How to Make Expenses Billable in QuickBooks Online

There are some instances where making expenses billable becomes necessary. By marking expenses as billable, businesses can pass these costs on to their clients, ensuring that they are properly reimbursed for the out-of-pocket expenses incurred during the course of their work.

In this blog, we’ll explore when and how to make expenses billable in QuickBooks, as well as the benefits of this practice.

What are billable expenses?

Billable expenses refer to costs incurred by a business on behalf of a client or customer. These expenses can range from purchasing materials for a specific project to travel costs incurred while working on a client assignment. When a business marks an expense as billable, it means they intend to recover the money spent on that expense by including it in the client’s invoice.

For example, suppose a freelance graphic designer is working on a project for a client and needs to purchase licensed stock images to use in the design. The cost of purchasing these stock images is considered a billable expense. The designer can mark this expense as billable in QuickBooks and include it in the final invoice sent to the client. The client, upon receiving the invoice, will then see the breakdown of all billable expenses incurred on their project and reimburse the designer accordingly.

When to Make Expenses Billable

Here are some situations where you might need to mark an expense as billable in QuickBooks Online:

• Client Projects: When you have a project or job for a specific client, and you incur expenses directly related to that project, making them billable is essential to ensure proper cost recovery.
• Reimbursable Expenses: If your business involves providing goods or services to clients and you incur expenses on their behalf, such as shipping costs or client-specific purchases, marking these expenses as billable helps you get your money back.
• Professional Services: Companies that offer professional services, such as consulting or legal work, often have billable expenses, such as travel or research costs, which can be passed on to the client.

How to Make Expenses Billable in QuickBooks Online

Turn on billable expenses: To get started, click on the gear icon in your QuickBooks Online dashboard and then select Account and settings. Navigate to the Expenses tab and make sure to click the boxes for Track expenses and items by customer and Make expenses and items billable. You may also need to click the other options to access other related features like the ability to charge sales taxes. Click Save to record the changes. 

Turning on billable expense tracking in QuickBooks Online

Locate the expenses you wish to mark billable: Next, click on Expenses on the left navigation menu and then select the Banking dropdown. From the transaction list, select the Expenses dropdown. This will open the expense transaction list; from here, select the transaction and click anywhere on the entry line to open the expense form. 

Expenses screen in QuickBooks Online

Then, under the Category details or Item details section, simply mark the box next to billable and select the customer or client to whom the expense should be billed. Once done, click Save and close.

Marking an item billable in QuickBooks Online

Now, when you create an invoice for that customer, you can include the billable expenses, allowing you to recover the costs incurred on behalf of the client and streamline your invoicing process.

Wrap Up

QuickBooks Online’s streamlined process for creating billable expenses and invoices makes it easy for businesses to manage and track their billable costs accurately. The ability to include billable expenses in client invoices with just a few clicks saves time, allowing companies to focus more on other important aspects of their business.