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Why You Should Be Keeping Your Personal Finances in QuickBooks Online (& How It Could Save You $$$ on Your Tax Return)

Updated: Apr 17



Over the past few decades, there’s been a startling trend: financial literacy is on the decline. Here are just a few statistics taken from National Today:

  • In the U.S., one out of every five students lack basic skills of financial literacy.

  • 29% of working women showed basic skills of financial literacy, whereas 47% of men demonstrated basic financial literacy skills.

  • 54% of the student loan holders didn't know about their future monthly payments before taking out their loans.

  • According to a national survey, only 20% of adults have participated in financial education.

  • According to a report by LT Trust, women save just 68 cents against every dollar that men save for retirement.

During Financial Literacy Month, it's crucial to focus on managing your personal finances efficiently. One way to streamline this process is by utilizing QuickBooks Online. This platform offers a range of benefits that can make tasks like income tax filing easier come tax time.

How? Well by having all your finances in one place, and calculated with concrete numbers taken right from your bank feeds, you won’t have to sort through and tally up a year’s worth of receipts. And you won’t need to worry about missing expenses in your income tax return - with reconciliation of your bank accounts, you know exactly how much money went out and how much came in.

Of course, we don’t recommend ever just tossing your box of receipts out - you’ll need them as backup for your return. But you’ll be amazed at how much faster and easier your income tax return is when you invest a small amount of time organizing your finances with QuickBooks Online.

Here’s how to do it in 7 simple steps:

1. Set up a new company

Visit the QuickBooks Pricing Page and choose a plan. We recommend EasyStart since it is only for personal finances (and don’t choose to add the payroll package). If you’re already using QuickBooks Online for your business, you can use your existing login credentials here. Otherwise, go ahead and create a new account.

Follow the on-screen instructions and choose whatever “company name” you’d like. For more help, visit QuickBooks. You can also check out their Get Started guide to get a brief run through if you are unfamiliar with using QuickBooks Online.

2. Link up your bank and credit card feeds

Head over to the Transactions tab and choose Bank transactions. From there, click Link account and follow the on-screen instructions to connect to your personal bank and credit card accounts. You can choose how far back to download transactions to.

This is entirely up to you - perhaps you only want to start from January of the tax year you’re currently filing, or maybe you want to see how your financial position has changed over a longer period of time.

Click here for more help on connecting bank feeds. If your bank or credit card is not yet supported for bank feeds, you can download the transactions via your bank account and import them to QuickBooks Online via CSV.

3. Add your “Suppliers”

Look at your money going out in each bank feed and add your “Suppliers” (i.e. Wal-Mart, Home Depot, etc.) and expense accounts (i.e. groceries, home repairs).

You can do this by clicking on the transaction in your bank feed and under Supplier/Customer and Category click + Add New.

More info on adding your Accounts (Category) can be found here. Most of what you are adding for Accounts should only be under the Account Type of Expenses.

*Note that Tax will be Exempt or Out of Scope as you are an individual, not a business, and therefore not registered for GST/HST.

4. Add your “Customers”

Look at your money coming in and add your “Customers” (i.e. the company you work for, Questrade) and income accounts (i.e. work income, investment income)

Follow the steps above as with Suppliers but instead you’ll be adding them as the contact type of Customers.

The account type you should be adding will either be under Income or Other Income.

5. Start categorizing transactions and create rules to categorize future transactions faster

Each one of your transactions will need to be accepted. That may seem a little daunting depending on how far back you need to go/how many transactions you make in your bank. But don’t be afraid! Bank rules can speed up the process for you.

We recommend sorting by Bank Detail to begin - that way you’ll see an organized list containing bank info to help you (i.e. APPLE, BELL CANADA, CANADA POST, etc.). Do this by clicking on Bank Detail at the top of your feed, until the arrow points up next to it to indicate A-Z sorting.

Starting with A: let's say Apple. If you’ve got a recurring charge on your credit card for your Apple TV+ subscription, you can set up a rule so that any transaction in the bank feed with the words “Apple” for $14.68, for example, will be automatically categorized to your Supplier named Apple and the Subscriptions expense account.

You can even take advantage of Auto-Add, though we are cautious about this as it may lead to errors. For example, let’s say you pay a company named Apple Couriers for delivery. Your rule might pick this up and throw it to Subscriptions, which would be an inaccuracy when looking at your spending on subscriptions for the year.

More information on setting up bank rules can be found here.

6. Reconcile against your bank accounts for accuracy

We don’t recommend using any of the numbers in your software for income tax filing, budgeting, analyzing, etcetera unless you have verified them against your bank and credit card statements - AKA performed a reconciliation. It’s the only way to ensure accuracy when it comes to bookkeeping.

You can reconcile (and view your statements) straight from the Transactions > Reconcile screen. Some smaller banks and credit unions may not be available for viewing statements. If this is the case, you’ll need to get them manually.

QuickBooks Online does a great job of automatically reconciling for you - anything you’ve added from the bank feed will appear as checked off (or, “cleared”) in the reconciliation screen. Sometimes, cleared transactions appear at the end of the statement period, when they aren’t included on your statement. They will be on the next month’s reconciliation. You’ll need to uncheck them in order to get to a $0 balance.

More information on reconciling in QuickBooks Online can be found here.

7. Pull reports like the Profit and Loss and Statement of Cash Flows to get an idea of your spending.

Now you can reap the rewards of your categorization and reconciliation - seeing all of your numbers in one clean report. The Profit and Loss and Statement of Cash Flows are two great reports to help you analyze and budget your finances.

Just make sure you select the correct period that you need - i.e. by calendar year, or maybe month-to-month. You can take advantage of the Comparison tool in the Report screen to assess your financial health against prior periods.

You can also look at these numbers and compare with your income tax filing to ensure accuracy with your receipts. You may also find surprising expense totals that you should be claiming on your income tax return to potentially save you hundreds of dollars - for example donations or medical expenses.

Conclusion: QuickBooks Online Makes Personal Finance Easy

By linking your accounts to QuickBooks Online through bank feeds, you can track your finances in real-time and reduce the risk of fraud or duplicate transactions. This feature simplifies budgeting, spending tracking, and saving goals, providing a comprehensive overview of your financial health at a glance.

Need help getting set up with QuickBooks Online? Here at Simcoe Office Solutions, we are Certified Professional Bookkeepers and Advanced QuickBooks Online ProAdvisors. We really know our stuff - we’re nerds for numbers.

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