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Level 1

Reimbursed employee for expenses but also entered transaction as an expense

I reimburse an employee (myself) in the payroll system. That part is easy, I put in the amount in the reimbursement box and I get paid for it on the paycheck.

I also put those transaction details as an expense.

The problem is, in my profit-loss report, expenses are showing up as expense and the reimbursement is showing as expense, causing these transaction to be accounted for twice.

 

The way I've been doing to prevent this is to not put in any expenses in quickbooks, but then I don't know the details of the reimbursements I'm paying.

 

What is the right accounting to do here?

Solved
Best answer 11-04-2018

Accepted Solutions
Level 15

Re: Reimbursed employee for expenses but also entered transaction as an expense


@bseker wrote:

I reimburse an employee (myself) in the payroll system. That part is easy, I put in the amount in the reimbursement box and I get paid for it on the paycheck.

I also put those transaction details as an expense.

The problem is, in my profit-loss report, expenses are showing up as expense and the reimbursement is showing as expense, causing these transaction to be accounted for twice.

 

The way I've been doing to prevent this is to not put in any expenses in quickbooks, but then I don't know the details of the reimbursements I'm paying.

 

What is the right accounting to do here?


One of two ways to do it

 

1. you pay the expense using a liability account, the company owes you for the expense, then the payroll item posts to that liability account zeroing it out

 

or

 

2.  As you said, do not post the expense and let the payroll reimbursement post to the expense account.

View solution in original post

15 Comments
Level 10

Re: Reimbursed employee for expenses but also entered transaction as an expense

You can change the account that is assigned to a reimbursement pay type, but unfortunately you can only use an expense type account, not a current asset (or liability) account, which would make things easier.  If it is always the same expense account, then simply change the assignment, from the default "reimbursement" expense.  If it's always different, then one way is to create a zero expense type transaction, with the "reimbursement" expense as a negative and the actual expense as a positive. You can also have multiple reimbursement pay types, each one assigned to a different expense account

Level 15

Re: Reimbursed employee for expenses but also entered transaction as an expense


@bseker wrote:

I reimburse an employee (myself) in the payroll system. That part is easy, I put in the amount in the reimbursement box and I get paid for it on the paycheck.

I also put those transaction details as an expense.

The problem is, in my profit-loss report, expenses are showing up as expense and the reimbursement is showing as expense, causing these transaction to be accounted for twice.

 

The way I've been doing to prevent this is to not put in any expenses in quickbooks, but then I don't know the details of the reimbursements I'm paying.

 

What is the right accounting to do here?


One of two ways to do it

 

1. you pay the expense using a liability account, the company owes you for the expense, then the payroll item posts to that liability account zeroing it out

 

or

 

2.  As you said, do not post the expense and let the payroll reimbursement post to the expense account.

View solution in original post

Level 1

Re: Reimbursed employee for expenses but also entered transaction as an expense

I'm not sure that I understand this solution.

You said, "simply change the assignment, from the default "reimbursement" expense". What am I changing it to?

Level 1

Re: Reimbursed employee for expenses but also entered transaction as an expense

This works. I assigned all the expenses to a new liability account as "Employee reimbursement" and the amounts disappeared from the "Profit and losss" report.

Will this change have other ramifications? I don't want those amounts to show up somewhere else.

Level 10

Re: Reimbursed employee for expenses but also entered transaction as an expense

"then the payroll item posts to that liability account zeroing it out"

Unfortunately you can't do that in QBO

 

Level 10

Re: Reimbursed employee for expenses but also entered transaction as an expense

"This works. I assigned all the expenses to a new liability account as "Employee reimbursement" and the amounts disappeared from the "Profit and losss" report."

 

Unfortunately this does NOT work in QBO, because there is no way to reduce the liability in payroll, using the reimbursement pay type.  In any case it's not even possible to do in the first place.  See next paragraph

 

Anyhow, I don't think you followed what the answer said. The answer said "you pay the expense using a liability account".  It's not quite clear what this means but I think that means is that you use a Bill type transaction, which creates an expense, against AP, a liability. That's the only way in QBO you can create an expense using a liability account, and then use a Bill Pay transaction to pay it (In an Expense-type transaction, you can choose from one of 3 account types: bank, c/card or c/asset. There is no liability option ). 

 

I don't think the answer means to"assign all the expenses to a new liability account".  If that means you choose a liability account instead of an expense account, then that's not the same as "you pay the expense using a liability account". What this seems to do if you used Expense-type transaction is reduce bank, which is not what should happen, because you added the amount to the pay check, if I understand correctly. So there is no reason to now reduce your bank balance. That happens with the real pay check

Level 10

Re: Reimbursed employee for expenses but also entered transaction as an expense

"I'm not sure that I understand this solution.

You said, "simply change the assignment, from the default "reimbursement" expense". What am I changing it to?"

 

Change it to say "Travel Expense" if it's for travel, "Supplies" if it's for supplies,  etc

Level 1

Re: Reimbursed employee for expenses but also entered transaction as an expense

I left the bank/credit account as the checking account but account of the item to a liability.

That removes it from the profit/loss report.

Level 10

Re: Reimbursed employee for expenses but also entered transaction as an expense

"I left the bank/credit account as the checking account"

So then you reduced your bank account twice, once with the paycheck, and again with the expense transaction

Level 1

Re: Reimbursed employee for expenses but also entered transaction as an expense

That was kind of the ramification I was talking about.

So there is no neat way of doing this then.

Perhaps I should just get rid of those expense records.

Level 10

Re: Reimbursed employee for expenses but also entered transaction as an expense

Somewhere above I explained what to do.  Here it is again:

 

You can change the account that is assigned to a reimbursement pay type, but unfortunately you can only use an expense type account, not a current asset account, which would make things easier.  If it is always the same expense account, then simply change the assignment, from the default "reimbursement" expense.  If it's always different, then one way is to create a zero expense type transaction, with the "reimbursement" expense as a negative and the actual expense as a positive. You can also have multiple reimbursement pay types, each one assigned to a different expense account

 

And yes, delete the expense-type transactions, if you don't use them as zero expenses

Level 1

Re: Reimbursed employee for expenses but also entered transaction as an expense

I'm not quite clear on where I do this:

"You can change the account that is assigned to a reimbursement pay type"

 

What is the account/detail combination for a reimbursement pay type?

Level 10

Re: Reimbursed employee for expenses but also entered transaction as an expense

Aha, I see the problem.  So you click on Gear>Payroll Settings>Accounting>Customize, and you should see Reimbursements under Wage Expense Accounts. If you click the drop-down you should see all your expense accounts, Select the one you want and click OK. 

If you have multiple reimbursement pay types, click "I use different accounts for different wages", and you can assign a different expense account to each one

Level 1

Re: Reimbursed employee for expenses but also entered transaction as an expense

I did this part where I can have a separate reimbursement account (an expense or asset). I'm not sure what that does though. The reimbursement will appear in a separate account. Also it's not retroactive, so it changes things only going forward.

How do I do this part:

"create a zero expense type transaction, with the "reimbursement" expense as a negative and the actual expense as a positive."

Level 10

Re: Reimbursed employee for expenses but also entered transaction as an expense

"How do I do this part:

"create a zero expense type transaction, with the "reimbursement" expense as a negative and the actual expense as a positive."

Not sure how else to say it. Start by clicking the "+" on the top, then click "Expense"

 

"I did this part where I can have a separate reimbursement account (an expense or asset). "

Where you see the option to choose an asset?  I don't see it.

 

"Also it's not retroactive,"

Yes you can change the history. Down at the bottom there is a start date from where to make the change, and OK button

 

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