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Handling employee reimbursement for business-related expenses, including mileage, should not be run through the payroll in QuickBooks.
When an employee uses his / her own money to pay for business-related expense is the money they have lent the company and the company should account for the expenditure in the same way as they would if the company had made spending itself – in other words – those refunds should be properly allocated to the appropriate expense or cost of goods sold accounts in QuickBooks
As a bookkeeper handling refund requests, not only do you need to make sure that expenses are properly registered. you also need to make sure that whatever the expense reimbursement requests from employees meet the accounting standards of the IRS.
Every business should take responsibly Plan for reimbursement. An accountable plan allows refunds not taxable and is not reported on a W-2, as long as the plan meets the following three conditions IRS
- There will be a business purpose, which means that the cost would be deductible if the company actually made the initial outlay of cash.
- amount, time use and purpose of business of the money spent must be justified within a “reasonable time”; which means that the employee should submit a written account detailing the cost of money, the purpose of the expenditure, what job or client expenses related to and receipts to prove expenses.
- employee must return unsubstantiated amount within a reasonable time; which means that if the employee was given a $ 1,000.00 but granted only to registered receipts for $ 900.00, $ 100.00 for the remainder would have to come back to the club.
If these conditions are not specifically state the number 3 when the employee does not return $ 100.00, you would then take that $ 100.00 and only then add it to the payroll and keep the appropriate taxes.
recordings of refunds in Quick Books can be accomplished using either write control window or the Bills window, however, it is important to note that John Doe employee should also have John Doe (rebate) record dealer list; John Doe record in the Employee List of issuing payroll and John Doe (repayment) from the vendor list when the costs for reimbursement.
Recording Refunds for indirect costs, such as telephone, gas, mileage, Purchases of small tools, postage, etc.
When the cost report is presented containing any of the indirect cost items above, when you write a check or enter an account, you will want to use cost-Tab to record amounts, if you will be among any of these costs on the customer account, click (check) billable option) and when you create an account, click on the Time & Cost to reduce these costs into account. If these costs will not be charged to the customer, do not check the billable column.
Recording Fees for work days Material or other Direct employment related costs
When the cost report is presented containing any of the Direct costs above, when you write a check or enter into account, you should use the items Tab to the amounts, if you include any of these costs on the customer account, click (check) billable option) and when you create an account, click on the Time & Cost draw these costs into account. If these costs will not be charged to the customer, do not check the billable column.
This article provides you with basic guidelines for the treatment of some types of refunds, though it does not mention the treatment of reimbursements for travel, lodging or meal reimbursements as they have stricter requirements. Contact your local accounting professional to get additional help.
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