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Reimbursing an employee

Reimbursing an employee:

Use these procedures to reimburse an employee who paid for a business expense with his or her personal funds. You can either:Pay the employee now, or record the expense and pay the employee later.

Note:  Don't use these procedures if you want to pay an employee who is a subcontractor, or if you want this payment to appear on supplier reports. In those cases, set up the employee as a supplier, and then use a Bill and Pay Bills instead.

To pay the employee now:

  1. Click the Plus sign (+) icon > Cheque or Plus sign (+) icon > Expense to record a payment to the employee, with attention to these fields:
    • Choose an account: The account you reimburse the employee from (bank or petty cash).
    • Amount:   Amount paying Employee. (Break down the amount into different line items if tracking or making billable for multiple customers.)
    • Account: The expense account appropriate for the purchase the employee made.
    • Customer: (Optional) Select a customer from the drop down menu if you are looking to track the expense for a specific customer or customers.
    • Billable: (Optional) Click on the box under billable if you wish to offset the expense onto your customers invoice.
      • Note: The customer and billable fields are not available in QBO Simple Start, but if in QuickBooks Online Plus you may turn on the feature. To do so see our related Knowledge Base  How do I turn on Billable Expenses?
  2. Click Save.

To record the expense for future payment:

You can record the expense as a journal entry, and then pay the employee later after the end of the month or to coincide with the end of a pay period, for example.

  1. Click the Plus sign (+) icon> Journal Entry to enter a transaction showing you owe the employee money.
  2. For the first distribution line, enter:Account: Account to track employee reimbursements you owe.  If you don't have one yet, type a name such as "Employee reimbursement" and press Enter.a.  Make these choices in the New Account interview:i. Choose from all account typesii. Current Liabilities iii. Other Current LiabilitiesCredit:  Amount owed to employee.Name: Employee.
  3. On the second line, enter:Account:  Expense account appropriate for the purchase the employee made.Debit: Amount of purchase.Name: If you want the expense associated with a customer, choose a customer. Otherwise, leave Name empty. (This option will not provide you the ability to make billable. So if billing for the expense incurred you will need to add the fees manually onto an invoice for your customer.)
  4. Click Save.

To see how much you owe the employee, create this report:

  1. Select Reports from the left menu.and search for Transaction Detail by Account
  2. Click Customise
  3. In the General section, verify the Transaction Date range includes the journal entries you've made above.
  4. In the Rows/Columns section, find the Group By field and select Employee.
  5. Click Change Columns:Select Employee from the left column, and click Add > Click OK.
  6. From the left menu bar select Lists, find the Distribution Account field and select your Employee Reimbursement liability account.In the Employee field, select the employee's name. (If you want the report to show what you owe all employees, leave this set to All.)
  7. Click Run Report

When you're ready to pay the employee:

  1. Click the Plus sign (+) icon> Cheque or Plus sign (+) icon> Expense to record reimbursing the employee, paying attention to these fields:Bank Account or Cash Account: The account you reimburse the employee from (bank or petty cash).Pay to the Order of: The employee.Amount:  Amount to pay employee.Account: The reimbursable account you created, above.Customer: Leave empty, even if you recorded a customer in the Name field, above.
  2. Click Save and Close.  

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