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ktip22
Level 1

Project Expenses

We have a dirt excavation business where some cost to be billed to the customer are not expenses in the bank register that can be posted to the project.   For example: we include a service charge to cover overhead cost per job or a fee for the use of our equipment.  This equipment fee is not for labor and our equipment has been fully depreciated in a previous year. 

When I try to add these costs to a project, I must select a category of "invoice, receive payment, expense, estimate, time or bill".  If I select "expense" and add the service fee to the project, there is an expense that is automatically added to the bank register.  This results in an unreconciled expense when reconciling with my bank statement.  I contacted QB and was told to do a J/E to Debit Opening Balance Equity and Credit Bank Account.  This is not only going to create lots of J/E's but create questions from our CPA Firm. 

How can I add a service fee or overhead expense to a project that will be billed to the customer without impacting my check register and without constantly recreating J/E/s?  Another note - We pay out commission to our employees per projects.  The commission is a percentage of the revenue.  I need the service fees and overhead expenses included on my projects to figure commission payouts correctly.  Please help.  Thank you!

3 Comments
IamjuViel
QuickBooks Team

Project Expenses

I appreciate the complete details you've shared, @ktip22.

 

Let me guide you in setting your service fee item so you can bill your customer for the use of your equipment.

 

First, you'd want to create a service item. Here's how:

  1. Go to the Gear icon.
  2. Select Products and Services.
  3. Click the New button.
  4. Choose Service.
  5. Fill in the necessary information and make sure to choose an expense account from the Income account
  6. Click Save and close. 1.JPG

     

Now, you can create a bill or check to record the total expense of the project. 

 

Once you create an invoice, that's the time you include the service item you've initially created. 

 

By doing this, the service fee will not show in your bank register. You can read through this article for more insights in using the Project feature: Set up and use the Projects feature.

 

Also, you can check these articles to help you manage your project related transactions:

I want to make sure everything is taken care of for you, feel free to leave a comment below if you have any other issues or concerns. I'm more than willing to assist. Have a good one!

ktip22
Level 1

Project Expenses

Thank you for the response.

I have followed your instructions.  Here's the issue:  We don't want the customer to see the Mark Up or the Service Fee on the invoice.  Our projects are flat rates.

Example of the contents we need on the invoice:

Snow Clearing = $5,000

 

Example of the our cost (that is needed in the project to determine profit):

Contract Labor = $2,000

Service Fee = $250 (5% of Revenue)

Total Cost = $2,250

 

Profit = $2,750 (Commission is paid from this $2,750)

Please help me workaround having the details on the invoice yet avoiding auto entries to the register.

Thank you.

 

 

 

 

 

Rasa-LilaM
QuickBooks Team

Project Expenses

Hello there, ktip22.


I appreciate follow the solution shared by my peer and letting us know the result. The information will guide us on how to track the service fee or mark up.


Based on the details, you can use an estimate to record the fee. This way, it’s tracked in QBO.


Make sure not to convert it to an invoice, so your customer will not see the fee. With just a few clicks you can create an estimate.

 

  1. In your company, tap the New menu to choose Estimate under Customer.
  2. This will open a page where you can enter the transaction details.
  3. Click Save or Save and close.

 

For more details into this process, the following guide includes instructions on how to update the transaction’s status, and delete one: Create and send estimates in QuickBooks Online.


As always, I suggest consulting with an accountant for further assistance. Doing so ensures that your books have the correct information.


To help you in the future, click here to view our self-help articles. It includes resources and tools that will guide you on how to manage the business efficiently.


Keep in touch if you have any clarifications. I’m only a few clicks away for help. Have a great rest of the day.

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