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QBO and Bank Rules

Start Automating with Bank Rules in QuickBooks Online

Manually categorizing transactions in QuickBooks Online (QBO) can be tedious, time-consuming, and error-prone. But did you know that with the proper setup of Bank Rules, you can automatically categorize 60% or more of your recurring transactions? Whether you’re managing utilities, contractor payments, or subscription services, Bank Rules can simplify your workflow and create more consistent books.

This guide walks you through the essentials of QBO Bank Rules—from what they are to how to create, audit, and manage them effectively.

What Are Bank Rules?

Bank Rules are logic-based instructions that tell QuickBooks Online how to handle incoming transactions from your connected bank and credit card feeds. Instead of manually categorizing each transaction, you can create rules that apply based on specific criteria—like vendor name, transaction amount, or bank text.

Key Benefits:

  • Automatically categorize recurring transactions
  • Save time during bank review and reconciliation
  • Reduce categorization errors
  • Standardize classifications for more accurate reporting

Step-by-Step: How to Create a Bank Rule

Step 1: Open the Banking Center

  • Go to Banking (or Transactions > Bank Transactions) in QBO.
  • Click the Rules tab at the top.

Step 2: Click “New Rule”

  • You’ll be prompted to name the rule and define its logic.

Step 3: Name the Rule Clearly

  • Use a clear naming convention:
  • “Utilities – FPL”
  • “Software – QuickBooks Sub”
  • “Contractor – John Smith ACH”

Step 4: Set Conditions

  • You can create rules based on:
  • Description/Bank Text (e.g., contains “Amazon Web Services”)
  • Amount (e.g., greater than $500)
  • Transaction Type (Money in or Money out)
  • Use the “All/Any” logic toggle to refine your filtering. Most effective rules use “contains” for bank descriptions.

Step 5: Choose Account and Details

  • Tell QBO what to do when a transaction matches your rule:
  • Category (e.g., Software, Office Supplies)
  • Payee (Vendor or customer name)
  • Class/Location (for tracking by department, job, etc.)
  • Memo (Optional for internal notes)

Step 6: Auto-Add or Manually Confirm?

  • You can choose to:
  • Auto-Add: QBO adds matching transactions automatically to your books.
  • Don’t Auto-Add: You still review the transaction, but the rule pre-fills the fields.
  • Pro Tip: Use Auto-Add only for transactions you’ve fully tested and reviewed. Start with manual review first.

Common Use Cases for Bank Rules

1: Software Subscriptions

  • Description contains: “Google Workspace”
  • Category: Software & IT
  • Auto-add: Yes

2: Utilities

  • Description contains: “FPL” or “Florida Power”
  • Category: Utilities
  • Auto-add: No (if variable amount)

3: Contractor ACH Payments

  • Description contains: “John Smith” or “ACH John”
  • Category: Subcontractor Labor
  • Class: Project Name
  • Auto-add: No (review each month)

4: Office Supplies

  • Description contains: “Office Depot” or “Staples”
  • Category: Office Supplies
  • Memo: “Monthly restock”

5: Recurring Income Deposits

  • Description contains: “Square” or “Stripe”
  • Category: Sales Income
  • Auto-add: No (reconcile against customer invoices)

How to Track and Maintain Bank Rules

  • Rule Name Conditions Category Payee Auto-Add? Notes
  • Software – Google Contains: “Google Workspace” Software Google Yes Monthly subscription
  • ACH – John Smith Contains: “Smith” Subcontractor Labor John Smith No Review project allocations
  • This tracker helps with:
  • Training new staff
  • Auditing for duplicates or conflicts
  • Updating rule logic when vendors or expense types change

How to Review and Audit Bank Rules

  • Monthly:
  • Check rules list for recent changes or duplicates
  • Run a Bank Detail Report to verify rule application accuracy
  • Spot check a handful of categorized transactions
  • Quarterly:
  • Compare categorized transactions to actual GL postings
  • Update rule descriptions or categories as needed
  • Remove or edit unused rules
  • Year-End:
  • Review vendor 1099 eligibility (rule-applied vendors may need W-9s)
  • Confirm income categorization aligns with CPA preferences

When NOT to Use Bank Rules

  • Bank Rules are powerful—but not foolproof. Avoid using them for:
  • Payments linked to customer invoices: These should be matched manually.
  • Complex journal entries: Use recurring templates or manual entry.
  • Transfers between accounts: QBO often identifies these automatically.
  • Payroll transactions: These need to be reviewed for accuracy and posting logic.

How Bank Rules Support Automation and Reporting

  • When done right, Bank Rules:
  • Reduce manual entry by 50–80%
  • Increase reporting consistency across categories
  • Help power dashboards, job costing, and budgeting tools
  • Integrate cleanly with apps like Dext, Relay, and Ramp
  • The more consistent your data, the more automation and insights you can unlock.

Final Thoughts: Set It, Test It, Trust It

Bank Rules in QuickBooks Online offer an enormous opportunity to improve accuracy, reduce overhead, and streamline bookkeeping. But they require thoughtful setup and regular reviews.

Start small, test for a few weeks, and then expand your automation footprint.

Want Help Getting Started?

We’ll walk you through building and testing your first 10 rules—and give you our customizable rule tracking template.