I have a consulting company where I invoice clients for a project, collect the deposits and then pay the expenses out on behalf of the client. The remaining sum is my income. Previously I set up the clients and the project and then paid the expenses as an expense categorizing through the chart of accounts.
However my accountant has now informed me that I need to set up liability accounts for each different client job, post the deposit to that account, and then pay expenses out of that liability account. It seems that the only way to do that is through setting up a retainer and then creating numerous products and services for each expense catagory. This will be extremely cumbersome to do each time I have a new job. Is there a better way to track these expenses without hitting the overall company P&L? Perhaps through Online or even one of the other Quickbooks products?
Thank you for posting here in QuickBooks Community. I'd also appreciate for providing details about your concern so I can share accurate information.
Aside from recording a retainer in QuickBooks Online to pay expenses on behalf of a client, you can also enter billable expenses in QuickBooks Online. This is an expense you incur on your customer’s behalf when you perform work for them. You can easily record and track billable expenses so your customer can reimburse them when they receive their invoice. Please note that this is only available in QuickBooks Plus and Advanced.
To start with, you'll need to turn on billable expense tracking from Account and settings. Here's how:
Go to the Gear icon ⚙, then select Account and Settings.
Go to the Expenses tab.
From the Bills and expenses section, choose Edit.
Turn on the following the Show Items table on expense and purchase forms, Track expenses and items by customer, and Make expenses and items billable.
Bill payment terms.
Hit Save and Done.
Once done, you can now enter a billable expense to bill a customer for an expense. Please follow the steps below.
Click the + New icon.
Select the transaction (Bill, Expense, or Check) you want to create.
Choose the payee.
From the Category column, choose the expense account for the transaction.
Enter the description and amount of the expense, then select the Billable checkbox.
In the Customer column, select the customer you want to bill for this expense.