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How to Reimburse Expenses in QuickBooks

· 5 min read
Debits

Introduction​

Reimbursing employees for expenses they incur on behalf of the business is a routine task for many companies. Whether it's travel costs, supplies, or meals, QuickBooks allows you to properly record these reimbursements to ensure accurate bookkeeping. This guide outlines the step-by-step process to appropriately reimburse expenses in QuickBooks, helping you maintain organized financial records and ensure compliance.

Step 1: Set Up an Expense Account for Reimbursements​

1.1: Create a Reimbursement Expense Account​

  1. Log in to QuickBooks: Start by logging in to your QuickBooks account.
  2. Go to the Chart of Accounts: Navigate to Accounting > Chart of Accounts.
  3. Create a New Account: Click on New in the top-right corner to add a new account.
  4. Select Account Type: Choose Expenses as the account type.
  5. Detail Type: Select the appropriate detail type, such as Reimbursement or Employee Reimbursement.
  6. Name the Account: Give the account a descriptive name, such as "Employee Expense Reimbursement."
  7. Save the Account: Click Save and Close to add this new expense account to your Chart of Accounts.

Step 2: Record Employee Expenses​

2.1: Use the Expense Feature​

  1. Go to + New Menu: Click on the + New button and select Expense under the "Vendors" section.
  2. Enter Employee Information: In the Payee field, select the employee who incurred the expense.
  3. Select the Payment Account: Choose the account from which the business will reimburse the employee (e.g., the main business bank account).
  4. Enter Expense Details:
    • Category: Choose the appropriate expense account (e.g., "Travel Expense," "Meals and Entertainment," etc.).
    • Amount: Enter the amount spent by the employee.
    • Description: Provide a description of the expense (e.g., "Flight to attend conference").
  5. Attach Receipts: Optionally, attach receipts or supporting documentation to the expense entry.
  6. Save and Close: Once all details are entered, click Save and close to record the expense.

2.2: Use a Journal Entry (Optional)​

For businesses that prefer using journal entries for employee reimbursements:

  1. Create a Journal Entry: Go to + New > Journal Entry.
  2. Debit the Expense Account: Debit the relevant expense accounts (e.g., travel, meals, or office supplies) for the amount incurred by the employee.
  3. Credit the Employee’s Liability Account: Credit a liability account, such as "Employee Reimbursement Payable," for the amount owed to the employee.
  4. Save the Entry: Click Save and close to record the journal entry.

Step 3: Reimburse the Employee​

3.1: Create a Check or Expense​

  1. Go to + New Menu: Click + New and select Check or Expense, depending on how you are reimbursing the employee (e.g., by check or electronic transfer).
  2. Select the Employee: In the Payee field, choose the employee who is being reimbursed.
  3. Choose the Bank Account: Select the business bank account from which the reimbursement will be made.
  4. Enter Reimbursement Details:
    • Category: Select the Employee Reimbursement expense account created in Step 1.
    • Amount: Enter the total amount being reimbursed.
    • Memo: Add a note to clarify that this payment is for expense reimbursement.
  5. Save the Transaction: Click Save and close to record the reimbursement.

3.2: Record Reimbursement Using a Journal Entry​

For businesses that recorded the initial expense using a journal entry:

  1. Create a Check: Go to + New > Check.
  2. Debit the Liability Account: Debit the "Employee Reimbursement Payable" account.
  3. Credit the Bank Account: Credit the business bank account from which the reimbursement is being paid.
  4. Save the Check: Click Save and close to finalize the reimbursement.

Step 4: Review and Reconcile the Reimbursement​

4.1: Verify Transactions​

  1. Go to Chart of Accounts: Navigate to Accounting > Chart of Accounts.
  2. Check the Expense Account: Review the Employee Expense Reimbursement account to ensure all expenses and reimbursements are accurately recorded.

4.2: Reconcile the Bank Account​

  1. Go to the Reconciliation Tool: Navigate to Accounting > Reconcile.
  2. Select the Bank Account: Choose the business bank account that was used to reimburse the employee.
  3. Reconcile the Transaction: Ensure that the reimbursement matches your bank statement, and complete the reconciliation process.

Best Practices for Managing Employee Reimbursements​

  • Document All Expenses: Always attach receipts or other documentation to the recorded expenses in QuickBooks to maintain a complete and accurate audit trail.
  • Clear Communication: Ensure that employees submit their expense claims with detailed descriptions and receipts to avoid discrepancies.
  • Regular Reconciliation: Regularly reconcile your accounts to catch any inconsistencies or errors in expense and reimbursement tracking.
  • Expense Policies: Establish a clear expense policy that outlines what expenses are reimbursable and the process for submitting claims.

Conclusion​

Recording and reimbursing employee expenses in QuickBooks is a critical task for maintaining accurate financial records and ensuring smooth business operations. By following the steps outlined in this guide, you can ensure that all employee expenses are properly tracked and reimbursed. Implementing best practices for documentation and reconciliation will further enhance your financial accuracy and streamline your bookkeeping processes.