How to Record Debt in Quickbooks

In any size business, debt can originate from a variety of sources. A business can incur payroll, tax and loan debt, as well as debt from vendors and suppliers. While it is crucial for a business to keep accurate records and record all debt on a timely basis, equally important is recording debt that you will pass on to customers and receive reimbursement for at a later date. QuickBooks provides a method for entering reimbursement expense debt and linking it to a specific customer account.

Things You'll Need

• Vendor/Supplier billing information
• Customer order information

Instructions

Enable Reimbursement Tracking

1. Locate the "Preferences" option from the "Edit" section of the main menu. Reimbursement tracking is not set as a default option. To begin tracking debt for items you purchase on behalf of your customer, such as a special order items, you must enable this feature.

2. Access "Company Preferences" by clicking the "Time & Expenses" icon and place a check mark in the box "Track Reimbursed Expenses as Income."

3. Click "OK" to exit.

Add a Reimbursed Expenses Account to the Chart of Accounts

1. Open the QuickBooks Chart of Accounts. To view the Chart of Accounts, press Ctrl +A, or access it from the "Company" tab of the main menu.

2. Click the "Accounts" drop-down menu and select "New," then select "Income" as the account type.

3. Enter an account number, if appropriate, and type in "Reimbursed Expenses" as the account name and click "Save."

Add Subaccounts for Individual Account Postings

1. Open the Chart of Accounts and create a new income account just as you did to add a Reimbursement Expense Account. In this section, you create a separate income account for each type of reimbursable expense. For example, if a customer purchases a special order item that requires professional installation and you pay for both in advance, both the special order item and the installation expense require a separate reimbursement income account.

2. Enter an account number, if appropriate, and name the account. Be sure to use names that accurately reflect the expense you are tracking for reimbursement, such as Reimbursed Special Order Expenses or Reimbursed Installation Expenses.

3. Link the subaccount to the main Reimbursed Expenses Account. Place a check in the "Subaccount Of" checkbox and select "Reimbursed Expenses" from the drop-down menu.

Record Reimbursable Expenses

1. Enter billing information. Select the vendor from the "Vendor" tab of the main menu, click "New Transactions" and enter all appropriate billing information.

2. Charge the appropriate customer for the reimbursable expense. In the "Customer:Job" field of the billing form, select the customer name from the list in the drop-down box. This will automatically place a check mark in the "Billable" field and link the charge to the appropriate customer.

3. Click "Save & Done" or "Save & New" to keep recording vendor bills.

Tips & Warnings

• If you wish to automatically mark up reimbursed expense items, decide on a markup percentage and add it to your "Time & Expenses Company Preferences" section. Although this is a system-wide markup, you will have the option to override it and set individual pricing for specific items.

• Check with your accountant to see if you should add account numbers when creating new accounts. If you do use account numbers, use a consecutive numbering system when adding new accounts.

References

• "QuickBooks 2009: The Official Guide;" Kathy Ivens; 2009
• QBContentChampion.com: Record Reimbursable Expenses
• QuickBooksHelp.com: Handling Reimbursement Expenses in QuickBooks

Resources

• QuickBooks.com: Compare Products