Setting Up Expenses in QuickBooks Online
Why Set Up Expenses?
One of the primary reasons why small businesses want to use QuickBooks is so that they can track their expenses. QuickBooks is designed to keep track of expenses from downloading your banking transactions to writing checks. In this set up, you can customize how QuickBooks will track your expenses by selecting one or more of the following options:
Track expenses by customer so that you can run profitability reports
Bill customers back for items that you purchased on their behalf
Manage bills through Accounts payable
Create purchase orders to send to your suppliers
If you do not need to customize QuickBooks for any of the options mentioned above, then you can skip this set up.
How Do I Set Up Expenses in QuickBooks Online?
Below are the step-by-step instructions on how to set up Expenses:
Expenses is the 4th tab in Account and Settings. This section will allow you to turn on/off features that affect how you pay bills and track your expenses.
QuickBooks Online Expenses Setup Tab
Below you will find a brief description of each feature along with how we would set this up for our fictitious company, Paul’s Plumbing:
Show items table on expense and purchase forms – this feature adds a Product/Service table on expense and purchase forms so you can itemize products and services that you have purchased.
Track expenses and items by customer – if you purchase an item on behalf of a customer and you want to link this item to that customer, then this feature will add a Customer column on expense and purchase forms.
Make expenses and items billable – this feature will add a billable column on expense and purchase forms so you can add billable expenses and items on sales forms to charge customers for items purchased on their behalf.
Set up a default markup rate – this feature is only available if you have turned on the make expenses and items billable feature (above). It allows you to set a default markup rate for items you plan to bill your customers for.
Track billable expenses and items as income – this feature is only available if you have turned on the make expenses and items billable feature (above). You can choose to track this income in one account or in multiple accounts. Refer to the chart of accounts set up lesson to learn how to create new accounts.
Charge sales tax – this feature should be activated if you need to charge your customers sales tax.
Set up default payment terms – this feature allows you to set default payment terms for all bills that you enter into QuickBooks. If the payment terms vary by vendor, you can adjust them in the vendor profile when you set up your vendors in QuickBooks. By setting up payment terms in QuickBooks, you will receive reminders when a bill is coming due.
Purchase orders – if you need to send purchase orders to your suppliers, you will need to turn this feature on here.