How to record client reimbursed expenses?

"When I bill my clients I record these items as "reimbursable" expenses and understand this is "income""

The Expense is whatever you Bought and paid for: Meals, Travel, Office Supplies, Postage, etc; Even though you intend to Charge that to the customer = Selling it to them, to be Reimbursed, that doesn't change the Details for what you incurred.

"reimbursements may in some cases overstate your income - particularly for Meals.  For eg. if I have $3000 peryear in reimburseable meals, IRS let's me deduct 50% i.e. $1500 but I get $3000 back from the client. So now I have $1500 in additional taxable income when its really not income."

No. That isn't Overstating anything.

We seem to be confusing Gross and Net.

Gross = what you incur, in full; and what you are Paid by others, in Full.

Net = the difference. If I pay $500 for Stamps for you, and charge that to you, I have $500 Postage Expense and $500 Income to report. I have a Net of 0.

And the tax regulations and provisions have Nothing to do with this tracking. You track it, because you Need it for reporting. You report it, based on what the Tax regulations allow.

So, yes, you incur a $100 meal, and the IRS only allows you to take 50% as Expense, because we all need to eat, so that is not all Business. Meanwhile, you "sell" it to the customer for $100.

Yes, you just made $50 in Taxable Income, in that part of the expense is Not Reportable.

That isn't an overstated condition. That is Reality.

"So how do we record those say travel expenses"

Start with How you Paid for it. s Expense from Checking (or on debit card) or as Credit Card charge.

"and keep track of to whom we must bill them?"

You split the details and assign Customer Name in the detail lines. Example:

Lodging split to 3 different Clients; as billable or not.

"For example, may I call the Vendor the Customer name"

No. That makes no sense. Example:

Postage from USPS is split as "postage reimbursed expense" by using your Service or noninventory product, listing that three times, so that you can allocate how much goes to each Customer name. USPS is your Payee name.

"and mark all costs as Reimbursable Expenses?  Is there a better way to record and track what I must bill each customer for?"

You enter something as Billable, to the customer, because you intend to Bill them for it. The same is true for Billable time, from timesheets.

If you record as travel expense at the time it is incurred and later received as reimbursement, you can record it as income.  yes, you can create a category called reimbursement income and record under that head

Suba k

SMD Financial Group LLC

Hi everyone I'm looking for a clear brain to answer this question....

Reim Exp purchased for a customer

I'm helping an older person to organize his estate by offering consulting services.  My invoices include 1 line under services for consulting at X hours for my labor.  However, I may have purchased a laptop for my customer and set it  up ready for him to do business.

Question

I purchased the laptop for 1000.00.  In the past I've always use a current asset account called "Reim Exp pass thru" to tag the expense in when posting my cc register in qbooks.  However, now i want to include it on a line item to my customer for 1000 with no markup but when i go to add it i cannot get to my current asset account to tag it as a pass thru.

I'M missing something somewhere in the exchange as what i've read shows listing the expense under reim income account and when doing the P&L it shows it as income and the expense still shows as an in expense so I do not want my reports to be wrong.....ugh.

By "reimbursable" I presume you mean billable, as in you bill these expenses back to your customers, and your customers pay these bills to reimburse you for expenses you paid out on your customers behalf. 

The terminology should help you a bit with the answer.  Technically, a "reimbursable expense" usually describes an expense (like cleaning or office supplies) that an employee bought on behalf of an employer. A "billable expense" usually describes an expense that your company paid on behalf of your customer  (for job supplies and materials, for instance) that you charge the customer for. 

Therefore, to avoid confusion between these two types of expenses, I do NOT recommend that you call that expense account "Reimbursable Expenses". If you use Quickbooks payroll, and add the reimbursable expense category to types of pay for your employees, Quickbooks will get confused since it creates a payroll Reimbursable Expense account. Please call it "Billable Expenses" instead.

You *could* call it prepaid expenses, but the term "prepaid" in accounting usually refers  to an expense (like legal or insurance) that is paid for your OWN business in advance in increments, added to an intangible  asset, then deducted from the account when used.  (I hope this is not too confusing, I do have a degree in accounting.)

To give a more specific example, supposing an auto mechanic repairs your car. They charge not only for labor, but for parts. The parts in this case are a billable expense that they charge to their customers,  if it is a specialized part that they do not normally keep in their inventory.

In Quickbooks Online, for  every expense you enter, there is a checkbox that you can check off if this is an expense that you will bill to your customer, or receive payment from your customer for, as part of their service deal with you. 

This does NOT include inventory, since inventory is accounted for in a completely different way, and can be recorded and tracked inside or outside Quickbooks (if the business doesn't have Quickbooks Plus or Advanced (enterprise) online, it must be tracked outside Quickbooks, usually on a spreadsheet or using other apps).  Typically inventory is something you charge your customers for that you would always have a certain quantity of on hand (screws, nails, buttons, clothing, cans, bags).  

When you check off the billable expense box, you MUST enter the customer's name. This is the name of the customer that you will receive the money for the expense from. 

Next, you would create an invoice, adding the billable expense to it. 

Finally, when you receive payment from your customer for the expense, you record the customer's payment. 

Now regarding the Travel expenses. Travel expenses do need to be booked separately for tax purposes. (I have been a tax preparer for ten years, a bookkeeper for six years, and assisting clients with their payroll and bookkeeping for three years.) This includes lodging, food while on an overnight trip, and airfare or other travel tickets. Business meals with clients also need to be recorded separately, along with details of which client you met with and general purpose of the meeting (sales, etc).  

Hello. I got a question.

My customer gave me his sell permit number to avoid paying taxes. If I have to reimburse the taxes he paid me. How can I categorize that expense? 

I will appreciate your help (:

Hi I have a similar situation.

I provide services for a company as a PC, in addition to the regular income I receive for hours worked, I now will receive travel reimbursement ( of $50 per day).  
how do I enter this in quickbooks online ?

thanks 

If I could offer a suggestion: Hopefully you are using classes or projects. Make each client a project and when you have expenses, you can mark them billable within each expense's line item and pick the project you want to bill to. Next time you go to make an invoice for that client/project, it will pop up a list of billable expenses that have not yet been billed that you can add to the invoice.