This article is part of a larger series on Accounting Software.
In this tutorial, you will learn how to enter bills in QuickBooks Online. Entering bills in QuickBooks Online allows you to track upcoming payments as well as provides up-to-date expense figures.
Thank you for completing this free tutorial for QuickBooks Online, our best overall pick for small business accounting software. We recommend following along with the tutorial in your own QuickBooks account. If you don’t already subscribe to QuickBooks Online, you can choose from a 30-day free trial or 50% off for three months.
This tutorial is one in our series of Free QuickBooks Tutorials. The video below and the step-by-step instructions that follow present the same information.
Why Entering Bills in QuickBooks Is Important
Vendors that allow you to make purchases on credit will send a bill with a due date for payment. By entering bills when received, QuickBooks Online can help you track upcoming due dates to make sure bills are paid on time. It is also helpful to know the total amount of bills, or accounts payable (A/P), that your company owes. In a later tutorial, you will learn to run an A/P aging report, which depends upon all bills being entered.
By entering bills in QuickBooks and paying them as close to the due date as possible without being late, you will have better control over your cash flow. Cash flow is often a problem for small businesses, and better control of your cash flow is a major benefit of a good bookkeeping system like QuickBooks Online.
How to Enter Bills in QuickBooks Online
Prior to entering bills, it is important to set up your vendors and set up your product and services items. The information contained in these components will flow automatically to the create bill screen and populate much of the required information automatically. However, you will have the opportunity to add new vendors and new products and services items as you create bills.
1. Navigate to Enter Bills
Click New at the top of the left menu bar and then select Bill under Vendors in the second column:
2. Enter Bill
QuickBooks Online will display a screen to input the bill information. The actual fields that appear for your company will depend on your choices when you set up your advanced settings:
The information to create a bill is very similar to the information needed to create a check, as you learned in the previous tutorial.
A. Vendor: Choose the vendor that sent you the bill or choose Add new to set up a new vendor. Once you select a vendor, the fields for Mailing address and Terms will populate automatically.
B. Bill date: Enter the invoice date from the bill. The due date is determined by applying the payment terms to the invoice date, so the bill date must be the invoice date and not the date the bill was received or entered.
C. Due date: The due date should calculate automatically based on the terms and bill date, but I recommend verifying the calculated date matches any due date shown on the bill.
D. Bill no.: Enter the bill or invoice number from the vendor’s bill. This will be very helpful if you need to contact the vendor with questions about the bill.
Avoid entering bills twice: QuickBooks Online will provide you a warning message if you try to enter the same bill twice based on the vendor name and invoice number. Therefore, by providing the invoice number, you can avoid duplicate entries.
E. Category: Expenses not billed to customers should be assigned to a category. Select the category from the drop-down list or click Add new to set up a new account.
F. Description: Provide a description of the expense.
G. Amount: Enter the amount of the expense.
H. Billable: Place a checkmark here to make the expense billable to the customer. However, the better way to handle billable expenses is to assign them to product or service items instead of a category.
I. Markup %: If you wish to bill the customer more than the actual expense, enter a markup percentage here.
J. Tax: Place a checkmark here if you are required to collect sales tax when the expense is billed to the customer.
K. Customer/Project: Select the customer/project that you wish to bill the expense. If it is a new customer or project, select Add new to set up a customer/project.
L. Product/Service Item: Purchases of items you will sell to customers must be assigned to an inventory item. Services and expenses billed to customers must be assigned to a service item. Select a product/service item or click Add new to set up a new product/service item. Once you select a product/service item, the fields for Description, Rate, Billable, Markup%, Tax, and Class will automatically populate.
M. Qty: Enter the quantity of goods or hours of services purchased. After you enter quantity, the amount will calculate automatically as quantity times rate, and the sales amount will calculate as amount times markup percentage.
N. Customer/Project: Choose the customer or project to bill the item or select Add new to create a new customer or project.
When you are finished inputting the required information, click the green Save and close button in the bottom right-hand corner.
3. Review Bills
After entering a bill, you can verify the bill is correct by navigating to the Vendor center. Hover over Expenses in the left menu bar and then click Vendors:
In the vendor center, scroll down to the vendor for which you entered a bill. The Open Balance column for that vendor reflects the amount of all outstanding bills:
To see the detail of the total bills outstanding, click on the vendor’s name:
The bill you just entered should appear in the vendor’s transaction list.
Congratulations on another completed tutorial in our QuickBooks Online Training Course. You can now enter vendor bills as you receive them. The next tutorial in our QuickBooks Online Training Course is How to Pay Bills, where you will learn how to pay bills by either printing checks or making electronic payments.