QuickBooks 2011: The Missing Manual

Handling Reimbursable Expenses

Reimbursable expenses are costs you incur that a customer subsequently pays. For example, you’ve probably seen telephone 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 QuickBooks, as in accounting, there are two ways to track reimbursable expenses:

• As income. With this method, QuickBooks posts the expenses on a bill you pay to the expense account you specify. When you invoice your customer, QuickBooks posts the reimbursement as income in a separate income account. Your income is higher this way, but it’s offset by higher expenses. This approach is popular because it lets you compare income from reimbursable expenses to the reimbursable expenses themselves to make sure that they match. (The box on Accounts for Reimbursable Expenses describes the income accounts you need for tracking reimbursable expenses this way.)

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

Note

If you track reimbursable expenses as expenses, ...