Invoicing expenses is generally a fairly straightforward process in QuickBooks (QBD) which can be made even more effective by simply following a few best practices related to using Service Items. The general process begins with a check or a bill marked as billable to a customer, which will then allow it to be added onto an invoice in the Invoices area.
This can be a one-off: You’ve negotiated with a client an expense reimbursement package for a business trip. Other times, this is a recurring event: You’re constantly adding billable expenses to invoices each invoicing cycle. In both scenarios, if you map those bill or check line items to a Service Item rather than directly to an account, you can capture the cost and income more effectively and have the billable expenses appear in a clearer, more organized manner on an invoice.
First, you’ll want to create a new Service Item. In most versions of QuickBooks Desktop, you can do this by clicking on “Lists”, then “Items.” Once there, click on “Item” in the bottom left-hand corner and choose “New”. With a fresh new item to use, here are a few best practices.
Assign Both an Income Account and an Expense Account
Check “This service is used in assemblies or is performed by…” The options will change and you’ll now see a spot for both an Income and an Expense account to be assigned. Utilizing an item in this manner is often referred to as either a Double-Sided Item or Two-Sided item.
Now, when you invoice billable expenses, you can track income and cost.
Utilize the Description Field
If you have a billable expense mapped to an account when you add it to an invoice, you may see it associated with “Reimbursable Group” or worse, just as an amount with no description. If you instead fill out the “Sales Description” field, you’ll have complete control over the description that appears on the invoice for the charge. Note that if you fill out the “Purchases Description” field, it will automatically populate the sales description.
Adding a Billable charge mapped to an Item onto an Invoice
If you need a billable charge to an invoice, simply open up an invoice for the client and click “Add Time/Costs.” You’ll find the charges under the “Item” tab.