How to log reimbursement for contractor in Quickbooks?

Question

I run an education consulting company. Recently, we hosted a business retreat to discuss strategy with other entrepreneurs. One of our contractors (who works and teaches lessons for us) who attended the summit helped organize everything, and booked AirBnBs, meals, etc. with her own personal credit card. We then reimbursed her for her expenses in Gusto. But now, I'm trying to figure out how to represent that in Quickbooks.

Currently, we have all of the expenses tracked under a separate Credit Card account representing her personal credit card. We also have all the receipts. However, after doing more research in this forum, this seems to be the incorrect approach. Instead, I've read through threads giving conflicting advice: some say to create an Expense Account and then log reimbursements through there; others say to create a clearing account; others say to log it as an expense through Payroll; others say to write it as a billable expense income... what is the correct thing to do in our situation?

GlinetteC · Accepted Answer

I'll help you understand better and give more information about how QuickBooks deals with reimbursing a contractor, JeffreyYu18.

Your accountant is correct in stating that the contractor's credit card (CC) is no longer necessary for reimbursement. Instead, you can use your checking account under the Payment account. By simplifying the process, you can eliminate the need for the contractor's credit card information and streamline the payment process.

For the reimbursement, you have two options as an alternative. You can record it as a Check or as an Expense. Before proceeding, it's best to consult with your accountant to guide you in choosing the right account to ensure your books are up-to-date.

To record as a check:

Go to + New and select Check.
Choose a bank account to use to reimburse the funds.
In the Category column, select Partner's equity or Owner's equity.
Enter the amount to reimburse.
Tap Save and close.

To record as an expense:

Go to + New and select Expense.
Choose a bank account to use to reimburse the funds.
In the Category column, select Partner's equity or Owner's equity.
Enter the amount to reimburse.
Tap Save and close.

With these steps, you can reimburse contractors in QBO and keep track of their expenses for accurate financial reporting.

Furthermore, I would like to provide you with a resource to assist you in accurately closing out the current period: Learn the reconcile workflow in QuickBooks.

If you need further assistance with managing your contractors or any other tasks, please don't hesitate to let me know. I'll be ready to assist you in this thread promptly.

Maybelle_S · Answer

I understand the importance of accurately recording reimbursement transactions in QuickBooks Online (QBO), JeffreyYu18. Let me guide you through the process.

In QBO, we can create an expense account specifically for contractor reimbursement. This will help you track the transactions separately from other expenses.

Here's how:

Go to the Accounting menu, and then Chart of accounts.
Click the New button.
Tap Expenses at the top.
Under the Save account under dop-down arrow, choose Expenses.
Select the Tax form section from the drop-down arrow.
Enter the Account name and Description.
Hit Save.

Once done, let's record the reimbursement transaction in QuickBooks. I'll guide you on how to do it.

Go to the +New button.
Under Vendors, select Expense.
Select the contractor's name from the Payee drop-down arrow.
Under the Payment account drop-down arrow, choose the credit card account representing her credit card.
In the Category column, select the expense account you've created.
Enter the amount of the reimbursement field as a negative value. This ensures the transaction acts as a reimbursement rather than an additional expense.
Add any necessary notes or memos to the transaction for future reference.
Hit Save and close.

I also suggest seeking guidance from your accountant to help you choose the right account. It's to ensure that your books are accurate.

We hope this guidance helps you accurately represent the contractor reimbursement in QuickBooks. If you have any further questions or need additional assistance, please don't hesitate to drop a comment below. We are here to support you in managing your finances effectively.

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