Employee reimburse contractor

@Marcelia 

Use a cash type bank account and pay the vendor. That lowers the cash balance.

Pay the employee and use that same cash type bank account as the expense (reason) for the payment.  That bring the balance back to zero

For this kind of situation, since it happens often, I would create a new cash type bank account called clearing or something, makes it easier to see that payments and repayments have been made.

Thank you!

My main concern was I want to track this Contractor's on how much we are paying him so I will have an accurate amount. But when the employee pays the contractor and get reimburse later, then tracking this contractor was somewhat lost because I have to pay in the name of the employee. And this is what I am having a problem. Any more suggestion besides creating the Cash Bank?

Thanks!

Marcelia

Thanks for coming back for more assistance, @Marcelia. You can follow Rustler, our all-star contributor's expert advice. 

We can use clearing, barter, or wash account to move the employee's reimbursement to pay the contractor. Also, we use a bank so you can do these following: 

• Pay into a bank account via Receive Payments or Make Deposits.
• Pay a bank account via Write Checks or Pay Bills.
• To make it appear on the balance sheet and the statement of cash flows to balances, and changes in balances.
• To allocate expenses to overhead or class using a zero check.

Let's now set up a clearing account in QuickBooks Desktop. Here's how: 

1. Go to the Lists menu, then select Chart of Accounts.
2. Right-click anywhere, then click New.
3. Select the Bank radio button in the Add New Account window, then click Continue.
4. In the Account Name field, enter a name such as Clearing Account, Barter Account, or Wash Account. Don't enter an opening balance.
5. Click Save & Close.

Once done, create a journal entry to move the employee's reimbursement to pay the contractor. Follow the steps on how to use the clearing account outlined in this help article: Set up a clearing account.

To make sure your books are accurate, I'd recommend consulting an accountant for proper guidance. 

You'll also want to run the Vendor QuickReport to see the journal entry transactions and to ensure they're recorded accurately in QuickBooks. 

Let me know if you have additional concerns. We're always here to help you some more. 

Forgive me for being so not good at this. You are saying that I pay the employee from the clearing account and then use the clearing account again to pay the vendor? Is this right? Once this is done, to make a journal entry. I did use the clearing account to both pay the employee and vendor and end up having a balance on the clearing account. I still don't understand.

Let me ease your confusion, Marcelia.

First, you'll have to create a journal entry to move the employee's reimbursement to the clearing account. Then, pay the contractor and use the clearing account. This will bring the balance to zero.

Then, you can pull up the Vendor QuickReport or the clearing account quick report to ensure the transactions are recorded accurately. Here's how:

1. Click Lists.
2. Go to Chart of Accounts.
3. Select the account, right-click, then choose QuickReport.

If you have other questions, please feel free to let us know. We're just around for you.

Thank you.