 QuickBooks Online 2024. Setting up bank feeds, options, and overview. Get ready and some coffee because the accounting team is on board with QuickBooks Online 2024. First, a word from our sponsor. Yeah, actually we're sponsoring ourselves on this one because apparently the merchandisers, they don't want to be seen with us. But that's okay whatever because our merchandise is better than their stupid stuff anyways. Like this CPA thinking cap for example. CPA thinking CAP, you see what we did with the letters? And this CPA thinking cap is not just for CPAs either. Anyone can and should have at least one possibly multiple CPA thinking caps. Why? Because based on our scientific survey of five people, all of whom directly profit from the sale of these CPA thinking caps, wearing this CPA thinking cap without a doubt according to the survey, increases accounting productivity tenfold. Yeah, at least. Apparently the hat actually channels like accounting energy from the quantum field ether directly into your head. Allowing you to navigate spreadsheets faster. It's kind of like how in like the matrix when Neo learns kung fu or at least that's what the scientific survey's saying. So get one because the scientific survey participants could really use some extra cash. If you would like a commercial free experience, consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com. Here we are in our QuickBooks Online Bank Feed Practice file we set up in a prior presentation. Remembering the major objectives of the accounting department or the bookkeeper include number one, the creation of the financial statements being the balance sheet income statement otherwise known as the profit and loss and related reports that typically done with transactions entered with the use and help of forms found under the plus or new button broken out by category or cycle customers, vendors and the payroll. For example, number two, facilitating and communicating transactions with the people we do business with that being the customers, vendors and the employees which the centers help us do on the left hand side, sales center or the customer center, the expenses center or vendor center and then the payroll center or the employee center. In prior presentations, we set up the QuickBooks file. We talked about some of the foundational items that need to be put in place before you can start the normal accounting cycle. Most of them found under the cog. You can look at the lists, the primary two lists being the chart of accounts and the products and services. We can also find that chart of accounts in the transactions on the left which we did in a prior presentation and under the chart of accounts. We cleaned up the chart of accounts because we wanted to basically construct our chart of accounts much from scratch as possible as we actually enter the transactions from the bank feeds. So now at this point in time, we would like to actually connect to the bank noting there's a few different ways that we could connect to the bank. You'll recall that when we actually set up the QuickBooks file, for example, going through the interview process that QuickBooks forces us to go through mainly to get information I think on into its side about us rather than to help us set up the file. But in any case, they asked us during that process if we wanted to connect to the bank feeds. Now I actually don't like doing it during that interview process because I'd rather go in here and look at the chart of accounts before I actually do the bank feed connection. So the next method you can do now that we're in our QuickBooks file and not connected to the bank feeds after we have cleaned up our chart of accounts is we can set up bank accounts within here and the bank account types, those are the ones connected to the bank feeds. The other method that we could use is going directly into our bank feeds transactions. This is where the bank feeds will be once the transactions flow in what I call Bank Feed Limbo here, where you're going to have to add those last pieces of information to bring those transactions in from Bank Feed Limbo to the promised land helping us to generate or support the creation of the financial statements, balance sheet income statement otherwise known as the profit and loss report. Now either of these methods could be useful to go to from this point in time. In other words, you might want to go to your chart of accounts for example and actually set up your checking account the way you want to see it and then connect the bank feeds to it already having checking set up the account. If on the other hand you go to the bank feed transactions without your bank accounts set up, then as you connect to the bank QuickBooks will automatically make the accounts for you. Note that that sometimes can be useful because like if you have multiple accounts with one financial institution, businesses often having for example a checking account and possibly a credit card account on the business side. If you're using QuickBooks on the personal side, you might even have more accounts with a particular financial institution. You might have a checking account, a savings account and then you like see the other kinds of cash type of accounts and possibly like a brokerage account or something like that which sometimes QuickBooks is able to connect to as well. So if you connect to the entire institution, QuickBooks will actually create the accounts and give you a name for them that might be recognizable. In other words, it'll create a cash type of account. It will tell you the institution it's from and typically give you the last four digits of the account number for each of them from that institution so that you can identify the checking account versus the savings account versus the brokerage account and so on and so forth. I'm going to go start from here though. I'm going to go to the chart of accounts and let's create a checking account. Before I do one other point, the credit card is often overlooked when we think about connecting to the bank feeds because the credit cards are also able to connect to the bank feeds. Then being very similar to the checking account in that the transactions are electronic transfers and they're going through the financial institution. Oftentimes the same financial institution as you might have from your checking account or not. But the only difference is instead of decreasing the checking account as you buy stuff, lowering a liability on asset, it's going to be increasing the liability account. So it's going to be a Visa card or credit card will simply be a liability that acts in a similar way as the cash account. But when you purchase stuff instead of decreasing the checking account, it's going to increase it. So you can connect your credit cards as well. We'll connect the credit cards in another part or section of the course here. So we won't totally ignore credit cards. We'll look at them later. All right, let's create an account just to see the different account types. So if I say we're going to have a new account in the chart of accounts, if you wanted the account to be connected to the bank, you would have to choose a bank type of account. Those are the kinds of accounts that would be connected to the bank. And then this second category does not really matter that much. They have it here for further sorting needs. But I'm going to put the check in account. So that'll help you to sort possibly because you have your account type and then your sub account type or your detail type. And then in the checking account, you might put the checking account, you might put like B of A or the institution that might help you. But oftentimes the institution in and of itself would not be sufficient to distinguish one account from another because possibly you have multiple accounts from one financial institution. The differentiating factor typically will be the last four digits of your account number, which are things that you probably don't want to be giving to people per se that are users other than yourself. So however, they're good, they're useful to have internally because then I can identify the account. So when you make the financial reports, in other words, it looks kind of ugly to have a checking account with this B of A and the last four digits of a number. Because for external balance sheet reports, we just wanted to say cash or cash and cash equivalence. You can do that by having a parent account called, you know, cash and cash equivalence or something like that. And then underneath it have each of your subsidiate or subordinate accounts be the actual checking account so that when you create your balance sheet, you can actually collapse them in a triangle. You know, there'll be a little triangle and you can collapse them. You could put a description. I don't need a further description. Here's the sub account. So if I did make a parent checking account, then I wanted to put this as a subordinate account to it. I could go in here and I could find that parent account and make it a subordinate account to it. We're not going to do that in our case. When do you want to start tracking your finances from this account in QuickBooks? So we can say beginning this year, beginning this month out today or other. And this will help us then to connect the bank feeds at this point in time. Now I would like to not really connect the bank feeds at this point in time and then go over here and connect the bank feeds the other way. It also could be the case that you're setting up a checking account that you don't want the bank feeds connected to and QuickBooks will be trying to be somewhat insistent to try to get you to do the bank feeds. So I'm going to save it here. So now this is a bank type of account has the capacity for bank feeds to be connected to it, but we have not yet connected the bank feeds to it. If I select the dropdown over here, I have connect the bank feed in addition to edit and active run reports. If I look at another one, you'll see I don't have the connection of the bank feeds. So it has to be a bank type of account or a credit card type of account in order to connect the bank feeds. So instead of connecting them this way, like I could connect to the bank, you know, this way, and it'll take me to my banking information. And we can go from here, but let's actually look at the other method. So I'm going to close this back out and I'm going to go into my hamburger and then go into the transactions. And now I'm in the bank transactions. Let's do it from here now. So we're going to automate income and expense tracking, save hours of work by tracking finances automatically. Number one, connect a bank or credit card to get started. Number two, review and add your transactions. Number three, see how your business is doing. Note that if I didn't have a chart of accounts set up for the bank accounts and I did this, it would ask us to basically create a chart of accounts or create the accounts on the flyer as we go. So then if all I have to do is go into here and you have a whole bunch of different banks. So it used to be when this first started that some banks did not yet have the capacity to connect. And it still is the case that smaller banks might not have the capacity to connect directly, but it's becoming somewhat universal. So most of any major institution for financial institution for checking accounts will typically have the capacity of the bank feed. So you can type in whoever you're searching for here that you have an institution with. Also, some other accounts that are intermediary accounts, the primary one being PayPal is something to be aware of. I believe you can still connect to PayPal basically two different ways. PayPal used to be more of something that I think a lot of small businesses, including myself, used just to collect revenue as an intermediary to connect to platforms to allow them to pay us. And a secure credit card payment platform and whatnot. But now PayPal is becoming an acting for many businesses more like a checking account. So in that case, so you might want to have the bank feeds of course for PayPal, which is now acting like a checking account because people are receiving money and paying money out of PayPal oftentimes. And I think you can connect to it two different ways. You can connect using the bank feeds or you can also connect using the PayPal app. And the PayPal app has a little bit, it's basically the same thing, but it has a little bit more possibly detail in the transactions for the app. So you might want to do a little bit more research. We might have another course or section on that with PayPal, but that's a special kind of a special case because it's kind of in between between a checking account, a financial institution, normal and just a knot. So in any case, I'm going to type in like Chase up here and just pick one out just randomly. So we'll pick up Chase and then sign in to your account. So start by connecting your Chase bank account with Intuit. So the makers of QuickBooks online because Intuit is the owner of QuickBooks. Go to the bank site to sign in and connect your account. Now here's where it gets a little bit different. It's usually quite easy to do, but all the financial institutions have their own verification process. Clearly you're going to need some verification in order to connect to the bank feeds. Oftentimes that means you might have to log in to the bank. And if you have an online banking system, it should be fairly straightforward and easy to do. However, some financial institutions might be a little bit more complex. And if you need to contact the financial institution, then most of them are pretty good with that as well. But usually it's a pretty straightforward process. Now I'm actually not going to connect it to the bank in our practice problem because what I want to do is just upload the transactions. So I'm going to basically start stop it here in terms of the actual connection. But you can see the connection once you find the financial institution is actually the easy part. That's the easy thing. So if I close this out, just note that the next couple things that would happen, if I go to the chart of accounts, is that when you actually connect to the bank, it will then ask you how far back you want to pull the transactions from. So this is something you have to make sure that you get that right. If you're starting a new company and you're putting all the transactions from the history of that checking account because you created the checking account for that particular company into QuickBooks, then you can go as far back as when you started the checking account. And that's a really easy no problem. However, if you had a prior accounting system and you're transferring to the new accounting system, then you're going to have to determine when was the cutoff point of your old accounting system. So if I was just doing normal accounting without the bank feeds, I had to enter the transactions in for the checking account. So possibly that ended last month or something. Then I want to make sure that I'm entering the new transactions as of the day after the cutoff date so that I don't have duplicate transactions in there. And I also want to make sure that I go far enough back in my transactions so that I have enough transactions there. Also just realize that if, and this happens fairly often actually, if you're at the end of the year and you're trying to just put together your financial statements in order to do your tax return and you're trying to just connect to the bank and pull in a whole year's worth of data, you might be able to pull in a whole year's worth of data, but some financial institutions might limit you. If you're trying to pull in like three years of data and do your books for the last three years because you haven't done your taxes for three years, you might run into a problem because some institutions won't allow you to go that far back. Now also just realize that if you run into that problem, you're like, okay, I want to pull in three years worth of data, the bank won't let me do it. Maybe if you go to the actual financial institution itself and download the transactions, either as a QuickBooks file or as a CSV file, a comma-deliminated file that can typically be opened with Excel, which we'll talk about later, then you could download more time. So if you have to go further back than is allowed by just a connection to the bank feeds, you might be able to do that by going to the institution downloading all those transactions in a CSV file and then uploading them. So we'll talk more about that process later because what we will do is upload in that format. We're going to imagine that we're going to the financial institution, that we download the data from the financial institution, and then we're going to upload it into QuickBooks. After we upload it into QuickBooks, we will be in the same spot as though we connected to the bank feeds. If we connect directly to the bank, the stuff will flow into Bank Feed Limbo automatically starting at the starting point that we started the bank feeds. If we upload the data into the system this way, upload the transactions, then of course we'll upload the transactions and they'll go as far back as the data file that we are uploading. Either method will result in the data in what I call Bank Feed Limbo here. So we'll be at that same point and then we can practice the difficult part, the next step being how do we give QuickBooks the information to pull that stuff from Bank Feed Limbo into the actual creation of the financial statement or the supporting of the creation of the financial statement, helping us to do the bank reconciliations as well. And how can we automate that system using the bank rules? Now also just note that if you're starting the bank feeds like in the middle, if you're starting the new accounting system in the middle of the year, like it's not on January and you're starting a new file, then you probably still want to do the bank feeds for the whole year, meaning you want your whole accounting system in one year if you can. So if you're switching from an old accounting system to QuickBooks online and you're trying to use your bank feeds for the new accounting system but you're starting in February, then you probably want to run your books using the bank feeds, using your new system for January and February, even though you already have January in your old accounting system. Why? Because you don't want two years, two different accounting systems when you're trying to do your taxes at the end of the year. Even if it was like six months of data, it's probably easier for you to pull in all that information possibly with the help of the bank feeds into the current year, duplicating six months in some way, shape or form into the new accounting system so that you have a whole year's worth of data in your accounting system so that at year end you're not trying to toggle back and forth between the old accounting system and the new accounting system. Alright, so that's the general idea. Next time what we will do is we'll go in here and we'll actually upload the transactions or shortly we will upload the transactions which will mirror or have the same effect as though we connected directly to the bank pulling those transactions into Bank Feed Limbo and then we'll go through step by step practicing different scenarios in terms of how and what issues come up when we pull this stuff from Bank Feed Limbo into the promised land of the creation of the financial statements.