Invoicing and Tracking Reimbursed Costs To track reimbursed costs from customers, you need to do three things: Create an income account that holds the revenue that comes in as a reimbursed cost. Create the configuration options to automate postings to that income account when you invoice your customers for a reimbursable cost. Use the accounts configured for reimbursement when you enter transactions for reimbursed costs. Configuring QuickBooks for Reimbursed Costs Unfortunately, QuickBooks is limited in its methods for tracking reimbursed costs. Unlike many other accounting software applications, QuickBooks does not let you post all of your reimbursable expenses into one income account. Instead, it insists on a one-to-one relationship between a reimbursable expense and the income from a reimbursable expense. As a result, if you have more than one expense account for reimbursement, you must also create more than one income account for accepting reimbursed expenses. The best way to do this is to create a parent income account and subaccounts for each reimbursement type. Create the Income Accounts To create the income accounts, follow these steps: Click Chart of Accounts on the Shortcuts pane to open the COA window. Press Ctrl+N to open a New Account window. Select Income as the account type. Enter an account number (if you use numbers) and name the account Reimbursed Expenses (or something similar). Click OK. Then create the specific child accounts as follows: In the COA window, press Ctrl+N to open the New Account window. Select Income as the account type. Enter a number (use the next sequential number after the number of the parent account)and a name for the account. Select the Subaccount check box. Enter the parent account you created. Repeat this process as many times as necessary. Assign the Income Account to the Expense Accounts You must tell QuickBooks that when an expense account is used to invoice a customer for reimbursement, it should automatically post the Reimbursed Costs invoice item to the Income account you created for that purpose. Use the following steps to accomplish this: Open the Chart of Accounts Select (highlight) the expense you bill back to customers for reimbursement. Press Ctrl+E to edit this account. Select the check box Track reimbursed expenses in. Entering the check mark automatically makes the Income Account field accessible. Enter the appropriate income account. Click OK. Repeat for the additional Expense accounts that are reimbursed. Creating Transactions for Reimbursed Costs When you enter a vendor bill, if that bill, or part of the bill, is subject to customer billing for reimbursement, you must indicate that fact with two additional steps: Enter the job in the Customer:Job column Make sure the little "Invoice" icon is showing in the last column. When you enter the customer's Invoice, take these steps: Enter the invoice items as usual, along with the amount. Click the Time/Costs icon at the top of the Invoice form. Click the Expenses tab to see all the reimbursable expenses you've posted for this job since the last time you invoiced this job. Click Select All to select all reimbursable costs for this invoice. A check mark appears in the Use column for every cost. To select only certain costs, click the Use column to the left of that cost's listing to place a check mark in the column. Costs you do not use for this invoice will be displayed on this window the next time you create an invoice for this job, so take this step only for costs you're not ready to pass on to the customer at this time (this rarely occurs). Click Print Selected Time And Costs As One Invoice Item if you just want one line (Reimbursed Expenses) to show on the invoice, instead of listing each reimbursement by category. Click Hide for any cost that you don't want to invoice the expense to the customer. This removes the cost permanently from the list of reimbursable expenses for this job. It does not remove the original transaction from your records. Your Customer:Job reports will still show the cost as associated with the customer or job. After you've made your selections, click OK. QuickBooks automatically makes the appropriate entries in the Invoice. Your P&L Report will list the subtotals for each individual income item that's a reimbursed cost, and give you a total for all reimbursed costs. It does the same thing on the expense side . The totals 'wash' but you get information about how much of your spending and income is within these items.