH payments?
Spoiler alert: also “write check”! Think of it as saying, “I spent money out of the business bank account, one way or another”

However, you would not use “write check” when you are using a credit card to pay for expenses. You would use the “enter credit card charges” function for QB Desktop or in QB Online, you’d use the “expense” function and select the credit card instead of the bank. (see pic). Then at month-end, you reconcile to the statement like a bank account, and record the payment out of your bank coded directly to the credit card

“But what about when I pay the credit card? I normally just break the charges out then.” If you pay the card in full each month, you may be thinking it’s all the same. However, it’s not the proper method because the expenses are not being recorded in the correct period, and what if you are ever not paying in full? So it’s better to play it safe and do things the right way by utilizing the credit card functions available in QuickBooks.

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