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jkope26
Level 2

Employee Expense Reimbursements via Payroll Clearing

We are going to start to use QBO in January and I have a question about recording employee expense reimbursements.  

We are a marketing company and will be using separate software to track our projects.  Our expenses will be recorded in that software and synced with QBO (the 2 systems are integrated.)

When employee reimbursable expenses are synced to QBO they show up as a bill.  The expense is recorded correctly but the credit is to AP.

1) We historically have reimbursed employees via payroll (which is being processed outside of QBO) and instead of the expenses transaction crediting AP, we recorded to a payroll clearing account instead.  Can this be accomplished in QBO by simply doing a JE to reclassify the transaction from AP to the payroll clearing account?

2) How would we mark this bill as "paid" since are are not cutting a check?  (We will be doing a separate JE to record payroll and it will have an offsetting line item to the payroll clearing account.)

Thank you!

 

Solved
Best answer December 19, 2020

Best Answers
MaryAnn_E
QuickBooks Team

Employee Expense Reimbursements via Payroll Clearing

Hi there, @jkope26.

 

We can give you the information you need to get these balances taken care of, however, it would still be best to consult with your accountant to make sure what's best for you and your business.

 

The most efficient way to clear any payables is to pay them off. Aside from making journal entries, this includes creating a clearing account. The steps are similar to setting up a bank account in your chart of accounts but without an opening balance.

 

Once you're ready, you can follow the steps below to clear off those A/P balances:

Create the appropriate journal entry:

  1. Click the Plus sign (+), then choose Journal Entry.
  2. In the Journal Entry window, change the date if necessary.
  3. In the Account Field, choose Creditors from the drop-down list.
  4. Enter the amount in the Debit field.
  5. Tab to the name field and select the Supplier from the drop-down list.
  6. In the next row, choose the off-setting or the clearing account in the Account field.
  7. The amount in the Credit field should be equal to the amount in the Debit field.
  8. Click Save & Close.

 

Apply the general journal entry to the existing balance:

  1. Go to Expenses, and then choose Suppliers at the top.
  2. Click on the supplier name, and look for the Bill to pay it.
  3. Click the Make Payment button in the top-right corner. When the Bill Payment window opens, the Journal Entry will be under the Credits section.
  4. Select the Bill and the Journal Entry to link them.
  5.  Click Save & Close.

 

Feel free to reach out to us. While we can't provide accounting advice, we want to make sure any technical questions you have about the system are answered.

View solution in original post

3 Comments
MaryAnn_E
QuickBooks Team

Employee Expense Reimbursements via Payroll Clearing

Hi there, @jkope26.

 

You can create a journal entry to reimburse your employees. I'm delighted to help walk you through how to do it in QuickBooks.

 

To record the payments, let's create a journal entry. Here's how:

 

  1. Click the Plus Icon.
  2. Choose Journal Entry.
  3. On the first distribution line, enter the following:
  4. Choose the account used for tracking Employee reimbursement (Additional Pay).
  5. Enter how much you paid to the employee and the Description.
  6. Select the name of the employee.
  7. On the second distribution line, enter the following:
  8. Choose Accounts Payable on the Account column.
  9. Enter the amount of the bill or vendor invoice and the Description.
  10. Select the name of the Vendor.
  11. Click Save and Close.

 

That should do it! This will allow you to record the payments in QuickBooks.

 

Always feel free to get back to us here in the Community if you have other questions about recording the reimbursements you've to your employees. I'm always here to help.        

jkope26
Level 2

Employee Expense Reimbursements via Payroll Clearing

Thank you for your quick response!

I understand the journal entry you describe but still unclear on how to close out the Bill (can I mark it as paid without needing to specify a bank account or generate a check?)

MaryAnn_E
QuickBooks Team

Employee Expense Reimbursements via Payroll Clearing

Hi there, @jkope26.

 

We can give you the information you need to get these balances taken care of, however, it would still be best to consult with your accountant to make sure what's best for you and your business.

 

The most efficient way to clear any payables is to pay them off. Aside from making journal entries, this includes creating a clearing account. The steps are similar to setting up a bank account in your chart of accounts but without an opening balance.

 

Once you're ready, you can follow the steps below to clear off those A/P balances:

Create the appropriate journal entry:

  1. Click the Plus sign (+), then choose Journal Entry.
  2. In the Journal Entry window, change the date if necessary.
  3. In the Account Field, choose Creditors from the drop-down list.
  4. Enter the amount in the Debit field.
  5. Tab to the name field and select the Supplier from the drop-down list.
  6. In the next row, choose the off-setting or the clearing account in the Account field.
  7. The amount in the Credit field should be equal to the amount in the Debit field.
  8. Click Save & Close.

 

Apply the general journal entry to the existing balance:

  1. Go to Expenses, and then choose Suppliers at the top.
  2. Click on the supplier name, and look for the Bill to pay it.
  3. Click the Make Payment button in the top-right corner. When the Bill Payment window opens, the Journal Entry will be under the Credits section.
  4. Select the Bill and the Journal Entry to link them.
  5.  Click Save & Close.

 

Feel free to reach out to us. While we can't provide accounting advice, we want to make sure any technical questions you have about the system are answered.

View solution in original post

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