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timmins
March 23, 2024
Question

How to categorize payment from client that includes expense reimbursement?

  • March 23, 2024
  • 1 reply
  • 0 views

New self-employed user, so appreciate your patience!


I have one primary client. When they pay me for my services, it often includes a portion of "reimbursement" for things my LLC has paid for, such as materials and travel. I don't want to be taxed for the part of the payment that isn't actual income, but don't know how to categorize it appropriately.

 

I figured out how to split the transaction into two accounts, the primary one being "income", but I'm unsure how to properly categorize the expense reimbursement.

Thanks in advance!

1 reply

C
ChristineJoieR
March 23, 2024

Hello there, timmins. Let me share more information concerning how to categorize the reimbursement expenses in QuickBooks Self-Employed.

 

You can categorize your deposit and reimbursement as "Transfers" in QuickBooks when using personal funds to pay for business expenses and then reimbursing yourself. 

 

By categorizing these transactions as transfers, they aren't considered part of your business income or expenses, ensuring they are not included in tax estimations. This method is suitable for scenarios where personal funds are used for business expenses and later reimbursed, helping to maintain accurate financial records without impacting tax calculations

 

Nonetheless, it would be best to reach out to your tax advisor and consider getting some advice to keep books accurate and expense accounts to use. Since they are the ones who are more knowledgeable with accounting standards.

 

Please refer to this article for more detailed information: Schedule C and expense categories in QuickBooks Self-Employed.

 

You can also go through this article to understand what we updated with expenditure classifications: Updates to expense categories in QuickBooks Self-Employed.

 

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