Bank Feeds vs Spreadsheets for Business Books

Every set of business books starts with the same job: each deposit, card charge and payment has to get from the bank into the records. There are two common routes. In a spreadsheet, someone types or pastes each row from the statement and picks a category by hand. With a bank feed, the account is connected to bookkeeping software and transactions download on their own, waiting for someone to review them. This guide does not claim either route is safer or cheaper. It sets out how each one works, in the words of the IRS and of Intuit's QuickBooks help articles, and the questions worth answering before choosing.

Moreno Financial Services keeps monthly books for small businesses across Central Texas through our bookkeeping services, with plans starting at $600/mo. We use connected accounts where possible, with human review, and we don't leave it on autopilot.

What the IRS says about software

The IRS guide to starting a business and keeping records describes recordkeeping software packages as very helpful and relatively easy to use. Whether a business has to use a particular bookkeeping method, and what a computerized system has to be able to produce, are IRS rules covered in that guide and on the IRS recordkeeping topic page, both linked under Official sources.

How a spreadsheet gets its rows

A spreadsheet ledger is built by hand. Each row usually starts from a bank or card statement: the date, who was paid or who paid, the amount, and a category chosen by whoever keeps the file. Formulas add up the categories. Nothing arrives in the file unless someone enters it, and the layout can be whatever the owner likes. The work is that every row, every month, is typed or pasted in, and the categories are only as consistent as the person choosing them.

How a bank feed works in QuickBooks

In QuickBooks Online, a feed starts when the business connects its bank or card account. From then on, Intuit says, QuickBooks automatically downloads recent transactions for review. It suggests categories based on how similar transactions were categorized in the past, and one transaction can be split between several categories.

Downloaded transactions can also be matched to many kinds of records already in the books, including invoices and bills, paychecks and tax payments, checks and receipts, bank transfers, and credit card payments and refunds. When a transaction is matched to a bill or an invoice, QuickBooks marks it as paid.

Rules that learn, and why they still get a look

Bank rules categorize downloads that meet the conditions you set, and Intuit says the more QuickBooks uses the rules you create, the better it gets at categorizing. Auto-post rules go a step further: once one is created, matching transactions are added automatically, without anyone clicking through them. That is why rule results still need a periodic look. Software alone still mis-categorizes, which is why a person reviews the feed in our monthly books.

Where a feed needs a person

If a bank will not connect, or the books need history from before the connection, Intuit says transactions can be uploaded from a file instead: an account statement as a PDF or image, or a transaction list as a CSV, QBO or QFX file. To pull the most recent transactions, a manual update fetches them. And if the bank account number, username or password changes on the bank's website, Intuit says to make sure QuickBooks has the same information.

Excluding is the other place a feed needs judgment. Intuit says an excluded transaction does not appear in any account registers or financial reports, and to make sure excluding is the right step before doing it. For duplicate transactions, it says they may need to be fixed first. A personal purchase that lands in the business feed is a different case: Intuit says to add it rather than exclude it, because otherwise the bank account in QuickBooks won't match the bank statement at reconciliation. The matching itself is covered in our guide to monthly bank reconciliation.

Questions to answer before choosing

Whichever route a business takes, a few answers shape the work:

• How many bank, card and payment accounts the business runs
• Whether each bank connects to the software, or will need statement uploads
• Who reviews downloaded transactions and bank rule results, and how often
• How personal spending in a business account gets recorded
• Where receipts and invoices live, so transactions can be matched to them

Where we fit

Spreadsheets, QuickBooks and a shoebox are all workable starting points: tell us how you run money today, and we assess scope and give a transparent quote. We can work from QuickBooks and from connected bank and card feeds, and if you use something else today, tell us on the free call and we will say plainly whether it works. Keeping the receipt side current is covered in our guide to receipts and mileage logs.