TheQuickBooks bank feed seems like an amazing tool for reconciling your businessbank accounts. But let’s look at a little more detail on the intricacies of the cash”transfer” feature within the bank feed.

First, let’s define a “transfer” in your business.A transfer should really only reflect cashmovement between your own business accounts. A transfer from your savings to yourchecking, or a credit card payment is also labeled as a transfer in QBO because you aremoving cash from your bank account to yourcredit card account.

It is important to understand that what your bank categorizes as a transfer is not alwaysconsistent with what your business books should reflect. If you use Stripe or Zelle orVenmo in your business, (we need to talk), the bank will identify these transactions asTransfers, because you are moving cash from your bank account through your Zelleaccount, or through your Stripe account. However, most business owners do not recordtheir Stripe account as a separate account on their balancesheets. In QuickBooksOnline, we are skipping a step, and because of this, we do not want to record thesetransactions as transfers. Instead, these transactions need to be categorized directly asan expense or as a revenue.

Moreover, designating a transaction as a “transfer” in QBO locks it in place, limiting theflexibility for accountants to make necessary corrections. This can become particularlyproblematic when attempting to clean up a QuickBooks Online file with numeroustransactions inaccurately coded as transfers. Such cleanups can be time-consuming andcostly for business owners.

It’s crucial to utilize the “transfer” feature correctly, reserving it exclusively for cashtransfers between business accounts. For cash payments made out of the business, it’sbest practice to categorize them as expenses, allowing for proper classification andtracking. For ‘transfers’ from your Stripe, these should be coded as revenues.

To navigate these complexities effectively, it’s wise to enlist the expertise of aknowledgeable bookkeeper who understands the nuances of transfers from the outset.Investing in the right guidance upfront can save considerable time, effort, and resources in rectifying mistakes down the line. Stay informed, stay proactive!#QuickBooksOnline #BankFeed #Transfers #FinancialManagement #Bookkeeping#SmallBusinessAdvice