Employee paid a company bill and will be reimbursed through payroll (ADP). What is the best way to account for this

JZ-22 · ‎May 22, 2023

Employee paid a company bill and will be reimbursed through payroll (ADP). What is the best way to account for this.

I have not entered the purchase into QBO yet. I assume I need to split the payroll when that hits qbo

JamaicaA · ‎May 22, 2023

Good day, @JZ-22.

I'm here to get you on the right track toward reimbursing the bill payment of your employee for the company. In this method, you no longer need to create a purchase order and split payroll in QuickBooks Online.

Since this is money that your business owes from an employee and will be paid at a later date, you can create a bill. To ensure the process is a breeze for you, follow the steps below:

Go to the + New button.
Select Bill under Vendors.
Enter the necessary details, then click Save and close.

After that, use a journal entry to ensure there's no money posted on the business bank. We will then apply this to the bill you created above. Thus, it will be marked as paid.

Here's how:

Go to the + New button.
Select Journal Entry under Other.
Ensure to debit Accounts Payable and credit the Liability account.
Proceed to the + New button again and choose Pay bills.
Locate the JE you've made, then press Save and close.

Once done, create an expense transaction to reimburse your employee. Just navigate to the + New, then select Expense. Choose the correct vendor and pick the Payroll Liabilities you used on the JE.

Navigate to the Expenses page and locate the supplier on the Vendors button. We can review the entries to check if they're recorded correctly from there. The zero amount on the Open and Overdue on your vendor's profile indicates that we successfully linked the transactions together.

As for the taxes and accounts affected, it's best to consult with your accountant. They can guide you on which action to take to record these transactions correctly.

Utilize this guide if you use your cash to pay for your business needs: Paying for business expenses with personal funds. It involves using journal entries and checks or expenses to reimburse the money.

I'm adding these resources for more tips on managing vendors and handling bills:

Stay in touch if you have additional questions about reimbursing employees who paid business expenses on behalf of the company. I look forward to hearing from you soon. Take care.

View solution in original post

JaeAnnC · ‎May 22, 2023

We appreciate your response, @JZ-22. My colleague will update her answer on how to record a company expense paid by an employee in QuickBooks Online (QBO). However, let me provide a rundown of the procedure.

Let's start by creating a bill to keep track of the costs you paid to a vendor.

Next, make a journal entry to ensure there's no money posted to the business bank. Credit the liability account and debit the Accounts Payable. However, I still advise consulting with your accountant to choose the appropriate accounts to utilize and how to keep them organized.

Once done, apply the journal entry as a payment to mark the bill as paid. Then, reimburse the employee by adding a non-taxable item when you process payroll.

I'm also sharing an article if you need to run reports to get insights on the products you buy and sell: Use reports to see your sales and inventory status.

Let me know whenever you need additional assistance managing your expenses in QBO. I'll be more than willing to help you. Keep safe, and have a great rest of the day!

View solution in original post

JamaicaA · ‎May 22, 2023

Good day, @JZ-22.

I'm here to get you on the right track toward reimbursing the bill payment of your employee for the company. In this method, you no longer need to create a purchase order and split payroll in QuickBooks Online.

Since this is money that your business owes from an employee and will be paid at a later date, you can create a bill. To ensure the process is a breeze for you, follow the steps below:

Go to the + New button.
Select Bill under Vendors.
Enter the necessary details, then click Save and close.

After that, use a journal entry to ensure there's no money posted on the business bank. We will then apply this to the bill you created above. Thus, it will be marked as paid.

Here's how:

Go to the + New button.
Select Journal Entry under Other.
Ensure to debit Accounts Payable and credit the Liability account.
Proceed to the + New button again and choose Pay bills.
Locate the JE you've made, then press Save and close.

Once done, create an expense transaction to reimburse your employee. Just navigate to the + New, then select Expense. Choose the correct vendor and pick the Payroll Liabilities you used on the JE.

Navigate to the Expenses page and locate the supplier on the Vendors button. We can review the entries to check if they're recorded correctly from there. The zero amount on the Open and Overdue on your vendor's profile indicates that we successfully linked the transactions together.

As for the taxes and accounts affected, it's best to consult with your accountant. They can guide you on which action to take to record these transactions correctly.

Utilize this guide if you use your cash to pay for your business needs: Paying for business expenses with personal funds. It involves using journal entries and checks or expenses to reimburse the money.

I'm adding these resources for more tips on managing vendors and handling bills:

Stay in touch if you have additional questions about reimbursing employees who paid business expenses on behalf of the company. I look forward to hearing from you soon. Take care.

JZ-22 · ‎May 22, 2023

Thanks for your response.

I want to add the expense/bill to the vendor so I can keep track of how much we spend there. So if I create an expense for the employee how would that connect to the vender?

Lets say it was $100 at Amazon and the employee paid for it with his credit card.

I am going to reimburse the employee through payroll (ADP not QuickBooks.)

I want to show in QBO that a 100 purchase was made to Amazon and paid for by the employee. Since I am not cutting a check from QBO and paying through ADP payroll, I am not sure how to document that.

JaeAnnC · ‎May 22, 2023

We appreciate your response, @JZ-22. My colleague will update her answer on how to record a company expense paid by an employee in QuickBooks Online (QBO). However, let me provide a rundown of the procedure.

Let's start by creating a bill to keep track of the costs you paid to a vendor.

Next, make a journal entry to ensure there's no money posted to the business bank. Credit the liability account and debit the Accounts Payable. However, I still advise consulting with your accountant to choose the appropriate accounts to utilize and how to keep them organized.

Once done, apply the journal entry as a payment to mark the bill as paid. Then, reimburse the employee by adding a non-taxable item when you process payroll.

I'm also sharing an article if you need to run reports to get insights on the products you buy and sell: Use reports to see your sales and inventory status.

Let me know whenever you need additional assistance managing your expenses in QBO. I'll be more than willing to help you. Keep safe, and have a great rest of the day!

chaya143 · ‎October 21, 2023

Is there a more direct way to do this if we are using quickbooks payroll and not a third-party?

Bryan_M · ‎October 21, 2023

Hi there, @chaya143. I see that having a direct way to reimburse your employee using QuickBooks Online (QBO) Payroll will be more effective on your end. Let me help you perform this task smoothly.

Before reimbursing your employee, check the Employee business expense reimbursements section of IRS Publication 15, Circular E — Employer's Tax Guide. Because if an employee paid business expense out of their own pockets, these are non-table and doesn't appear on any of your payroll tax forms.

To start, let's first create a reimbursement item. Then, define accounting preferences (optional). After that, run payroll with a reimbursement amount. Follow the steps below:

To create a reimbursement item, go to Payroll, then Employees.
Choose your employee.
From Pay types, select Start or Edit.
Scroll to the Additional pay types section and select Reimbursement.
- If there's an existing reimbursement pay type, you can add a new one in the Common pay types section dropdown. Just select + Another Reimbursement type to add new.
- You can add the default amount or leave it blank, and just enter the amount as you run payroll.
- You can also rename this pay type. To rename, select Edit ✎ next to Reimbursement.
When you’re finished, select Save.

For detailed steps, check out this article: Reimburse your employee in QuickBooks Payroll.

Additionally. click on these articles if you want to learn how to enter employee's year-to-date paycheck info, and company totals:

If you have a QuickBooks-related question in mind, don't hesitate to reply to this post. We'll be glad to answer it. Keep safe always, @chaya143.

1111111113 · ‎April 17, 2024

When I tried to create the journal entry it told me that the Accounts Payable line needed a Name field that was a vendor. Isn't this supposed to be the employee? (I realize this is probably a very basic question, but that's my level of expertise here.)

Maybelle_S · ‎April 17, 2024

I want to ensure you're able to create a journal entry.

In QuickBooks Online (QBO), creating a journal entry and using the Accounts Payable (A/P) account should be associated with the vendor to link the transactions.

If you make an entry for reimbursing an employee, you can use a liability account to maintain clarity in your financial reporting. It provides a more accurate financial picture of your company's obligations and ensures that these liabilities are accounted for on your balance sheet, reflecting the financial position of your business.

Here's how:

Go to the +New button.
Under Other, select Journal entry.
On the first line, pick your liability account.
Under Credits, enter the amount you owe your employee.
Select the Name drop-down arrow, and choose your employee.
In the second line, click the expense account that fits the purchase your employee made.
Enter the amount of purchase in the Debits column.
Hit Save and Close.

For more details, check this link: Reimburse an employee.

I also recommend seeking help from your accountant for tailored advice on creating the journal entry, as they can offer insights based on your business needs.

Additionally, you may want to run payroll reports to gain insight into your company's finances and employee data.

Feel free to leave a reply if you require further assistance with reimbursing employees in QuickBooks. The Community team always has your back. Have a good one.

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Employee paid a company bill and will be reimbursed through payroll (ADP). What is the best way to account for this