Let’s take a look on our new blog, Billable Expense Income in QuickBooks Desktop. When running your own business, invoices, and bills become familiar concepts. Companies that can track and manage their bills and invoices get numerous benefits, such as making informed financial decisions. Business owners who keep track of their business’s finances in QuickBooks often come across ‘billable expense income.’ Some companies, however, tend to get confused when confronted with this term, which means they won’t be able to record their QuickBooks accounts accurately.
QuickBooks streamlines the process of handling transactions related to billable expenses and income. It tracks the billable separately when you mark an expense as billable while waiting for the creation of an invoice to link it to. QuickBooks automatically shifts the billable expense from the expense category, which becomes a billable income once users generate an invoice.
Billable Expense Income in QuickBooks Desktop
A billable expense income refers to money paid by a client/customer to cover the costs incurred by the business for the completion of the client’s services. A billable expense income is used to track the money paid by your clients for expenses that your business incurred on their behalf. Billable expenses can include the following;
- Office Supplies
- Research and planning expenses
- Online payment processing fees
- Subscriptions and service providers’ fees
- Travel expenses
- Customer engagement tools
- Materials
- Shipping costs
Businesses are encouraged to track billable expense income if they charge their customers for costs incurred in completing their services. Users can track billable expense income using billable expenses. Business owners can do this by recording expenses as ‘billable’ in QuickBooks and applying them to the client’s invoice. Tracking your billable ensures that your business’s financial records are well organized and accurate.
How to set up a Billable Expense in QuickBooks Desktop
Before setting up a billable expense check, check if the billable, consumer, and markup columns are activated in your QuickBooks. If they do not appear in your QuickBooks, you first need to activate them and update them to a higher version of QuickBooks. Once you have completed that, follow the instructions below on how to set up a billable expense;
Users should first enable QuickBooks Billable Expense to capture chargeable costs.
- Go to the ‘Gear’ icon at the top right corner of the QuickBooks Window and click on it to get more options.
- Now select the ‘Account and Settings’ option from the drop-down menu.
- Next, go to the ‘Expenses’ tab in the Account and Settings and click on the ‘Bills and Expenses’ section.
- Tap on the ‘Edit’ option and enable the following;
- Expenses and items by customers can be tracked
- Check the items and expenses that are billable
- Display the items table on the expenditure and purchase forms
- Users can also set up some more optional things like;
- Markup rate
- Charge sales tax
- Tracking the billable Expenses
- Check on the billable payment terms
- Press the ‘Save’ button to set up, and tap on the ‘Close’ tab.
Record the Billable Expense in QuickBooks Desktop
Once the billable expense has been set up, users should input a billable expense. Follow the instructions below to record your billable expenses;
- Tap on the ‘+,’ which is the ‘New’ icon on the top bar, and select the ‘type of transaction’ tab to choose the transaction you want to create, such as expense.
- Next, select the ‘Payee’ option to pick whom you want to reimburse.
- Navigate to the ‘category’ column and click the ‘Expense account’ option.
- Enter the expense description, details, and amount, and mark the ‘Billable’ checkbox.
- Next, navigate to the ‘Customer’ column and choose the customer to whom you want to charge the expense.
- Confirm that the markup percentage is correct and select ‘Tax’ by marking it in the checkbox beside it.
- Save & Close button to complete the procedure.
Adding Billable Expenses to Your Invoices
After recording billable expenses, you need to add them to your invoices. Users should link the Billable Expense to their customer’s/client’s invoice to get reimbursed.
- Hit the ‘+ New’ icon to add a new billable expense to your QuickBooks account.
- Select the ‘Invoice’ option and click on the ‘Customer’ column.
- Select the ‘customer’ from the drop-down menu to create a billable expense.
- A Window will open; select ‘Add to the invoice’ and click the ‘Add’ option. The customer will be charged on the billable expense.
- To finish, hit the ‘Save and Close’ button.
How do you track Billable Expense Income in QuickBooks Desktop?
Tracking billable expense income in QuickBooks desktop allows users to maintain accurate financial records and ensure proper reimbursement to the business for the expenses incurred on behalf of the clients/customers. This enables users to monitor the economic health of their companies. QuickBooks users can access various features and tools that help them track billable expense income effortlessly. The features and tools include;
- Transaction list by customers – This report gives users a detailed breakdown of all transactions, including the billable expense income for each client.
- Project reports – This report allows users to track billable expense income based on the project of the job.
- Client Balance Report – This comprehensive report provides users with the total billable expense income for each client. It makes it simple for users to see how much each client owes them for the expense they incurred on their behalf.
- Profit and loss by customer – This report allows users to track the profitability of each customer, including the billable expense income related to their projects.
How do you turn off the Billable Expense setting?
QuickBooks lets users turn off the billable expense settings in their Accounts. After turning off this setting, any currently listed billable expense in the Account remains present until you unmark them as billable Expenses or apply them to an invoice. However, users will not be able to create any more billable expenses since the feature is disabled.
Business owners and individual users can follow the guide below to turn off billable expenses in QuickBooks;
- First, open the Settings by clicking on the ‘Gear’ icon.
- Now, select the ‘Account and Settings’ option from the drop-down menu.
- Next, tap on the ‘Expense’ option to select it and navigate to the ‘Bills and Expenses’ section.
- Select the ‘Edit’ option and unmark the ‘Track billable expense and items as income’ option in the checkbox.
- Tap on the ‘Save’ button to save the changes you made.
Conclusion
A billable expense income allows users in QuickBooks to monitor and invoice their customers for expenses the business incurred on the customer’s behalf. Tracking billable expense income streamlines the billing process and ensures businesses are appropriately compensated for such costs. Companies can take advantage of this functionality to improve their overall accounting process.
