What Are Billable Expenses in QuickBooks Online, and How to Use Them?

Billable expenses are a powerful feature in QuickBooks Online (QBO) for businesses that incur costs on behalf of their customers. They ensure you’re reimbursed for these costs while maintaining clear records. Let’s explore what billable expenses are, when to use them, and how to record them in QBO.

What Are Billable Expenses?

A Billable Expense is a cost your business pays upfront for a customer, with the understanding that the customer will reimburse it. These expenses can include:

• Materials purchased for a specific project.

• Travel expenses incurred while working on a customer’s project.

• Subcontractor costs billed to you for services provided to your customer.

When to Use Billable Expenses

Billable expenses are ideal for:

• Project-Based Work: Construction, consulting, or other industries where costs are directly tied to a project or client.

• Reimbursable Costs: Any agreed-upon expenses a customer is responsible for covering.

How to Record Billable Expenses in QuickBooks Online:

1. Enable Billable Expenses:

   • Navigate to Settings > Account and Settings > Expenses.

   • Turn on Track billable expenses and items by customer and save your changes.

2. Record the Expense or Bill:

   • Create a new Expense or Bill.

   • Assign the appropriate Customer/Project in the transaction form.

   • Check the Billable box and enter the amount to be charged.

3. Invoice the Customer:

   • When creating an invoice for the customer, QBO will suggest adding the billable expense.

   • You can adjust the amount or markup before saving and sending the invoice.

Common Mistakes to Avoid:

1. Not Associating the Expense with a Customer:

   • Forgetting to assign a customer can result in unreimbursed costs.

2. Skipping the Billable Checkbox:

   • This omission means the expense won’t appear when invoicing the customer.

3. Incorrect Markups:

   • Always double-check markup percentages to avoid undercharging or overcharging.

How We Can Help

Accurate tracking of billable expenses ensures you recover every dollar spent on behalf of your customers. Let us handle the setup and tracking in QuickBooks Online so you can focus on delivering excellent service. Contact us today to simplify your bookkeeping!