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Three Kinds of Bank Transfers and How to Handle Them

Bank transfer is one of the transactions that can become confusing for many people. Knowing how to properly handle them will help ensure a cleaner banking experience with QuickBooks Online.

There are basically 3 types of bank transfers in QuickBooks Online. 

1. Bank to bank transfer

Bank transfer from checking account to another checking account or bank transfer from checking to savings account.

The transfer should be first recorded from the Checking account feeds, then match to the Savings account feeds

2. Bank to Credit Card / Credit Card Payment

Transfer of funds from checking account to pay for a credit card account

The transfer should first be recorded in the checking account feeds and quickbooks online auto-matches it to the credit card feeds. In the event that it does not auto-match, you can match it in the credit card feeds by clicking “Find match” option.

3. PayPal Transfer and Payment to vendors

PayPal gets the funds from your bank account, then uses the fund to pay for a vendor.

It usually has the word “PayPal” in the description so you will know. And in the PayPal fees, you will see “Added from bank” in the memo.

The transfer shall first be recorded from the Checking account feeds, then match to the PayPal account feeds.

Then add the payment to the vendor from PayPal feeds as Expense.

Best Practice:

  • Do not categorize the PayPal transfer from the checking account as payment to the Vendor. PayPal pays the Vendor, not the checking account.
  • Always create the bank rule to handle transfers from the bank where money goes out
  • Profit First creates a lot of bank transfers, be sure to create the rule from the Income bucket going to the other buckets.
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