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Level 2

Whats the difference between creating a bill vs creating an expense

I was wondering what is the difference in the two. For ex. When I input a phone bill that I classify as an expense or when I put in a gas receipt that is an expense. Should I create a bill for all of them or should I create and expense for all. Which should I do and why.
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Best answer 10-15-2018

Accepted Solutions
kko
Level 3

Both are expenses.  The difference is a bill represents s...

Both are expenses.  The difference is a bill represents something you are going to pay for at a later time, while a receipt represents something you've already paid.

View solution in original post

56 Comments
Level 1

what is a bill for then?  ie if I am paying cheques to su...

what is a bill for then?  ie if I am paying cheques to suppliers and want to skip the step of creating a bill first - can I do so?  or does it create something different "behind the scenes" in quickbooks?

ie I would like to go into supplier and simply go to make a cheque and from within their create a bill to Cost of goods sold - will it all end up the same?
or is creating an expense different to creating a bill?
kko
Level 3

Hi crang, You can do that, but the check will not be lin...

Hi crang,

You can do that, but the check will not be linked to your vendor's bill and will not be tracked as a bill payment.  Creating a bill creates an expense, but creating an expense does not create a bill.
kko
Level 3

Both are expenses.  The difference is a bill represents s...

Both are expenses.  The difference is a bill represents something you are going to pay for at a later time, while a receipt represents something you've already paid.

View solution in original post

Level 2

Gotcha.. So if I have already paid for it, I should just...

Gotcha.. So if I have already paid for it, I should just create an expense as opposed to making it a bill.
Highlighted
kko
Level 3

You've got it!

You've got it!
Level 2

Thanks... Sorry if I sounded real stupid by asking that q...

Thanks... Sorry if I sounded real stupid by asking that question.... Like duh... LOL.. Just wanted to know and make sure. hahaha
kko
Level 3

No worries.  Accounting lingo can be confusing. Thanks f...

No worries.  Accounting lingo can be confusing.

Thanks for using Intuit Community!
Level 1

So when I pay an independent contractor - write a check?...

So when I pay an independent contractor - write a check?  Corporate apartment Rent payments write check also?
kko
Level 3

Yes.

Yes.
Level 1

this is another Americanism I think.  a bill is where any...

this is another Americanism I think.  a bill is where any supplier renders an invoice to you, whether or not paid.  expenses were always staff payments in my working life!
Level 1

As Mark Ellis points out, a Bill is an Expense.  But QBO...

As Mark Ellis points out, a Bill is an Expense.  But QBO treats them differently for some unknown reason.  If you plan to reconcile a bank statement with current or even past expenses in QB Online, enter the expenses as a Bill.  This is the only practical way to reconcile the bank account (cash flow) with the actual expense.  Other approaches, using Expense, are a band-aid and complicate tax reconciliation.  (PS to QB staff:  It should be possible to convert an Expense to a Bill.  I understand this complicates the way records are constructed in QB, but it is a royal PITA to re-enter expenses as Bills once one understands the difference in QB Online
Level 1

I'm lost on this again ... so paying an independent contr...

I'm lost on this again ... so paying an independent contractor by check even though you don't have an formal bill or invoice for them, goes under expense? But if you had an actual invoice for services rendered you would put it under bill?
kko
Level 3

Once again:  Both are expenses.  A BILL is something you...

Once again:  Both are expenses.  A BILL is something you are going to pay at a later time, for instance NET 30.  A payment to an  independent contractor is still an expense, but you generally pay for it right away.
Level 1

Both are expenses. The "Bill" lets you keep a track of yo...

Both are expenses. The "Bill" lets you keep a track of your committed costs by knowing all your Accounts Payable. The "Expense" is done and paid for in one shot.
Level 1

But why is it that QB has some aversion to understanding...

But why is it that QB has some aversion to understanding that some suppliers are paid on account!  rather than the payment (cheque) being kept as such until it can be matched with a subsequent bill, it gets turned into an expense which is just plainly wrong.  this was a big issue with 2010/2012 desktop issues until the developers finally woke up to how businesses actually worked.  now it has to be done all over again.
Level 1

Okay, here's one. You say that a BILL is something that y...

Okay, here's one. You say that a BILL is something that you will pay later on after it's been invoiced. What do you do if you're invoiced and pay the bill immediately? Is that still a bill or is it an expense???
Level 10

"Bill" type transaction increases expenses and increases...

"Bill" type transaction increases expenses and increases Accounts Payable
"Expense" or "Check" type transaction increases expenses and decreases Bank balance (or increases Credit Card Liability)

Level 1

Thanks Malcolm! That helps me understand better.

Thanks Malcolm! That helps me understand better.
Level 1

So if I pay for something (ie: a recurring monthly charge...

So if I pay for something (ie: a recurring monthly charge) with my credit card, that recurring monthly charge is recorded as a bill? Then, when I make a payment to my credit card  (that already paid for the recurring monthly charge), that payment to the credit card is recorded as an expense?
Level 15

"So if I pay for something (ie: a recurring monthly charg...

"So if I pay for something (ie: a recurring monthly charge) with my credit card,"

That means you Already Paid that provider. Go directly to Expense as From My Credit Card Account. This is a running Debt balance, and this is your liability = you need to pay the Card Provider later; they acted as your lender and gave you a Micro-loan = let you Charge something.

"that recurring monthly charge is recorded as a bill?"

There is no Bill. Bill = something that is Unpaid; you Paid them by Plastic instead of Cash or debit card.

Bill = I am entering something I have not yet paid for and won't pay until later. The date on the bill is supposed to be Different than the date you paid it, because this is Accounts Payable = I am accruing something I need to pay. This is a Type of Liability. Loans, mortgages, credit card account debt, lines of credit are all Different types of liabilities. You don't mix Credit Card with Bill (AP) because that is running Liability through another Liability.

"Then, when I make a payment to my credit card  (that already paid for the recurring monthly charge), that payment to the credit card is recorded as an expense?"

That is Debt payment, and Intuit uses the word "Expense" to = Check or Paperless check. But it won't post as an Expense account activity. It is a Transfer: Checking against Credit Card Debt account.

And you don't nee Bills to make things track and report. All you need is the Payee Name on Checks (expense transaction) and Credit Card Charge entries, as well as bill (to show something is Not Paid Yet). As long as you use Names, you have the reporting.

So, if someone gives you your copy of the paid Bill, there is no reason to use Enter Bill. You already paid for it on this same date.


Level 1

Re: Gotcha.. So if I have already paid for it, I should just...

Hi,

Do you have to create an expense?  Because when the check is cashed or when the credit card is used to pay the bank automatically downloads that and doesn't that create an expense?

Level 1

Re: Both are expenses. The difference is a bill represents s...

So, we do not enter bills at our church, just pay by check or on phone. To enter the phone payments, I use the "create expense" button?

QuickBooks Team

Re: Both are expenses. The difference is a bill represents s...

Thanks for following this thread, Daffodilmom.


Yes! If your phone payment is a transaction you pay on the spot, then you can use the Expense feature in QuickBooks Online to record it. You can also opt to write a check since they work similarly with creating expenses.


In case you need the steps in doing so, here’s how to create expenses:

  1. Go to Create button (Plus icon) at the top.
  2. Click Expense under the Vendors column.
  3. In the Choose a payee drop-down, select the Telephone Company you’re paying.
  4. Pick the Bank/Credit card account where the payment was taken out.
  5. From the Account field, enter the Expense account affected by the transaction.
  6. Click Save and Close.

Check out this article for the detailed steps:


How to enter, edit, or delete expenses


To write checks, go to the Plus icon, select Checks, then enter necessary details.


For additional reference, visit this article:


What is the difference between Pay Bills and Write Checks?


If you have other questions in mind about recording expenses or checks, feel free to let me know. I’m only a comment away.

 

QuickBooks Team

Hi @lt2018, QuickBooks Online has different ways in mana...

Hi @lt2018,


QuickBooks Online has different ways in managing your business transactions. Let me help you record your transactions in the program.


The manner of entering your expenses depends on the method used when processing the payments. If this is an on-the-spot payment and you release a check to pay it, then you can enter it in the program by using either the Check or Expense feature.


Meanwhile, if you used a credit card which is connected in your QBO account, there isn’t a need for you to create expenses manually. You’ll just need to categorize the downloaded transaction and add it to the affected account.


To do so:

  1. Go to Banking in the left panel, then Banking.
  2. Pick the Credit Card account.
  3. Locate the downloaded payment in the For Review section.
  4. Choose the appropriate expense account, then enter other relevant information.
  5. Click Add.

In case you need to write a Check:

  1. Go to Create button (Plus icon) at the top.
  2. Click Expense under the Vendors column.
  3. Enter necessary details, and click Save and Close.

For more insights, check out these articles for your reference:

That’s it! You’re now set to record your transaction in the program.


Drop me a response below if there are other things you need help with. I’m here anytime!

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