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A
ambermasterson
April 16, 2024
Question

Hi, Am I able to record expenses and income where I have bought a product for a client and sold it to them at that same cost (i.e. no profit no loss, not for tax)

  • April 16, 2024
  • 1 reply
  • 0 views
I wonder if someone can help me as I am in a pickle with Quickbooks Online! I have been trying to reconcile my books on Quickbook and have run into some trouble getting numbers to match. I have been through my statements and matched these up, and the transactions I am struggling with are transactions where I have bought an item on behalf of a customer, and they have paid me back at the same cost (i.e. no profit to myself)

How should I go about categorising these in Quickbooks? Obviously I do not want these deposits to count towards my taxable income, or for the payments to go towards my expenses.

 


 

1 reply

M
Mark_AG
April 16, 2024

Hello there, Amber.

 

You can create a clearing account to record an expense and income on behalf of your customer by creating a clearing account. I'm here to show you how.

 

Create a Clearing Account:

 

  1. Go to the Gear icon and select Chart of Accounts. 
  2. Click New, and select the account type as Bank. Name it something like "Clearing Account for Reimbursements." This account will temporarily hold the money movements without affecting your profits or expenses.
  3. Click Save.

 

Record the Purchase Transaction:

 

  • When you purchase the item for your client, create an expense using the clearing account as the Payment account. This records the outflow of the money.

 

Record the Reimbursement:

 

  • When your client reimburses you, record this as a deposit into the same clearing account as the Payment account. This will offset the initial expense.

 

It is good practice to reconcile your clearing account regularly to ensure that it correctly reflects all the transactions and that it balances back to zero after each set of transactions is completed.

 

Using a clearing account in this manner means that these transactions won't impact your profit and loss and won't be considered for tax purposes as they are essentially pass-through costs.

 

Moreover, you can also consider closing your books in QuickBooks Online yearly to avoid unwanted modifications.

 

If you have other queries besides recording pass-through transactions, please feel free to reply. We're always here to help.

    A
    ambermastersonAuthor
    April 17, 2024

    Thank you for this - I will give it a go and feedback if I have any issues. 

     

    Could this process also be used for transactions I have made accidentally on my business account and then reimbursed the business via. my personal account? E.g. using my business card at the shop by accident to buy groceries? 

     

    Thanks 

    K
    KayePe
    April 17, 2024

    Hello there, amber. Thanks for coming back here in the thread. Let us help you with your business account reimbursed by the personal account in QuickBooks Online (QBO).

     

    In QBO, there's another way of recording a reimbursement from the personal account of the business account. We'll show you how:

     

    Step 1 is to record a personal expense from a business account

     

    1. In +New, choose Cheque or Expense.
    2. From the dropdown menu, click Payee.
    3. Select the Bank or Payment account from the dropdown menu.
    4. Choose the category tax that suits your need from the dropdown menu in the Category details.
    5. Put the purchase amount and click Save and close or Save and new.

     

    After that, reimburse the company.

     

    1. Select Bank Deposit in the +New.
    2. To add the reimbursement, select the Account and choose the Date.
    3. To add funds to a deposit, head over to the Add funds to this deposit section. In the Received From field, type the name of the person who made the personal expense, and then select the account. Note that if the person is not already in your books, you can add them as a customer. It is the best option, even if they aren't a customer.
    4. Decide the Payment Method and put the reimbursement amount, then Save and close or Save and new.

     

    On the other hand, you can also delete a transaction that you have made by accident. Visit this link as a guide on how: Void or delete transactions in QuickBooks Online.

     

    We'll be happy to see you here again in the Community space. Feel free to post here again if you have any questions about your business account being reimbursed by the personal account. We've got you covered, and we'll get back to you. Take care. 

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