Have you ever entered an expense in QuickBooks and had that little flicker of doubt about whether it landed where it belongs? 🤕

You save it, the screen closes, nothing turns red. So you move on to the next one.

That’s the part I want to slow down on today.

Nothing in QuickBooks warns you when an expense goes to the wrong place, and that’s exactly why it keeps happening.

Your report just quietly tells you a story that isn’t quite true, and you find out at tax time, or in the middle of trying to make a decision when the numbers don’t add up.

The way you enter your expenses in QuickBooks Online is what builds your Profit and Loss.

So this one matters more than it looks like it does

5 Ways to Enter an Expense in QuickBooks Online

Same money, five different doors.

Nobody ever explains which one to walk through, and that’s where the confusion starts.

 

Expense.

Your everyday one.

Reach for this when the money is already gone, so a credit card charge, a debit card, or an ATM transaction.

Check.

Use this when you’re writing a check.

One small difference worth knowing, when you choose check, QuickBooks only offers you bank accounts in the payment field, no credit cards.

 

Bills and pay bills.

This is accounts payable, for when the bill comes in now, and you pay it later.

You’ll have this if you’re on one of the higher tiers.

 

The register.

You can add a transaction right in the register for that bank account or credit card, line by line.

It’s quick when you’re working through several at once, and you get fewer fields than the full screen gives you.

 

Your bank feed.

This one works a little differently, because you’re not entering it from scratch.

It’s already sitting there waiting for you to tell QuickBooks what it was. You still pick the category, which is the part that matters most.

If the feed itself still feels like a mystery…

I walked through how the new QuickBooks Online Bank Feeds work in a separate tutorial. Click here to dive in.

Pick the door that matches how the money moved. Whichever one you use, the category field does the same job.

 

What Each Field on the Expense Screen Does

You always start with a vendor.

Vendors are the people and places you spend money, so Office Depot, your cell phone company, the power company, all vendors.

Then your payment account, which is the bank account or credit card the money came out of, and the date you paid it.

Payment method and reference number are optional, so leave them blank if you don’t need them.

 

How Your Expense Category Shows Up on the Profit and Loss

When you choose a category, you’re choosing the line you’ll read later on your Profit and Loss. There’s no translation step in between.

Enter the power bill, pick Utilities, and Utilities is the title that shows up on your report.

Click that dollar amount on your P&L and the transaction you just entered is sitting right there, part of the total.

Which means the question to ask while you’re entering isn’t “what is this.” It’s “where do I want to see this later.”

That’s the shift.

Every expense you enter is you designing the report you’re going to use to run your business, and that’s the whole point of QuickBooks…

Getting numbers you trust enough to act on. Which vendor is creeping up on you. Whether you can afford the hire.

What your accountant is going to see.

 

Splitting One Expense Into Two Categories

Sometimes one payment belongs on two lines of your report.

Say your $700 utility bill includes $200 of water and sewer septic that you want tracked separately.

You don’t have to pick just one.

Add a second line, put $200 on septic and leave $500 on the other, and the total still comes to $700 while showing up in both places on your P&L.

Start with one category per transaction while you’re building the habit, and split when you have a reason to.

 

How to Find Expenses in the Wrong Category

This is where it gets useful.

Once you understand what the category field is doing, you can audit what’s already in there.

Go to your chart of accounts, open your bank account, and view the register, the same one we talked about up top. Or come at it through your bank transactions.

Then scroll and read.

I found an auto insurance payment sitting in advertising.

It had been there a while, and the person it belonged to had been in QuickBooks for years.

That’s not a disaster, and it’s not a sign you’re bad at this.

It’s a transaction somebody categorized in a hurry, and now that you know what you’re looking at, you can fix it.

 

Changing an Expense Category, and When You Can’t

Open the transaction, switch the category to where it belongs, then save and close.

Refresh your report and there it is on the right line.

 

Keep three things the same. The date, the dollar amount, and the bank account. Change those and you can break a reconciliation you already finished.

 

Only in an open period. If you haven’t filed taxes for that year yet, you’re free to clean up.

Once a return is filed, that year is what it is unless you amend it, so we do the cleanup in the current period instead.

And a small tip I can’t help sharing: right-click your browser tab and duplicate it.

Having your entry screen and your Profit and Loss open side by side saves so much clicking.

 

Looking for a video referenced in this tutorial? Click the link below.
“Chart of Accounts: Why Yours May Be Wrong”
“QuickBooks Modern Reports Explained: The 3 Reports Every Business Owner Should Check”
“How to Record Income in QuickBooks Online (3 Ways)”

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If reading this made you think, “Wait, I could set QuickBooks up to work the way my business runs,” that’s exactly what I teach in my free Customizing QuickBooks workshop.

We go behind the scenes so you understand the why, not just the clicks.

Once you understand the why, you can handle any transaction that lands on your desk, not only the ones you’ve seen before.

Save your seat here: https://canduskampfer.com/learn

 

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What was your biggest aha from this one, or did you find something sitting in a category that made you laugh?

Tell me in the comments. ⤵️

#CandusKampfer