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Re: How to handle reimbursement payments for outside work?

As you said you can post the cost to a COGS account and include it as income when invoiced and the two will wash out so no additional income will hit the bottom line.  The other alternative is to set up an Asset account and call it something like Billable Expenses.  Set up items for your reimbursable costs and use the  Billable Expense account as the account on the item set-up.  For example, set up an item called mulch and point it to the Billable Expense account.  When you enter a bill or expense, use the items tab instead of the expense tab.  Enter your item (i.e. mulch) and the cost.  Include the customer name on the item tab.  Mark it off as billable.  When you create invoices for that customer, you will be prompted to include billable costs.  Check all that you want to include on the bill.