Billable expenses should not be considered revenue

Gear > Account and settings > Expenses

You may already see Make expenses and items billable toggled to On

Click on that line to expand that section

More settings should appear... and one of them is:

"Track billable expenses and items as income"

Remove the check in the box and Save.

We have not checked the track expenses as income.

Hi there, TerriSR.

Once you've checked the Track billable expenses and items as income option, the system will automatically give you an option to make the invoice billable. Afterward, you can run the Income by Customer Summary report to show the billable expense without reflecting it as income.

Let me guide you with these steps:

1. Click the Reports tab.
2. Enter and select Income by Customer Summary.
3. Filter the Report period.
4. You can Customize it to add or delete some data on the report.
5. Click Run report.

I've also added this article for more information about Billable Expense: Enter billable expenses.

I'm just around if there's anything that I can help with. Keep safe!

The problem is expenses should not be included in income.  I do not have that checked in the settings.  Why are you lumping billable expenses as sales and/or revenue.  It is separate and should be included as part of your overall revenue.

Expenses should NOT be included as revenue.  

Hello, TerriSR.

Let me join this conversation and add additional information about this.

It could be that those billable expenses were applied to the invoices that's why transactions are showing as income. You'll want to make sure they are not linked. 

You may also consider deleting and recreating the transactions to ensure the reporting is accurate. 

I've included some articles that you may find helpful:

• How to remove a billable expense charge in QuickBooks Online.
• Enter and manage expenses in QuickBooks Online.

Please let me know how it goes. I'll be around to help if you have other concerns about the billable expense. Have a good one. 

How do I submit expenses to my customers?  It seemed the only way to send them to a customer for reimbursement was to include them in the invoice.  I need to make sure we have them always categorized as an expense as it is not revenue for us.  Our consultants work for our customers.  They submit expenses and their service provided separately and we pay them tracking them separately so it is not included in our taxable sales/income.  How in this system do you handle this?  I cannot seem to find a way which is very concerning to me as a consulting company.  It is pretty basic what I am requesting.  I have consultants (vendors) working for me to fulfill a job for my customer.  Please advise.  I may have to find another software solution if this system cannot perform basic accounting solutions

I appreciate you for getting back to us, TerriSR.

You'll have to record the same customer as vendor. Since you're unable to enter the same name, you can put a special character or number to differentiate them.

Once added, you're good to create an expense transaction to record your customer's expense transaction.

I've added this reference as your guide: Enter and manage expenses.

I'll be around if there's anything that I can help with. Keep safe!

If I do enter them again for expenses as a vendor how to I send them a bill? These are pass through expenses.  I need to be able to bill them. Also what reports are available for showing these separately from invoices? 

Thanks for getting back here, TerriSR.

To ensure you are recording these pass though expenses correctly, I'd recommend reaching to your accountant for advice. They can provide details on how to handle this situation.

If you're not affiliated with one, you can visit our Find an accountant or bookkeeper site to find certified professionals near you.

As for sending the bill, this option is unavailable. You can record the transaction in QuickBooks Online by following the steps in this article: Enter bills and record bill payments in QuickBooks Online.

With regard to the reports, if you only want to see the expenses, you can run the Transaction List  by Vendor. This will display your transactions grouped by vendor.

Here's how:

1. Go to Reports on the left panel.
2. Type  Transaction List  by Vendor in the search field.
3. Set the Report period and Rows/Columns.
4. Click Run report.

You can also check out the articles below to learn more about the different reports in your subscription and how you can customize them:

• Reports included in your QuickBooks Online subscription
• Customize reports in QuickBooks Online

Please feel free to reply again if you have additional questions or need help with other concerns. Take care and stay safe.

Thank you for your response.  Are you saying that quickbooks does not handle the processing of pass through expenses?  I have an accountant and have been running our consulting business for years.  I wanted a system for all my processing instead of the manual processes I have in place today.  The more I hear from all the responses it seems that your system cannot really handle what a large consulting company needs to do.  I am very surprised at this and disappointed.  Please confirm that you cannot process pass through expenses.

When you invoice your customer for the billable expenses, you are earning revenue.  That is the "billable" in "billable expenses".  You record the expenses for your business when your consultants send you invoices and/or expense reports.  Then, when you pass those expenses on to the customer, that is revenue.  The expenses hit your books when you enter or pay the invoices (depending on if you're a cash basis or accrual basis taxpayer) and then you earn revenue when billing the customer.  The difference between the invoice amount(s) and the billable expenses is your profit for each consulting job.   

This is an old thread but you should use the COGS account to bill pass-through items. Hope you were able to get your issue resolved before now.

Barb, are you meaning the "payment account"?  Or are you recommending choosing "Cost of Goods Sold" Category when editing an expense (doesn't look like an account)? If that's the case, why is this better than what may be a more accurate category such as "Travel: Airfare".

I have this exact same issue with my consulting company that involves a lot of travel and would like to save time/work up front.

I appreciate it!

@MJoy_D can you respond to the last question? I'd like to know as well. 

Hello, @Chris_Accounting_2023.

I would greatly appreciate it if you could provide me with more information regarding your question. This will enable me to offer you an exact solution to your concern.

To add more details, simply click on the Reply button below.

I eagerly await your response. Have a great day and stay safe!

@MJoy_D  - I was asking for a reply on @LukeNurn's question. Copied it below. 

Barb, are you meaning the "payment account"?  Or are you recommending choosing "Cost of Goods Sold" Category when editing an expense (doesn't look like an account)? If that's the case, why is this better than what may be a more accurate category such as "Travel: Airfare".

I have this exact same issue with my consulting company that involves a lot of travel and would like to save time/work up front.

I have materials that are connected to handyman work I do, or sometimes I purchase supplies for my client's airbnb. 

Thanks in advance. 

I have the same problem.  I purchase materials for customers that I later bill them for using the Billable checkbox at the time of categorizing the expense.  I categorize the expense as Cost of Goods Sold.  That billable expense is then invoiced to the customer.  The revenue for the billable expense is being reported as Income on P&L but the expense is not showing in the Cost of Goods Sold section of the P&L which in turn inflates my profit.  Is there a way to fix this without having to stop using the billable expense option?  It is a great way to be able to track these expenses by customer without making it a manual process for invoicing.

Welcome to the QuickBooks Community, @ACE2021.

I'd love to help you with your concern about managing billable expenses in QuickBooks Online (QBO). But can you please provide more information about it? May I know how you categorize the expense as Cost of Goods Sold? Is it through an item or directly when creating the bill? Any additional information would help us provide the best resolution to your concern.

Please know that the Community forum is always open to help you with any QuickBooks concerns you may have. Wishing you all the best!