Quite often I receive a request from companies who are looking for an easy way of tracking employee’s reimbursed expenses. Often, they want to write a check from payroll. So, after spending some time doing the research, I have found that the best way to include employee reimbursed expenses in their paycheck is to avoid trying to do so. It is much easier (i.e. less confusing) to write a check for employee reimbursed expenses. However, the best way to track the expenses and pay them is as follows:
- Create a new credit card account called, “Employee Reimbursed Expenses”. I know, a little strange, but this will be just the beginning of strange. Bare with me through the end, though, and I promise it will all make sense.
- Now make a sub-account of the one you created above with the name of the employee as it’s name. You will want to do this for each employee.
- Okay, whenever the employee hands you a receipt, you simply go to the Banking menu and select, “Enter Credit Card Charges”.
- Select the Employee who purchased the items, “John Doe” in our sample.
- Enter the Vendor information and which COGs/Expense account you are using to track the purchase.
- On each line item in the credit card form, enter the customer/job that this purchase was for so you can track it to the correct job. Even if you are not billing it, you should always select the job it’s for unless it’s for a office party or something internal.
- In QuickBooks, scan in your receipt and save it to your designated file structure location (for more help with creating a file structure, please contact QB Services! It’s relatively easy and it will really save you time).
Now that you have successfully saved all the information you need about the purchase(s) your employee(s) made, you can track them until you are ready to reimburse your employee for the expenses. The best way to do this is:
- In the chart of accounts (ctrl + A), double-click on the employee credit card account that you are working on. In the register, make sure that sort is by “Date, Type, Number…”.
- Look at the balance of the account for the last day you would like to pay the employee for. Write this amount down.
- Since you should stll be in the chart of accounts and right-click on the same Employee credit card account you were just in and select, “Reconcile Credit Card” from the menu.
- Enter the date through which you would like to pay for the employee expenses through. The date should still be the date you had in step 2.
- Then, enter the total balance that wrote down as the ending statement balance.
- Click on the button that say’s, “Select All”. The “Difference” should equal the balance that you wrote down in step 2.
- Complete reconciliation by clicking on, “Reconcile Now”.
- If you owe the employee money, you will see a pop-up that asks if you would like to write a check now or create a bill to pay later. Select your preference.
- After that, you should receive a pop-up form that asks if you would like to print out a summary or detailed report. I would print this out for your employee to provide with the check you are about to write.
Although this seems like a lot of steps, it actually goes quite quickly. You could have employee’s fill out their own, however, that is not recommended as they might assign it to the incorrect account…the “too many cooks” senario.
Why is this what I recommend? It does quite a bit for you, it:
- Keeps track of job expenses paid for by employee that are out of pocket.
- Provides a neat way of tracking expenses for a job.
- Provides an excellent way of paying back employees for expenses (good record keeping).
- It has a built-in reconciliation system that you can use to double-check the expenses claimed by the employee.
See below for details.
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