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lisa17
Level 1

How to reconcile 1099 to Income if I include a markup on billable expenses

My clients are starting to use Bill.com. I am planning to bill them for the cost of Bill.com plus a markup. I don't want to show the markup on the invoice so I am planning to show a flat fee that includes the actual reimbursable cost plus the markup as one cost to them. My question is what is the best way to account for this on their end to provide me with the most accurate tax reporting. 1. If they record this as part of my fee, I will be getting a 1099 that includes the reimbursable cost as income to me. Which it is not. 2. If they list this all as a software cost, I will be getting a 1099 that does NOT include the markup amount and will be less than my actual income.  What is the correct way to handle this for tax purposes on my side?

2 Comments 2
RenjolynC
QuickBooks Team

How to reconcile 1099 to Income if I include a markup on billable expenses

Good day, lisa17.

 

I have some steps on how to record the transactions. Before doing so, let's make sure to enable the billable expense feature by following these steps:

 

  1. Go to Settings > Account and Settings.
  2. On the left panel, click on the Expenses tab.
  3. Select the Bills and expenses section, then put a check mark on the Show Items table on expense and purchase formsTrack expenses and items by customer, and Make expenses and items billable boxes.
  4. Under Make expenses and items billable, put a check mark on Markup with a default rate box.
  5. Click Save and then Done.

Then, follow these steps to create a bill:

 

  1. On the left navigation menu, select + New Bill, Expense, or Check.
  2. Select a vendor from drop-down menu.
  3. In the Category or Item details column, select an expense account or the item for the transaction.
  4. Enter the description and amount of the expense, then select the Billable checkbox.
  5. Select the client you want to bill for this expense.from the Client/Project column.
  6. Make sure the markup % is correct, then select the Tax checkbox.
  7. Click Save and close.

 

Once done, go to Sales > Clients and select the client, so you can create an invoice for the billable expense. This article includes a video tutorial for reference: Enter billable expenses.

 

When you're done recording the transactions, you can now reconcile them. I've got this article for the instructions: Reconcile an account in QuickBooks Online.

 

I'm just a post away if you need more help about the billable expenses. Thanks.

lisa17
Level 1

How to reconcile 1099 to Income if I include a markup on billable expenses

Thank you for your response, but this does not address my question. 

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