How To: Process Credit Card Payments?

How To: Process Credit Card Payments?

Created: August, 12th, 2022


Overview

While credit card payments are seen as negative transactions in the checking account bank feed, they are not expenses. These payments are not considered an expense but a transfer.  The individual transactions that occur on the credit card are expenses and should be recorded as such. It is important that each expense is recorded individually for tax purposes.  The IRS will not like seeing credit card payments as an expense in the case of an audit. It is also important to have an accurate recording of actual expense transactions and not just estimated expenses. 

So, how do we record credit card transactions? These transactions need to be recorded as a “Create Transfer” transaction, here is the two-part process;

Processing business credit card payments


Step 1: Click on the blue “match” dropdown menu and choose “create transfer”

Step 2: Choose an account from the dropdown menu

  • All of the active Chart of Accounts are listed in the dropdown menu

    • The dropdown menu is alphabetical based on Chart of Accounts categories and then based on account numbers

  • You can begin typing the name of the account to help narrow down the search

Step 3: Type a Description for the transfer 

  • The description will default with the bank feed description, if you would like to personalize it, type in your description

Step 4: You can also attach a receipt to the expense by clicking on the “Upload File”

  • Accounts only supports PNG, PDF, GIF, JPG formats for receipts

Step 5: Click on the green “Create Transfer”




Matching the Transfer in the Credit Card account

Step 1: Go to the credit card account that was just paid


  •   You will see Created Entries on the right side of the page.

    •  If the date and amount match, your account has automatically matches the transfer directly to the bank feed. If it is correct, click “Match” and complete the transaction.

    • If your transaction didn’t automatically match, drag the card over to the bank feed transaction to match. Click “Match” and the transaction is complete.


Processing credit card payments for accounts not linked to your Lendio account.

When a business owner chooses to pay for credit cards that are not listed as a business liability, those are considered personal expenses. It does not matter if that card was used to pay for business expenses, it is still considered a personal expense. These business expenses will need to be captured by adding a manual expense.

You can easily record those transactions with the “Personal Expense” option in the bank feed.

Note: If this credit card is used primarily for business purposes, it is recommended that you link this account to your Lendio account.  It will make tracking expenses so much easier. Learn how to add additional accounts here.



Step 1: Click on the blue “Match” dropdown menu and choose “Personal Expense”

Step 2: Choose an account from the dropdown menu

  • The default is 3020 - Owner(s) Draws Account.  You can change to a different account with the dropdown menu. Keep in mind it needs to be an equity account.

Step 3: Type a Description for the personal expenses transfer 

  • This will default with the bank feed description, if you would like to personalize the description, type your description here. 

    • It is recommended that you put the name of the credit card being paid in the description field. Makes it easier for you to search for the transaction.

Step 4: You can also attach a receipt to the expense by clicking on the “Upload File”

  • Only supports PNG, PDF, GIF, JPG formats for receipts

Step 5: Click on the green “Record Personal Expense”

Resources

Need more help? If you have trouble with this process, send our US-based customer experience team a message by clicking Help on the Navigation Menu or email customerservice@lendio.com



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