How to Appropriately Reimburse Expenses in QuickBooks?

In this guide, we will elucidate the process of reimbursements along with the process to pay employees back for outofpocket expenses in QuickBooks accounting platform.

While doing business, an employee might have to procure goods and services for the operation of the company using his own expenses. You can use QuickBooks accounting software to keep the track of the reimbursement as an expense. The QuickBooks accounting software facilitates you to record and keep the track of the reimbursements to employees, so that you can effectively manage the business finances. You can make a use of the write Checks utility in QuickBooks accounting software to keep the track of the reimbursement.

What is Reimbursement?

Reimbursements are non-taxable payments which is paid to employees from the business when they incurred the business expense from their personal amount. This type of payment does not appear on any of the payroll tax forms. You also have the option to generate a taxable reimbursement item in case you have QuickBooks Desktop Payroll.

How to Create the Reimbursement Item:

In first step, you need to create the reimbursement item. In this module we will explain how to do it. Keep reading.

How to Do it in QuickBooks Online Payroll?

Kindly follow the below-mentioned steps:

• In the first step, you are required to navigate to the Payroll and then Employees. Now, select the employee’s name.
• Now, you need to choose the edit option in the Pay types section and scroll to the Additional pay types section and choose Reimbursement.
• You can add a new one in the Common pay types section dropdown if there is an existing reimbursement pay type. You are just required to choose Another Reimbursement type to add new.
• Here, just add the default dollar amount or leave it blank, and just enter the dollar amount as you run payroll. You can also rename this pay type. To do so you need to choose the edit option which is there next to Reimbursement.
• Click the save option once you are done.

How to Reimburse Expenses in QuickBooks Accounting Software.

How to Do it in QuickBooks Desktop Payroll?

Kindly follow the below-mentioned steps:

• In the first step, you are required to navigate to Employees and choose Manage Payroll Items.
• Now, you need to choose New Payroll Item.
• After that choose the custom setup and click next and now choose addition and click next.
• Now here you need to enter the Reimbursement item name and click on next.
• Now to track the item you need to choose the expense account.
• Also, to track travel or mileage amounts you need to select an expense account.
• Choose the assets account if the reimbursement comes to the advance paid to the employee category.
• In this step you are required to set the Tax Tracking type to none and click next.
• Under Taxes, none should be selected.
• Select the Based on Quantity checkbox for the amounts paid per mile/kilometer and post that click on Next.
• Now, you are required to select the calculate on Net Pay and here just enter the default rate and click on Finish.

How to Do it in QuickBooks Online Payroll?

Kindly follow the below-mentioned steps:

• In the first step, you are required to navigate to Employees and click on the employee name.
• Now, click on Edit option.
• In this step, you are required to choose the Reimbursement checkbox In the What additional ways do you pay employee? Choose Show all pay types if the Reimbursement is not available in the list.
• You need to mention the amount as you run the payroll here you can either add a default amount or leave it blank. You can also rename this pay type by choosing the Add/edit types option.
• Choose the Add Reimbursement type option if you have multiple reimbursement pay types.
• Click OK once you are done with the above steps.

How to Define Accounting Preferences?

Here you can also update the accounting preferences to make sure the reimbursement amounts post to the correct account in your chart of accounts for accounting purposes. This is an optional step.

Here we will get to know about the process of setting up the Payroll accounting preferences for the reimbursement pay type.

How to Do it in QuickBooks Desktop Payroll?

In QuickBooks Desktop Payroll, here you will get an option of selecting the expense account at the time of setting up the payroll item. To ensure or change the account you need to follow the below-mentioned steps:

• In the first step, you are required to navigate to the employees and then choose the Manage Payroll Items after that select the View/Edit Payroll Item List.
• Now, you need to open the payroll item you would like to review.
• After that choose the next option until you get to the Expense account.
• Here you can review or make the required changes and after that select the next option until you can choose Finish.

How to Do it in QuickBooks Online Payroll?

• In the first step, you are required to navigate to Setup and select the preferences option under the export.
• Now, you are required to select or add an account for the Reimbursement in the Wage Expense Account section.
• Once you are done with the above option click OK.

How to Run Payroll with a Reimbursement Amount?

Once you are done with adding the reimbursement pay type and updated the accounting preference, you are all set to reimburse the employee.

How to Do it in QuickBooks Online Payroll?

You are required to mention the amount in the reimbursement field at the time of creation of the paycheck. The check consist the reimbursement amount in the total field.

How to Do it in QuickBooks Desktop Payroll?

• In the first step, you are required to add the reimbursement item to the employee’s record.
• After that, navigate to the employees option and choose the Employee Center.
• Now, double-click on the employee’s name and go to Payroll Info tab.
• Now, here you are required to make the addition of the item from the dropdown list under Additions, Deductions, and Company Contributions.

The reimbursement item will be appear in the other Payroll Items area of the Preview Paycheck display at the time of creation of the paychecks,. Here you need to enter the amount of the reimbursement on the paycheck.

We can easily record and track expenses which incur on the customer’s behalf in QuickBooks accounting software. All you need to do is to turn on the Billable Expense function in the settings. After that, write the check and mark it as billable to the client/customer. This will allow you to link the billable expense to the customer’s invoice for the reimbursement.

How to Turn on Billable Expense?

In first step, we will get to know how to turn on billable expense?

• Firstly, you need to navigate to the Gear icon, then choose Account and Settings and go to the Expenses tab.
• Now, you need to select the edit option from the Bills and expenses section.
• After that, you need to turn on Show Items table on expense and purchase forms, Track expenses and items by customer, Make expenses and items billable,
• Once you are done with the above step, now you may also set up the Markup rate, Billable expense tracking, Sales tax charge and Bill payment terms.
• And finally, click on the save and close option.

How to Enter a Billable Expense?

In second step, we will get to know how to enter a billable expense?

• Firstly, you need to click the New menu and choose Check and select payee.
• Now, you are required to fill in the Category or Item details and mention the description and amount of the expense, then click on the Billable checkbox.
• Once you are done with the above step, now choose the customer you need to bill for this expense In the Customer column.
• You can enter or make sure the markup percentage is accurate, then choose the Tax checkbox or select a tax agency if you need to charge tax.
• And finally, click on the save and close option.

How to Add Billable Expenses to Invoices?

In third step, we will get to know add billable expenses to invoices?

• Firstly, you need to click the the New menu and choose Invoice.
• Select the customer you created a billable expense for in the Customer dropdown menu. This will take you to add to invoice window.
• Now, choose the add on the billable expense you need to charge to the customer.
• And finally, click on the save and close option.

Implementing any of the above stated methods can help the user to know the process of reimbursement in QuickBooks accounting software. In case, the user continues to face any error, then reaching out to our 24*7 QuickBooks error support team at our place can work in your favor. Pease do not hesitate to connect with Dancing Numbers Experts via LIVE CHAT for any further information.

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