What is a bank transaction?
Definition of bank transaction
A bank transaction is a record of money that has moved in and out of your bank account.
When you have costs associated with your business - for example, rent for office space - the payments for these will come out of your bank account as transactions. The formation of your asset accounts, capital accounts and liability accounts all rely on bank transactions.
Keep track of your bank transactions
Ensuring that the transactions in your bank account match those in your accounting records is a process known as bank reconciliation. This is important as it allows you to establish precisely how much money your business has and to accurately report your income to HMRC.
Accounting software can help you save time with bank reconciliation by enabling you to import your banking data faster.
There are a few ways to import your banking data into accounting software. You can either:
- enter transactions manually
- upload transactional data to a spreadsheet. You can find out more about that process over on our Knowledge Base
- connect your bank account to your accounting software with a bank feed
To make sure your bank transactions are always in order, why not try out our exciting new Open Banking bank feeds? These feeds use cutting edge technology to quickly and reliably import your banking data into FreeAgent. Find out more about banking in FreeAgent.
Got questions? Ask Emily!
FreeAgent's Chief Accountant Emily Coltman is available to answer your questions in the comments.