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Mathew Larson
Level 1

How to categorize a reimbursement payment from one company back to our company

I am trying to figure out how to properly categorize a reimbursement check that we received from another company.  Long story short we paid full price to have a business evaluation completed.  Upon completion we can submit the full payment receipt to this other company we use and they reimbursed us for part of the expense to get the business evaluation.  We are trying not to record the reimbursement check that we received for the partial payment as income.  Is there a way around this?  or a category I can create to reflect the expense and the reimbursement? 


Thanks to anyone who can assist! 

1 Comment
Community Champion

How to categorize a reimbursement payment from one company back to our company

Good morning @Mathew Larson


When you have several businesses that share an expense, (I currently have this set up with two rental property companies I own), and they are both evaluated, you probably paid for the total expense with 2 checks.  Then for some reason you were reimbursed via one check, you need to account for that properly.  My accountant had me set up an exchange account.   He had me make it an equity account (balance sheet account).  Then when things like this happen (or in my case when someone in the office deposits a tenant's rent into the wrong bank acct --yup, that has happened too), I deposit it and apply it to the exchange account and then write a check or record a transfer to the other company, also applying that transaction to the exchange account.  The net balance in the exchange account has to be zero at year end.


I hope that helps.  :)



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