I am a licensed CPA in both New York and Massachusetts, and a member of the American Institute of Certified Public Accountants.
Managing Company Credit Cards in QuickBooks – The Easy Way
Company credit cards are a handy financial tool, and frankly you’ll probably find it hard to do business without them. However, proper bookkeeping that’s well-organized from the start will keep them from becoming a headache.
If your business has even a few company cards floating around, you can very quickly have a bookkeeping nightmare on your hands. Fortunately, QuickBooks has good credit card management tools. Combined with a few basic techniques, they can rein in your company cards (and their users).
The first step is setting up your credit card accounts in QuickBooks. If you don’t use account numbers (on your chart of accounts, that is), I recommend that you start. It makes organizing things much easier. Say you have seven company cards with Big Corporate Bank International and six with Friendly Community Bank and Trust. You, your operations manager, and your sales manager each have a card from both banks. Your four salespeople have the other four BCBI cards; your office manager, warehouse manager, and IT manager have the other three FCB&T cards. Here’s how you might set that up in the chart of accounts:
42000 Credit Cards
42001 BCBI – John 7247
42002 BCBI – Fred 8339
42003 BCBI – Alexis 4544
42004 BCBI – Jennifer 2968
42005 BCBI – Perry 1465
42006 BCBI – Gene 9328
42007 BCBI – Terri 6137
42101 FCB&T – John 8562
42102 FCB&T – Fred 1742
42103 FCB&T – Alexis 3324
42104 FCB&T – Barbara 4581
42105 FCB&T – Frank 5529
42106 FCB&T – Juan 2428
This relatively simple setup has a few different benefits. First, the account numbering groups cards from the same bank together. Using 420XX, 421XX, 422XX, and so forth for each bank gives you plenty of room to add additional cards. (It also lets you add replacements. If someone’s card is lost or compromised, set up a new account for the new card; don’t just change the number on the old one.) You can also see at a glance whose card you’re dealing with as well as the last four of the card number, which can be important with receipts that don’t show the cardholder name.
I also recommend that you create an “Unassigned” account under each card issuer as the “99” in the series (for example, 42099 BCBI – Unassigned). There may be times you have to assign a payment or a charge to the account but don’t yet know which card to use, or need to pay the bill but haven’t received all the receipts yet. Nothing should stay in this account, however—as soon as you get the information you need, reclassify the charge, credit, or payment correctly.
One issue that can crop up with company credit cards is the vendor name. Let’s say your sales manager loves Starbucks and takes all her meetings there. The credit card charge entry screen in QuickBooks will ask for a vendor name, and if you include one you’ll have to add that name to your vendor list. Yet you don’t pay bills to Starbucks, or to McDonald’s, or to the local gas station. Soon your vendor list is cluttered up with irrelevant names.
You could leave the vendor name field blank, of course. But I recommend instead that you create a “dummy” vendor called “Credit Card Charge.” In the memo line, note the actual vendor name for each charge. This keeps your vendor list clean while keeping your bookkeeping accurate and informative.
Finally, lots of small business owners charge company expenses on personal credit cards. There is a way to account for these transactions without setting up that personal account in QuickBooks, which wouldn’t be appropriate for a few different reasons. Instead, create a Credit Card account called “Due to Owner – Personal Credit Card.” You can enter charges just as you would with regular company cards, noting the vendor as well as which card was used in the memo line. The company can then reimburse you for its share of the bill, with the check coded against this “Due to Owner” account.
These are some easy steps that will help QuickBooks help you keep your company cards from turning into a herd of little plastic headaches.