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Transfer vs expense to an asset account?

Hello. I am a new QBO user. In my books  I have a current asset account to reflect expenses that I pay for which are reimbursable to me from my clients. When I incur these expenses they are downloaded to to QBO and show up in a banking (credit card) account. These need to be accepted into my books and placed into an asset account where they sit until my client reimburses me. It appears there are two ways to get these transactions accepted and into the asset account:

1. From the banking account I can "Add" the transaction and select the "Category" to be the asset account

2. From the banking account I can "Transfer" the transaction and select the asset account as the other side of the transfer

 

I started using option #1 but noted that the transaction then also appeared in my list of "expenses". But it isn't an expense! And the account it ends up in is an asset account not an expense account! So I did option #2 only to find that the Vendor name is then lost because the "Transfer" function doesn't support a Vendor/Payee.

 

Is there a "correct way" to do this? It seems very wrong to classify the transaction as an "Expense" although if the expense is going into an asset account I assume it would not impact the P&L at all, right??

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Best answer 02-25-2019

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Established Community Backer ***

Re: Transfer vs expense to an asset account?

"that I pay for which are reimbursable to me from my clients."

 

They are your expense. Enable Billable Expenses, mark these as billable, invoice the client and what you collect from client is now income. If your math is correct you neither make money nor lose money on the effort although a proper markup is appropriate or your clients should be paying their own bills. As long as no open invoices carry over into a new year the net effect on P&L is zero

 

 

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2 Comments
Established Community Backer ***

Re: Transfer vs expense to an asset account?

"that I pay for which are reimbursable to me from my clients."

 

They are your expense. Enable Billable Expenses, mark these as billable, invoice the client and what you collect from client is now income. If your math is correct you neither make money nor lose money on the effort although a proper markup is appropriate or your clients should be paying their own bills. As long as no open invoices carry over into a new year the net effect on P&L is zero

 

 

View solution in original post

Established Community Backer ***

Re: Transfer vs expense to an asset account?

 

Did you check the box " Make expenses and items billable" in Settings>Expenses?

If so there will be a box in every Expense where you can mark it as Billable and another box to enter the customer.  That creates a reminder to create an Invoice.

 

You could use an asset account in the Expense, and create an Item where the income account is linked to the same asset account, and use that in the Invoice

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