Billable Expense Income Vs Product


It’s important to ensure that you correctly document and bill all eligible expenses to understand the financial performance later on and make filing taxes easier. Here’s a closer look at how accounting software transforms this critical aspect of financial management. I think a real-life example might better explain how billable expenses work.

Managing and Reporting Billable Transactions in QuickBooks 🔍

Distinguishing between billable and non-billable expenses boils down to understanding whether an extra cost happens because of your work on a specific client or project. Yes, QuickBooks Online Plus and Advanced have this feature to record billable expenses. We can set up a billable expense income account and transfer the expense to it. Yes, once the option to track billable expenses and items as revenue feature under the Bill and expense is set on, your gross income will increase. I post my credit card bills to COGS and then invoice the client with the reimbursable expense group. Quickbooks does not give me the option to select which income account to post the expenses on the client invoice.

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You can limit the total hours you spend on administrative duties by utilizing automated solutions. Look at the non-billable times and identify the most time-consuming projects. You can discern the productivity of each employee by comparing their billable and non-billable time.

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Invoices from service providers that are needed to complete a job can be passed on to the client. Examples include advertising costs, licensing fees for intellectual property, and shipping costs. These should be itemized and included on the client invoice, then classified as a billable mobile book keeping app expense. Shipping costs can be considered either an expense or a billable expense depending on the situation. If your business is responsible for covering the cost of shipping as part of delivering a product or service, then the shipping cost is considered an expense.

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Using a cloud accounting system is the best for keeping business expenses in check. If you utilize Moon Invoice, you may enable chargeable expenditures in just a few simple steps. With this integration, you may distribute transactions and divide business-related expenses based on a work, client, region, or client’s project code. Whether you’re shouldering the additional expenses to continue with the project or asking your client to purchase before you can proceed, all of these factors will affect your invoicing.

However, the rakes, shovels, and buckets that a landscaper carries with them from job to job are not considered billable expenses, since they are not directly tied to the individual job. Like most businesses, you may be using a digital platform to receive payments from your customers. However, if you are charged with a payment processing fee, make sure to add that into the invoice as a billable expense. Billable expenses are decidedly different from your product or service charge or even administrative fee, as explained by Laurie Brenner here.

The convenience of using digital payment platforms for service providers and clients alike means they are more ubiquitous than ever. However, accepting most or all payments via a digital platform means a lot of revenue can get eaten up by payment fees. Explain to your clients upfront that payment fees will be included in the final bill, and then account for them as billable expense income. Imagine a landscaping company that sells ornamental plants and also provides garden design services. When a customer purchases plants, the revenue generated is recorded as sales of product income. However, if the company is hired to design a garden, and as part of the project, it purchases special outdoor lighting on behalf of the client, the cost of the lighting is a billable expense.

In this case, the money you spent on the domain is a billable expense. You have a right to receive income that takes into account your billable expenses. Even if your rates are higher than your competitors it’s for a good reason, and you will be financially protecting yourself from all sides. In the end, you need everything ready in time before you file your taxes. Now that we understand the importance of a billable expense income, let’s look at the different types of billable expenses. For more information about how to track billable expenses and adding them to your invoice, send us a message on our email address at

  1. However, if the company is hired to design a garden, and as part of the project, it purchases special outdoor lighting on behalf of the client, the cost of the lighting is a billable expense.
  2. On the other hand, business owners themselves are pretty vigilant about their incoming bills and diligently keep track of the clients owed to them.
  3. I too noticed certain DEPOSITS were being duplicated in my P&L (Sales and Billable Expense Income).
  4. In other words, billable work consists only of those tasks that are to be compensated; this determines how you will get paid for the time you spent on the project.

Non-billable expenses are an important part of running a business, but they do not generate direct revenue. Properly tracking and accounting for billable expense income is crucial for maintaining accurate financial records and assessing the profitability of client projects. The workaround shared by my peer AlexV is the best way to track billable expenses on the Essentials version of QBO. That said, you’ll need to record the client’s expense as an expense and it to the billable income account through a Journal Entry. Also, when when both the billable expenses and invoices are created, you will see both income and expenses in your income statement. The invoices or sales under the Income section, while the billable expenses under the Expenses section.

Following certain best practices might help businesses in managing billable more efficiently. Imagine someone hiring a consulting firm to provide strategic advice on a project. While delivering the service, the consulting firm spends some money, as it’s necessary to fulfill their job for this client’s project. I’d like to ensure that you can record the billable expenses on your QuickBooks Online account properly. Both income statements and balance sheets provide important details about how a company uses its cash and other assets, but there are a few key differences between the two. Next in the cost and expenses section, you’ll notice where Ford is spending its cash.

Nonetheless, the IRS does not tax business entities based on their revenues but on their net profit. Hence, no need to have extra worries; the billable expense income does not mean additional taxes for you. You have an invoice stating that you have spent $400 on advertising costs for a new campaign around your client’s product.

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