When you manage your business finance in QuickBooks Online, then setting up your accounts correctly is very important. Each account in Chart of Account is assigned an “account type” which helps QuickBooks Online organize your financial data and reports accurately. When a mistake can happen in an expense account which was set up as an asset or you need to reclassify an account after making changes in your business. In such cases, it’s helpful to know how to change account type in QuickBooks Online to keep your books accurate and your reports correct. In this blog, we will discuss how to change account type in QuickBooks Online, Important considerations and steps to change account type in QuickBooks Online in detail.
What is an Account Type in QuickBooks Online?
Account type in QuickBooks Online is a main category that tells the system how to group and report your financial data. It helps QBO to identify whether money coming in and going out belongs to your income, expenses, assets, equity and liability. Every account type that affects your business transactions appear in reports such as balance sheets report and profit or loss statements.
Choosing a correct account type is important because it keeps your financial reports accurate and makes it easier to track your business performance. When an account is set up under the wrong type then your reports may show incorrect totals or categories which can lead to confusion later on.
When and Why You Might Change Account Type in Quickbooks Online?
When you set up your account in QuickBooks Online then the account should be assigned to the wrong category by mistake. This happens if you are new to QuickBooks or if your business structure changes over time. Here are some points when and why you might change account type in QuickBooks Online, mentioned below.
- You may also need to change an account type when you reorganize your Chart of Accounts.
- When your accountant suggests reclassifying certain accounts for better financial reporting.
- Updating the account type ensures that your reports like the profit and loss or balance sheet which show the correct information.
- To make sure each account is properly categorized not only improves the accuracy of your reports but also gives you a clearer view of how your business is performing.
- It’s a small change that can make a big difference in understanding your finances.
Important Considerations Before You Change Account Type in QuickBooks Online
Here are some important considerations before change account type in QuickBooks Online which are mentioned below.
- In QuickBooks, a sub-account must always have the same account type as its parent account before changes.
- When you change an account type, QuickBooks updates all related past transactions which reflect the new account type in your reports.
- Some default accounts in QuickBooks, like Accounts Receivable or Sales Tax Payable, are built-in and shouldn’t be changed.
- Before make changes, you need to save a copy(backup) of your Chart of Accounts or export reports.
- It’s always a good idea to confirm the change with a professional. They can help ensure that your financial statements remain accurate.
- Try to make adjustments when fewer transactions are happening, so you can easily spot and correct any issues.
Steps to Change Account Type in QuickBooks Online
Change account type in QuickBooks Online is a straightforward process if you follow these steps, mentioned below.
Go to Chart of Accounts
In QuickBooks Online, click the Gear icon in the top right corner, then select “Chart of Accounts” under the Accounting menu.
Find the Account you want to Change
Browse the list and use the search bar to locate the account which you want to change or make sure you select the correct one.
Edit the Account
Then click the “Edit” option in the Action column next to the account name.
Choose the New Account Type
In the account settings, select the correct Account Type from the dropdown menu. Then choose the appropriate Detail Type.
Check for Sub Accounts
If the account has sub-accounts then ensure they are updated to match the new type, or temporarily remove them before saving changes.
Save Your Changes
Once everything looks correct then click “Save and Close”.
Review and Confirm
Return to the Chart of Accounts to confirm that the account now shows the new type. Run a report if needed to make sure your transactions appear correctly.
Best Practices
To keep your accounts accurate and organized then follow these best practices when changing account types in QuickBooks Online.
- After change account type, review your chart of account and report to ensure the new account type fits your financial setup.
- If you are unsure, ask your accountant or bookkeeper, especially for complex accounts.
- Export your chart of accounts or reports before make any changes.
Conclusion
In conclusion, we hope this blog helps to change account type in QuickBooks Online easily. In this blog you will understand why & when you need to change account type with its easy steps which explain in this blog. If you have any queries then contact our QuickBooks ProAdvisor expert team and they help you fix the queries.