QuickBooks 2005: The Missing Manual

Handling Reimbursable Expenses

Reimbursable expenses are costs you incur that a customer subsequently pays. For example, you've probably seen telephone call and photocopy charges on your attorney's statements. Travel costs are another common type of reimbursable expense. Products you purchase specifically for a customer or a subcontractor you hire for a customer's job are all costs you pass on to your customers.

In accounting, as in QuickBooks, there are two approaches to tracking reimbursable expenses:

• As income. When you pay a bill, QuickBooks posts the expenses on the bill to the expense account you specify. But when you invoice your customer, QuickBooks posts the reimbursement as income in a separate income account. Your income is higher, but it's offset by higher expenses. This approach is popular because it lets you compare reimbursable income and expenses to make sure that they match.

• As expense. Tracking reimbursements as expenses doesn't change the way Quick-Books handles bills—expenses still post to the expense accounts you specify. However, when your customer pays you for the reimbursable expenses, QuickBooks posts those reimbursements right back to the expense account. The expense account balance looks as if you never incurred the expense in the first place.

Setting Up Reimbursements as Income

If you want to track your reimbursable expenses as income, you have to turn on the Track Reimbursed Expenses As Income preference. Choose Edit→Preferences and in the Edit Preferences ...