Question

Billable markup expenses

Forum|Forum|7 years ago
December 27, 2018
3 replies
26 views

I work for a General Contractor who pays the temporary power bills and temporary porta potty bills then bills the customer with a small markup for reimbursement.

I am not sure on how to enter this in QuickBooks Pro so it will reflect properly on the P and L

Pam

QuickBooks Desktop

A

AldrinS

Level 4

Hi there, pam0315.

You've come to the right place. Entering billable expenses is my specialty, so let me lend a helping hand in recording this in QuickBooks.

We'll begin by setting up the preferences that'll allow us to mark expenses as billable and enter a markup percentage. Let me walk you through the steps on how to do it:

From the Edit menu, choose Preferences.
Select Time & Expenses.
Go to the Company Preferences tab.
In the Invoicing Options section, check the Mark all expenses as billable option.
Enter the Default Markup Percentage.
- You can leave this blank if there isn't a default percentage for the markup.
From the Default Markup Account drop-down menu, choose the correct account.
- If you don't have one yet, you can always scroll up and select Add New to quickly create a markup account.
Click OK.

After we've set it up, allow me to guide you on how to enter the power and porta potty bills as billable expenses:

From the Vendors menu, select Enter bills.
Choose the Vendor.
Enter the Date.
Fill in the appropriate details in the following fields:
- Account: Make sure to choose the correct account.
- Amount: Enter the total amount of the bill.
- Memo: You can leave this field blank if necessary.
- Customer:Job: Choose the customer billable for this expense. Choosing the customer will automatically mark this expense as Billable.
Click Save & Close.

We're almost done. Now, we just need to create the invoice for the customer with the marked up amount. Here's how:

Click the Customers menu, then select Create Invoices.
Enter the customer that you entered on the bill.
On the Billable Time/Costs pop-up window, choose Select the outstanding billable time and costs to add to this invoice.
Go to the Expenses tab.
Select the right expense.
In the Markup Amount or % field, make sure the correct amount or percentage is entered.
In the Markup Account field, make sure the right account is selected.
Click OK, then Save & Close.

That should do it! I'm confident that with these resources you'll be able to enter billable expenses like a pro in no time. You'll also be all set with your Profit & Loss report after you follow these steps.

Keep in touch with me here if there's anything else you need. I always got your back. Thanks for reaching out, wishing you and your business the best.

P

pam0315Author

Thank you for your reply. I have a few more questions.

1. I am thinking I don't want to mark in the customer preferences all expenses are billable because they are not.

I can just check the billable and customer name if that applies when I am entering the bill - correct?

2. The default mark-up account is an Income account - Correct? So that when I print out a P and L statement it will show the income generated for the mark-ups throughout the year.

3. When I enter the bill the account would be Reimbursable Expenses when we want to be reimbursed from the customer? Correct

I believe the way the account is currently set up is Temporary Power or temporary facilities. But I am thinking when it is a billable expense to the customer and we receive payment back that it should not be under temporary power or temporary facilities BUT reimbursable Expense account. Is this correct?

4. So basically I have to set up two additional accounts - Reimbursable Expenses from Customer ( which is an expense account)

AND Markup account which would show up under Income. Is this correct?

Do you have a youtube video you can link to this message?

Am I correct that these particular expenses have nothing to do with Cost of Goods sold as that would be for specific material items - correct?

V

VivienJ

Hello pam0315,

Thanks for joining us again here in the Community. I can further help and add up to the detailed response given by my colleague, @AldrinS.

QuickBooks Desktop is great for allowing users to manage transactions and accounts based on their preferences. The set up would depend on how you want to track your finances, and I can guide you through it.

You can opt to mark all expenses as billable from the Preferences page. Anyway, you’ll have the option to assign a customer or remove the checkmark in the billable column when you create bills (see screenshot below).

Yes! To easily track the mark-ups of the billable expenses in the Profit and Loss report, it needs to be an income account. It’s money in type of transactions though!

Once you mark a bill as billable, the program automatically recognizes it as reimbursement from client. Therefore, regardless of whether you choose to use the reimbursable or any other expense accounts, your customers would need to pay you back.

The choice is yours; you can continuously use the Temporary Power or Facilities, or a new reimbursable expense account. All you need to do is create an invoice for them, so they can process the payment. I’ve added a screenshot below for visual reference.

In connection to your fourth question, if you want to create an income account specifically for the mark-up amounts for better tracking, you may do so. I’ve added steps below on how to do it:

Go to Lists at the top menu bar, select Chart of Accounts.
Right-click and choose New.
Select Income or Expense in the Categorize money your business earns or spends section.
Choose the other necessary details, click Continue
Enter the Account name, Description, and etc.
Click Save and Close.

Then, for the last question, I’d suggest consulting an accountant to verify if there’s a need to link them with the Cost of Goods Sold account. They are the experts with tax and account-related concerns to ensure accuracy of your books come tax time.

You can now proceed and enjoy working with your account. But, if there's anything else you need help with, I'm only a comment away. The Community is always here to help, anytime!

P

pam0315Author

I have another question on this.

When I select reimbursable Invoices it seems that there are two different Invoice number rather than Invoice numbers in sequential order.

Reimbursable Invoices seem to have one set of Invoice numbers and service Invoices not reimbursable seem to have another set of Invoice numbers

qbteachmt

Level 11

None of this is correct, for QB and Job cost tracking and reporting.

You want to use Two Sided items, not that Expenses tab. Examples:

Other Charge Items for Waste Removal, Building Permits, and Equipment Rental. Two Sided = checkmark the box on the left, link the Left to Expense and the right to Income. Two Sided Service item, such as Electrician Sub and Plumber Sub. Two Sided Noninventory item for Doors, Windows, Roofing, etc that you custom order for the job. Use the Items on the Items tab, use Qty, use them on Purchases and job track them. Optionally, this is Billable or not, depending on the terms for the job, such as Fixed Bid (direct costs not billable) or Time & Materials (is billable).

That way, you don't Micro-manage the Expenses tab as one expense account mapped to one income account. And now, when you use Items on estimates, and on Purchases, credit card charge, and sales, you see the info in Job reporting. Run Job Profitability Detail and see if yours reads as nicely as my attachment. And Est vs Actuals, these rely on the use of Items. Not that Expenses tab.

And the Reimbursement is Gross Income. Yes, it is All Income. Do not wash away expense with negative expense (income) or income with negative income (expense).

This is Wrong: "it should not be under temporary power or temporary facilities BUT reimbursable Expense account. Is this correct?"

This is more Items, not more Accounts: "I believe the way the account is currently set up is Temporary Power or temporary facilities."

That way, you see Gross Cost and Gross Revenue, and the job reporting and the P&L reporting will show the Net. Even the Item Profit reporting will show the net.

This also is wrong for your accounting: "

So basically I have to set up two additional accounts - Reimbursable Expenses from Customer ( which is an expense account)"

For instance, as you see in my side-by-side of the P&L related to the Job details (follow the matching Color), I have one expense account for Jobs, one for Subs labor. The Details are Items.

"When the customer sends us the reimbursement check is there a way to keep track of that check to where it is reimbursed income and doesn't go directly to income."

It is your Payment to process against their Charges. The check is just part of Banking.

"The reason for this question is because in a recent General Liability audit they wanted the company's income."

And your data has been "netting in the accounts" all this time, which is Wrong. Everything is Under-reported.

"Technically, the reimbursement check is just that a reimbursement for a bill we already paid for the customer and should be separated from the actually income of the company."

No, that is not what you are doing, for a Business. You track Gross Revenue and Gross Expense and you let Reporting show these differences. Otherwise, you completely under-report the scale of this business.

Please see my attachment.

qbteachmt

Level 11

Here's what the item mapping looks like, attached.

S

SD677

I am on a MAC QB 2019 and the steps you list in "pam0315 below thread" can not be found. How do I create billable markup expenses on a MAC version?

Basically, I have a few vendors and only a few clients that I need to charge a % of goods sold.

A

Anonymous

Hello, SD677.

Users who record billable expenses will have an option to include markups when invoicing the cost. This process is detailed in the Invoicing for actual costs (page 114) section in this PDF: QuickBooks Desktop for Mac 2019 User’s Guide.

This also contains topics that are very helpful while working with your QuickBooks.

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