Managing bookkeeping can be one of the most time-consuming tasks for any business owner, but QuickBooks Online makes it easier and faster with a powerful feature called Bank Rules.

Setting up bank rules automates the process of categorizing your transactions, saving you hours of manual entry and reducing the chance of errors.

Benefits of Bank Rules in QuickBooks Online:

  • Time-Saving Automation: Bank rules automatically categorize your transactions based on criteria you define, eliminating the need to manually sort through each transaction.
  • Reduced Errors: By automating categorization, bank rules help prevent errors in categorizing transactions, which can lead to incorrect reports and tax filings.
  • Consistency: Once you create a rule, QuickBooks applies it consistently across your transactions, ensuring uniformity in how income and expenses are recorded.
  • Faster Reconciliation: Bank rules streamline the reconciliation process by automatically matching transactions, making it quicker and easier to reconcile your bank accounts.
  • Improved Cash Flow Monitoring: By automating categorization, you get a clearer picture of your cash flow, helping you make more informed business decisions.

Step 1: Navigate to the Banking Section

  • Once logged in, on the left-hand menu, click on Transactions – Bank Transactions.
  • This will take you to the Banking dashboard, where you’ll see all your connected bank accounts and credit cards. From the For Review tab, you can review each transaction and decide which ones you want to apply bank rules to.

Step 2: Set Up Bank Rules

  • At the top of the Banking page, click on the Rules tab.
  • You’ll now be on the Bank Rules page. Click on the New Rule button in the upper-right corner to start creating a new rule.

Step 3: Choose Rule Type

  • QuickBooks will prompt you to choose the type of rule. You have two options:
    • Money in: For transactions that are deposits or credits (e.g., customer payments).
    • Money out: For transactions that are expenses, payments, or withdrawals (e.g., bills, credit card payments).

Step 4: Set Rule Details

  • Rule Name: Enter a name for the rule. Make it descriptive so you can easily identify it later, e.g., “PayPal Deposit” or “Office Supplies Expense.”
  • Apply this rule to: Choose whether the rule should apply to Any account or just specific Bank accounts, like your current or credit card account.

Step 5: Set Conditions for the Rule

Now you’ll set up the conditions that trigger the rule.

  • Conditions: QuickBooks lets you define the rule’s conditions based on different fields:
    • Description: This can be the name or description of the transaction (e.g., “Amazon” or “PayPal”).
    • Bank text: For transactions with specific bank or credit card text.
    • Amount: You can set an amount range for the transaction.

Example: If you are creating a rule to categorize PayPal transactions as “Sales Income,” you could set the condition as:

  • Description contains “PayPal” (because that’s what will appear in the transaction description).

You can add more conditions to the bank rule to narrow down the criteria, making the rule more specific and ensuring that it applies only to the transactions that meet all the selected conditions.

Step 6: Review and Save the Rule

Once you’ve set the conditions and actions for the rule:

  • Check the box that says, “Automatically add this rule to new transactions” if you want QuickBooks to automatically apply the rule to future transactions.
  • You can also check “Save this rule” to apply it to existing transactions in the account.
  • After reviewing your rule settings, click Save.

Example of a Bank Rule:

Let’s say you want to create a rule to categorize all transactions from Amazon as Office Supplies.

  • Rule Name: Amazon Subscription
  • Rule Type: Money Out (because it’s an expense).
  • Apply this rule to: Any Account (or select a specific account like your Credit Card).
  • Conditions:
    • Description contains “Amazon” (so QuickBooks knows it’s an Amazon transaction).

Add extra condition

  • Amount equals “£8.99” or the monthly amount for the subscription
  • Action:
    • Category: Subscription.
    • Add Memo: “Amazon Prime.”
  • Click Save.

This rule will now automatically categorize any transaction with “Amazon” in the description as a “Subscription” expense.

Step 8: Edit or Delete Rules (Optional)

If you need to modify or delete a rule:

  • Return to the Bank Rules page.
  • Find the rule you want to edit or delete.
  • Click the drop-down menu next to the rule and select Edit, Delete or Copy.

Top Tips for managing Bank Rules

  1. Regularly review your rules to ensure they’re still relevant.
  2. Be specific with descriptions or conditions to avoid miscategorising transactions.
  3. If a rule isn’t categorizing transactions as expected, make sure the conditions are accurate or refine them by adjusting text matching options

If you would like any assistance creating bank rules, or defining conditions for rules, in QuickBooks Online please feel free to contact us at any of our offices.

Likewise, if you have any further questions about how you can automate your bookkeeping with accounting software, we would be happy to hear from you.

Our cloud accounting experts in Bedfordshire, Cambridgeshire, and Hertfordshire are here to help you explore what works for your business, and to ensure you’re getting the most out of your chosen software.

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