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Senior Explorer *

Reimbursed Expenses in Invoice using Product/Services

Hello,

 

We are invoicing to our customer travel expenses (hotel, per diem etc.), which is 100% reimbursed. When I create the invoice in QB, I use "Product/Service" with type "service" and Income Account " sales", for the item where I am charging the service provided and the item charging the reimbursed expenses.

 

1. As you imagine, there is not a profit for reimbursed expenses, so I am wonder if using "Product/Services" for is correct or not. 

2. Because I already have an expense and income/sale with the same $value for travel expenses, my profit is zero (not taxable). is that right? 

 

Could you please help me to clarify the 2 questions above?

 

Thank you so much in advance for your support. 

Solved
Best answer 06-13-2019

Accepted Solutions
QuickBooks Team

Re: Reimbursed Expenses in Invoice using Product/Services

Hello there, @luzbeaty1,

 

I'm here to clarify things out for you.

 

1. Using products/services is correct when invoicing your client for reimbursed expenses. Just make sure the billable item does not have any mark up and the service item created have the same cost and price.

 

2. If there's no income on the service, then that is correct. The result of your income, expense, and net profit on your P&L report is zero.

 

Let me guide you through creating a product and service list in QBO.

  1. Click the Gear icon on your QuickBooks Toolbar.
  2. Select Products and Services under Lists.
  3. Click New.
  4. Select the product or service type.
  5. Enter the new product or service information.
  6. Click Save and close.

If you're using QuickBooks Desktop, here's how to create an item.

  1. Go to the Lists menu, then select Item List.
  2. Right-click anywhere in the Item List page, then click New.
  3. Select the type of item you want to create.
  4. Fill in the item fields.
  5. Click OK to save the item.

That will answer your concern for today.

 

Let me know if you still need clarifications about invoicing your customer and I'll get back to you.

 

4 Comments
QuickBooks Team

Re: Reimbursed Expenses in Invoice using Product/Services

Hello there, @luzbeaty1,

 

I'm here to clarify things out for you.

 

1. Using products/services is correct when invoicing your client for reimbursed expenses. Just make sure the billable item does not have any mark up and the service item created have the same cost and price.

 

2. If there's no income on the service, then that is correct. The result of your income, expense, and net profit on your P&L report is zero.

 

Let me guide you through creating a product and service list in QBO.

  1. Click the Gear icon on your QuickBooks Toolbar.
  2. Select Products and Services under Lists.
  3. Click New.
  4. Select the product or service type.
  5. Enter the new product or service information.
  6. Click Save and close.

If you're using QuickBooks Desktop, here's how to create an item.

  1. Go to the Lists menu, then select Item List.
  2. Right-click anywhere in the Item List page, then click New.
  3. Select the type of item you want to create.
  4. Fill in the item fields.
  5. Click OK to save the item.

That will answer your concern for today.

 

Let me know if you still need clarifications about invoicing your customer and I'll get back to you.

 

Senior Explorer *

Re: Reimbursed Expenses in Invoice using Product/Services

Hello @MaryLandT 

Thank you so much for your help, it is really appreciate it. 

Have a nice day,

LB

OP5
Not applicable

Re: Reimbursed Expenses in Invoice using Product/Services

Hi,

 

When I create the client invoice to be reimbursed for my expenses (e.g. office supplies), I use the time/cost list to add the expense item to the invoice.

 

The issue with this is that the journal entry will credit the original expense account where the original expense was booked.  But my accountant says it's best to not reduce the expense account...instead have the invoice credit a corresponding income account.

 

How can I use the existing time/cost tool and also have it booked to income instead of reducing the expense account?

Thanks,

QuickBooks Team

Re: Reimbursed Expenses in Invoice using Product/Services

Hi, @OP5.

 

Thanks for posting your concern here in the Community. Let me provide some details on recording expense transaction in QuickBooks Online (QBO).

 

In this case, you can enter billable expense to easily record and track billable expenses so your customer can reimburse them when they receive their invoice. Also, it will categorize correctly from expense account to income account once you sold what you've paid for. 

 

First, let's turn on billable expense. Here's how:

  1. Go to Gear Icon, then select Account and Settings.
  2. Click the Expenses tab.
  3. From the Bills and expenses section, select Edit.
  4. Select the following:
    •    Show Items table on expense and purchase forms
    •    Track expenses and items by customer
    •    Make expenses and items billable
  5. (Optional) Set up the following:
    •    Markup rate
    •    Billable expense tracking
    •    Sales tax charge
    •    Bill payment terms
  6. Select Save, then Done.

Once you turn on billable expense tracking, you can now record billable expenses. To do this, you can check this article for the detailed steps: Enter billable expenses

 

This will get you on the right track. Feel free to leave a comment below if you have any other questions about entering billable expense. 

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