QuickBooks Online: Step-by-Step Transaction Reclassification

Accurate books start with correctly classified transactions. If you are spending hours every week fixing errors in QuickBooks Online, you are not alone. Misclassified orders, fees, and payouts can distort your financials, slow down tax prep, and hide the true performance of your business.

This guide discusses how to reclassify transactions in QuickBooks Online, plan by plan, and shows when automation is the smarter move.

Why reclassifying transactions in QuickBooks Online matters

Accurate transaction classification is the foundation of reliable financials. Recurring misclassification often signals a workflow problem, not a user error.

Misclassification is more than a bookkeeping nuisance. 

When orders, fees, or inventory are posted to the wrong accounts, your profit and loss statement becomes unreliable, tax reporting is at risk, and you lose visibility into what drives your business. 

For ecommerce and multi-channel sellers, these errors multiply quickly.

Common scenarios of misclassification

• Shopify and Amazon orders both post to "Online Sales," making it impossible to see which channel is profitable
• Marketplace fees are lumped with revenue, inflating your margins and hiding true costs
• Inventory purchases are misclassified as cost of goods sold, overstating deductions and complicating year-end reconciliation

Misclassification creates cascading financial errors. 

For example, if $10,000 of inventory is posted as an expense instead of an asset, your tax liability can shift immediately, potentially overstating deductions by thousands. Monthly shipping fees in the wrong account mean you cannot calculate true fulfillment costs or identify unprofitable SKUs.

Recurring misclassification is rarely just a user mistake

It often means your systems are disconnected, and transactions are not being classified correctly at the point of entry. Automation can address these root causes before errors compound.

Multi-channel sellers and accountants typically spend several hours every week on manual reclassification and reconciliation when workflows are not automated, leading to increased errors, slower reporting, and higher costs.

Transaction reclassification by QuickBooks plan: What you can (and cannot) do

QuickBooks Online offers different reclassification capabilities depending on your subscription. Batch reclassification, moving dozens or hundreds of transactions at once, is only available in the Advanced and Accountant plans. 

Here’s a quick breakdown: 

Table: Reclassification capabilities by QuickBooks plan

Batch reclassification is only available in the Advanced and Accountant plans. 

If you are manually reclassifying 50+ transactions weekly on Essentials or Plus, upgrading can save 10+ hours monthly.

Even with Advanced, high-volume or multi-channel sellers may outgrow native tools. If you are batch-reclassifying hundreds of transactions weekly, the issue likely starts upstream, as orders are posting incorrectly from the start.

Once you know your plan’s capabilities, set up your account to avoid roadblocks.

Prepare your QuickBooks Online account for reclassification

Preparation prevents avoidable roadblocks. Set up permissions and check for locked periods before you begin.

Before reclassifying transactions, confirm you have the right access and settings:

Checklist

• Confirm you have Admin or Accountant role access (Settings > Manage Users)
• Check that the accounting period is open (Settings > Account and Settings > Advanced > Close the Books)
• Verify that destination accounts exist and are active in the Chart of Accounts
• Enable the audit log for compliance (Settings > Account and Settings > Advanced > Audit Log)
• If using classes or locations, ensure these are set up before reclassifying

For businesses using automation platforms like Webgility, detailed logs are maintained for compliance tracking. Now you are ready to reclassify transactions. Let us walk through the process step by step.

How to reclassify transactions in QuickBooks Online (step-by-step for each plan)

Every QuickBooks plan has a path to reclassification. Here is how to do it, step by step.

For QuickBooks Online Advanced users

Advanced users have access to the dedicated Reclassify Transactions tool, which enables batch reclassification.

Estimated time: 15–20 minutes for 100 transactions

Steps

1. Go to Settings (gear icon) > Reclassify Transactions
2. Select the account type (Profit and Loss or Balance Sheet)
3. Choose the specific account with misclassified transactions
4. Set the date range to filter transactions
5. Click Find Transactions to display the list
6. Select transactions to reclassify (use checkboxes or Select All)
7. Click Reclassify at the top
8. Choose the new account, class, or location
9. Click Apply to confirm
10. Run a Profit and Loss or Balance Sheet report to verify changes

Tip: If you are reclassifying the same types of transactions every week, see the next section.

For QuickBooks Online Accountant users

Accountant users access the same tool via Accountant Tools in the left sidebar.

Estimated time: 10–15 minutes for 100 transactions

Steps

1. Go to Accountant Tools (briefcase icon) > Reclassify Transactions
2. Filter by account, date, or transaction type
3. Select transactions to reclassify
4. Click Reclassify and choose the new account, class, or location
5. Confirm and verify changes in reports

For QuickBooks Online Plus, Essentials, and Simple Start users

These plans do not support batch reclassification. Manual workarounds are required.

Estimated time: 2–3 minutes per transaction (3–5 hours for 100 transactions)

Options

• Manual edit: Go to Accounting > Chart of Accounts, select the account, click View Register, open each transaction, update the Category, and save
• Banking feed: Go to Banking > your bank account > For Review, update the Category, and save
• Journal entry workaround: Create a Journal Entry to move balances between accounts (does not change original transactions)
• Upgrade: If you regularly reclassify 50+ transactions weekly, upgrading to Advanced can save significant time

When batch fixes are not enough: The weekly reclassification trap

Batch reclassification saves hours, but if you are running it every week for the same types of transactions, your workflow, not just your tools, may be the problem. 

For example, if Shopify and Amazon orders both post to "Online Sales," you will need to batch-reclassify them every week to see channel profitability. This is a sign that your sales channels and accounting system are not fully connected.

• Time audit: How many hours are you spending on batch reclassification monthly? If it is more than 2–3 hours, it is time to review your workflow
  
  
• Decision point: If you are reclassifying more than 20–30 transactions per week, automation may be the smarter solution. Platforms like Webgility automate order classification at the point of entry, eliminating recurring corrections and saving up to 90% of reconciliation time

5 rules for clean books: Prevent reclassification headaches

Prevention beats correction; follow these rules for lasting accuracy.

Best practices

• Double-check account mapping before importing or syncing transactions
• Keep audit trails and review changes after reclassification
• Communicate with your accountant before making bulk changes
• Audit root causes if you reclassify often (catch-all accounts, fee mapping, channel sync)
• Use a “red flags” checklist: If you are reclassifying 100+ transactions weekly, your manual process is failing

Prevent, do not just correct: After automating sales channel-to-QuickBooks sync, businesses like Channie’s reduced 60+ hours of manual corrections per month.

Time audit worksheet

Download a template to track your monthly reclassification hours and identify when automation makes sense. If you still hit roadblocks, here is how to troubleshoot and when to consider a new approach.

Troubleshooting: What to do if you cannot reclassify transactions

Most errors can be resolved with permissions or settings, but recurring issues may require a new workflow.

Common issues:

• Insufficient permissions (not an Admin or Accountant)
• Locked accounting periods (period is closed)
• Unsupported transaction types (payroll, inventory adjustments, or linked transactions)

Multi-channel sellers

If orders from Shopify and Amazon both post to "Online Sales," requiring weekly reclassification, this signals a data disconnect. Direct channel-to-account mapping via automation platforms eliminates this need.

Webgility connects your sales channels directly to QuickBooks, automating classification and reconciliation. If you are ready to eliminate manual corrections, here is how automation can help.

The automation alternative: How Webgility prevents misclassification

Automation prevents errors before they start, saving time and boosting accuracy.

Webgility automates order classification, fee mapping, and reconciliation, eliminating manual corrections and saving significant time. Here is how:

• Core accounting & financial sync: Automatically posts orders, fees, and payouts to the correct accounts in QuickBooks
  
  
• Automation & scheduling: Applies rules for correct classification at import, so transactions land in the right place the first time
  
  
• Analytics & reporting: Identifies and prevents misclassified transactions before they affect your books

After automating with Webgility, Epic Mens eliminated weekly reclassification and reduced manual accounting hours by over 80%.

Switch from correction to prevention

Manual correction works, but prevention is the real win. Accurate classification is critical for reliable financials, tax compliance, and business insight. 

If you are spending hours on recurring corrections, it is time to audit your workflows and consider automation. Review your reclassification frequency as a business health metric. Work with your accountant or explore automation if corrections are frequent.

Ready to reclaim your time and accuracy? See how Webgility’s automation can help. Get a demo now!

FAQs

What types of transactions can I reclassify in QuickBooks Online?

You can reclassify most income and expense transactions. Payroll, inventory adjustments, and transactions with linked line items may not be eligible.

Can I undo a reclassification?

There is no one-click undo, but you can manually move transactions back to their original accounts. Always review changes before applying.

How does reclassification affect my reports?

Reclassification updates your Profit and Loss and Balance Sheet reports immediately. Always verify reports after making changes.

Is there a way to avoid repeated manual reclassification?

Yes, automation tools like Webgility can classify transactions correctly at the point of entry, reducing or eliminating the need for manual fixes.