How to Record Business Expenses made with Personal Funds in QuickBooks?

In every business, you are most likely to encounter situations where you will be required to do the expenses for your business with your personal funds, but it is recommended not to mix business and personal funds. Well, if you still do it you have to record the expenses in your QuickBooks First and then the reimbursement of the expenditure made by the Owner, Partner or an Employee. The reimbursement can be recorded either as a check or an expense.

Methods to record Funds in your QuickBooks

You can select the method that suits your understanding and your business requirements.

Method 1:

This is the most commonly used method for recording reimbursable expenses, wherein QuickBooks records the amount to be reimbursed as an expense and the expense is transferred to Sales Revenue Account upon Invoicing the customer. Here go the steps below:

• Click on the Expense Tab from within Enter Bills or Write Checks Screen.
• Select the customer: Job
• Select the Expense Account and reimbursement amount.
• The Billable checkbox has to be checked in the Billable Column (That indicates you have to bill this customer later for the Expense)
• Save the transaction and you are done

Note:

1. The expense you entered will still display in the expense account.
2. The unchecked Billable Checkbox denotes that you won’t charge this customer for the expense.

Method 2:

This method is referred to as COGS. That calculates the cost of the goods sold during the year and is calculated as COGS = Opening Inventory + Purchase During the period - Closing Inventory. The cost will appear in the Unbilled Costs report that can’t be billed to the customer. This method can be used by the businesses who do not charge the reimbursement expense from their customers. The reimbursement expenses entered using this method can never be billed to the customers. Take a look at the Steps Below.

• Click on the Expense Tab from within Enter Bills or Write Checks Screen.
• Select the Customer: Job
• This step will be a bit different as it was in Method 1. In this method, the reimbursement expense has to be put on the COGS account and save the information.

Method 3:

This method is referred to as “Items Tab Method” and is ideally used in the situations where the markup is added to the reimbursement expense. This method allows the gross margin to be determined without the creation of Unbilled Costs Account. The reimbursement expenses are treated as revenue and billed to the customer later.

In this method the reimbursement expense is entered as an Item in the Bills, Credit Card Charges or Write Checks Screen. The Item is entered in the Expense Account, the reimbursement amount is posted on the Revenue Account that was chosen while setting up the item. The Steps follow underneath:

• Create a new Other Charge Item in the Item List Screen.
• Put a Check on the checkbox that says, “The item is used in assemblies or is a reimbursable charge”.
• While Entering the Bills, Credit Card Charges or writing the checks and select the item that was created from the item list and make sure not put a check on the column on the far right side of the screen. Fill the needed information and save the entry.

It is a bit complicated and time-consuming method and few things demand cautious consideration.

These steps will surely help you manage your funds. Dial 1-855-365-6O12 (Toll-Free) and talk to a QuickBooks ProAdvisor today for technical assistance.