How to Reimburse an Employees in QuickBooks Online?

Businesses sometimes need to reimburse employees for out-of-pocket expenditures, and QuickBooks Online (QBO) makes it easy to manage this process. QBO makes it simple to manage and repay staff expenses, whether they are for travel expenses, office supplies, or any other costs associated with your business. A detailed tutorial on the process is provided in this article.

Understanding Reimburse in QuickBooks

The practice of paying back a vendor, employee, or any other person or organization for costs they incurred on behalf of the company is referred to as “reimburse” in QuickBooks. These might include expenses that were once covered out of pocket by the individual, such as travel, office supplies, lunches, or other business-related charges.

For instance, a worker may buy office supplies and turn in the receipts to get paid back. QuickBooks enables companies to keep track of these costs, assign them the proper categories, and provide refunds. This guarantees that the person is reimbursed for their out-of-pocket expenses and that the expenditure is appropriately documented in the business’s financial records.

Significance of Reimbursements in QuickBooks

It’s critical to comprehend why paying staff appropriately is essential before moving on to the steps:

• Expense Tracking: It allows you to keep track of all allowable costs and make sure they are assigned to the appropriate category (e.g., office supplies, travel).
• Attachments for Receipts: QuickBooks lets you attach receipts to transactions so you have proof of purchase.
• Payroll-Based or Expense-Based Reimbursement: QuickBooks gives employees the choice of paying back the money through payroll or by sending a separate check or bank transfer.
• Detailed Reports: For simple review and reconciliation, you may create reports that keep track of all reimbursable charges.

How to Reimburse an Employee in QuickBooks Online?

You have two options if they paid for a company expenditure using their personal funds: pay them right away or record the charge first and pay them afterwards. We’ll demonstrate how.

Step 1: Gather Information to Pay Your Worker Now

• Choose + New.
• Choose either Expense or Check.
• Locate the name of your employee by selecting the Payee ▼ option.
• First, choose a liability account by selecting the Category ▼ menu. Note: You can add a new account if you don’t already have one.
• Add the additional data here:
  • Amount: Indicate how much is owing to your staff member. (If tracking or making billable for numerous clients, break down the amount into separate line items.)
  • Billable: (Optional) if you would want to credit the cost to your customer’s invoice, tick the box next to Billable.
  • Customer: (Optional) if you want to monitor the cost for a particular customer or customers, choose one from the dropdown menu. (Note: QuickBooks Online EasyStart does not have the Customer or Billable fields; however, you can enable them in QuickBooks Online Plus).
• Choose Close and save.

Step 2: Record the Employee’s Expenses

• Choose + New.
• Choose Journal entry after that.
• Choose your liability account under Account on the first line.
• Enter the amount you owe your employee under Credits.
• To locate the name of your employee, use the Name ▼ option.
• Choose the appropriate expenditure account for the purchase your employee made on the second line, under Account.
• Enter the purchase amount under Debits.
• After choosing Save, click close.

You may now pay them with a check or cost after making your journal entry.

Step 3: Track Your Employee Reimbursable Expenses

Run a Transaction detail report if you haven’t paid your employee in full to find out how much you still owe them.

• Access Reports. Use the account to search for transaction details.
• Select Customize after opening the report.
• Select the Report period ▼ menu and select the transaction range in the General section.
• Choose the Group By ▼ menu and then Employee in the Rows/Columns section.
• Choose the Employee Reimbursement account or the liability account that you created by selecting the Distribution Account ▼ option in the Filter section.

After selecting the Employee ▼ option, the name of your employee will appear. Note: If you would like your outstanding obligations to employees to be listed in the report, leave this set to all.

• Click “Run report.“

Guide to Reimbursing an Employee in QuickBooks Online Payroll

Step 1: Record Employee Expenses

• Recording the expenditure is a must before you can pay your staff.
• Create a liability account to track costs reported by staff members.
• Select “Liabilities” as the account type.
• Under Other Current Liabilities, save the account.
• Select “Other Current Liabilities” under the tax form section.
• Choose a name for the account that makes sense for you, such Payroll Reimbursements.
• Click Save.

Step 2: Add the Expense as a Journal Entry

Choose Journal Entry after selecting + new.

On the First Line:

• Choose your liability account under Account.
• Enter the amount you owe your employee under Credits.
• To locate the name of your employee, use the Name ▼ option.

On the Second Line:

• Choose the appropriate expenditure account for the purchase your employee made, under Account.
• Enter the purchase amount under Debits.
• After choosing Save, click close.

You may now use payroll to pay your employee after documenting the charge.

Step 3: Pay the Employee

Employee reimbursements must first be configured in your payroll.

• Add or modify QuickBooks pay types.
• Navigate to Employees, then Payroll.
• Choose your staff member.
• Choose either Edit or Start under Pay kinds.
• After selecting “Common pay types,” choose “Reimbursement.“
• Don’t specify the Recurring Amount.
• Click Save.

Step 4: Verify the Mapping to See Your Reimbursement

• Navigate to the upper right-hand Gear icon and choose Payroll Settings.
• Click the Pencil symbol under Accounting.
• To access Wage Expenses, scroll down and click the pencil symbol.
• Select the liability account you created before by scrolling down to Reimbursements.
• Hit Save and then Done.

Note: Enter the reimbursement amount in the Reimbursements box when you run payroll next time. Once that is done, your staff will be compensated.

Top Techniques for Paying Employees

• Preserve Clear Documentation: To guarantee openness and accurate tracking of company spending, always demand receipts or expense reports from staff members.
• Expenses for Business and Personal Use Should Be Separated: Only business-related costs should be reimbursed. Maintaining discrete financial records is facilitated by drawing a clear line between personal and company purchases.
• Efficient Processing of Reimbursements: Make sure that employees don’t have to wait an excessive amount of time for their money back.

Conclusion

Employee reimbursement for company costs may be done quickly, efficiently, legally, and with ease with QuickBooks Online Payroll. Businesses may expedite payments while guaranteeing accurate cost recording for financial reporting and tax purposes by including reimbursements into the payroll process.

By using QuickBooks, you can make sure that reimbursements are processed efficiently, maintaining your records correct and your staff happy.

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