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Accounting | How To

How To Customize Expense Settings in QuickBooks Online

Tim Yoder

REVIEWED BY: Tim Yoder

Tim is a Certified QuickBooks Time (formerly TSheets) Pro, QuickBooks ProAdvisor, and CPA with 25 years of experience. He brings his expertise to Fit Small Business’s accounting content.

 

WRITTEN BY: Mark Calatrava

Published May 11, 2022

Mark has researched and reviewed accounting software at Fit Small Business since 2019 and has developed an extensive knowledge of accounting software features and how unique business needs determine the best accounting software.

Published May 11, 2022

This article is part of a larger series on Accounting Software.

Learn More With Our QuickBooks Online Course
Explore the chapters in the guide.
  1. How to Set Up QuickBooks Online
  2. Part 1: Setting Up QuickBooks
    1. How to Set Up Company Information
    2. How to Customize Invoices, Sales Receipts & Estimates
    3. How to Set Up Invoices, Sales Receipts & Estimates
    4. How to Set Up Products and Services
    5. How to Set Up Messages
    6. How to Set Up Statements
    7. How to Set Up Expenses
    8. How to Set Up Advanced Settings
  3. Part 1: Setting Up QuickBooks (Cont.)
    1. How to Import Bank Transactions
    2. How to Import Credit Card Transactions
    3. How to Set Up Multiple Users
    4. How to Set Up the Chart of Accounts
    5. How to Set Up the Products and Services List
    6. How to Set Up Customers
    7. How to Set Up Vendors
  4. Part 2: Managing Sales and Income
    1. How to Create Estimates (Quotes or Bids)
    2. How to Create and Send Invoices
    3. How to Receive Payments
    4. How to Create & Send Sales Receipts
  5. Part 3: Managing Bills and Expenses
    1. How to Write & Print Checks
    2. How to Enter Bills
    3. How to Pay Bills
  6. Part 4: Managing Banking Transactions
    1. How to Enter Banking Transactions Manually
    2. How to Manage Downloaded Banking Transactions
    3. How to Record Bank Deposits
    4. How to Transfer Funds Between Bank Accounts
    5. How to Handle Bounced Checks From Customers
    6. How to Process Bank Reconciliation
  7. Part 5: Managing Business Credit Card Transactions
    1. How to Enter Business Credit Card Transactions Manually
    2. How to Manage Downloaded Business Credit Card Transactions
    3. How to Enter a Credit Card Refund
    4. How to Reconcile Business Credit Card Accounts
  8. Part 6: Managing Credit Card Sales
    1. How to Manage Credit Card Sales With QuickBooks Payments
    2. How to Manage Credit Card Sales With a Third-party Credit Card Processor
  9. Part 7: Set Up and Manage Payroll
    1. How Set Up and Run Payroll
    2. How to Manage Payroll Tax
    3. How to Add Historical Payroll Data
    4. How to Set Up Automatic Deposits
    5. How to Print Payroll Checks
    6. How to Run Payroll Reports
    7. How to Reconcile Payroll Liabilities
  10. Part 8: Reporting in QuickBooks Online
    1. How to Run a Profit and Loss Statement
    2. How to Run a Balance Sheet Report
    3. How to Run a Statement of Cash Flows
    4. How to Run an A/R Aging Report
    5. How to Run an A/P Aging Report

In this tutorial, we’ll teach you how to customize the expense settings in QuickBooks Online to match your company’s needs. Among other options, we’ll show you how to mark up expenses automatically and designate them as billable so that they can be charged to customers.

To get the most from this tutorial, we recommend following along in your own QuickBooks account. If you don’t yet have QuickBooks Online, our highest-ranked small business accounting software, you can either sign up for a 30-day free trial or get a 50% off for the first three months.

Visit QuickBooks Online

This tutorial is part of our series of Free QuickBooks Tutorials. You can either watch the video below or read the illustrated step-by-step instructions that follow.

Step 1: Navigate To Account and Settings

Click on the gear icon in the upper right corner of your QuickBooks Online screen and select Account and settings under Your Company in the first column, as shown below.

Navigating to Account and Settings in QuickBooks Online.

Navigate to Account and settings in QuickBooks Online


Step 2: Select Expenses

Next, click on Expenses in the left menu bar to reveal the three categories of expense settings: bills and expenses, purchase orders (POs), and messages.

Expense settings in QuickBooks Online.

Expense settings in QuickBooks Online


Step 3: Customize Bills and Expenses

Let’s start by customizing your bills and expenses by clicking anywhere in the Bills and expenses section. The Bills and expenses section includes the following fields:

Bills and expenses settings in QuickBooks Online with labeled.

Bills and expenses settings in QuickBooks Online

A. Show items table on expense and purchase forms: This setting must be turned on to assign expenses and purchases to “items” instead of directly to expense accounts. Items include the products and services that you sell to customers, so this option must be turned on if you have inventory. The use of items is a powerful feature of QuickBooks, so we highly recommend this option be activated.

B. Show Tags fields on expense and purchase forms: Turn this on if you want to use custom tags to track anything of interest across expense transactions.

C. Track expenses and items by customer: This should be turned on 1) so that you can assign expenses and items purchased to specific clients, and 2) if you want to bill customers for expenses incurred on their behalf.

D. Make expenses and items billable: This feature will provide a checkbox next to each expense and item on expense forms, allowing you to indicate that the expense or item should be billed to the client. Marked expenses and items will be available to include next time you generate an invoice for that customer.

E. Markup with a default rate of: If you’ve decided to provide an option to bill expenses and items to clients, you can choose a default markup rate. If you leave this box unchecked, the expense or item will be billed to the customer at the actual cost. You can change the markup when creating an invoice.

F. Track billable expenses as income: There are two methods of accounting for the reimbursement of billable expenses. If you leave this box unchecked, the reimbursement will directly offset the original expense. If you check the box, the reimbursement will be recorded as income. Any markup of expenses will always be shown as income.

If you decide to track billable expenses as income, you must choose whether you want all billable expenses to be tracked in a single account or multiple accounts.

  • In a single account: All billable expenses will be tracked in an income account named “Billable Expense Income.”
  • In multiple accounts: A checkbox will be added to every income account information screen, so you can indicate which income accounts should be available to use for billable expense income.

G. Charge sales tax: If you’re required to collect sales tax from customers on billable expenses, check this box. Invoices for billable expenses will then include a field for sales tax.

H. Default bill payment terms: Most vendors will provide you with the payment terms for their invoices, which can be entered either in the vendor information screen or as the bill is input. The default payment term entered here will apply to bills for which the vendor hasn’t specified payment terms. By setting up payment terms in QuickBooks, you’ll receive reminders when a bill is coming due.

When you have customized all of your options under Bills and expenses, click the green Save button.


Step 4: Customize PO Settings

Click on Purchase orders to open the various options available.

Purchase order settings in QuickBooks Online.

Purchase order settings in QuickBooks Online.

A. Use purchase orders: POs can be generated in QuickBooks and then emailed to vendors or printed. They can be converted to bills once the order is received. Toggle Use purchase orders on to enable POs for your company.

B. Custom fields: You can add up to three custom fields to print on your POs. This option is great if your vendors request specific information excluded from the QuickBooks PO.

C. Custom transaction numbers: If this box is unchecked, QuickBooks will automatically generate PO numbers. By checking the box, you can manually input PO numbers when they’re created. This option is nice if you want to match your PO to a vendor’s system.

D. Default message on purchase orders: You can provide a default message that will print on all POs. This message can be changed and customized when you create a PO.

When you’re satisfied with your choices, click the green Save button.


Step 5: Customize the PO Email

The last section of expense settings allows you to design a default email message to accompany POs emailed to vendors. Click on Messages to get started.

Short video on Purchase order email message in QuickBooks Online.

Purchase order email message in QuickBooks Online

Customize the greeting, subject line, and message you wish to send with all POs. You can always change the email message when you send a PO. For instance, you might add a personal note when you send a PO to a long-time vendor. If you don’t like the changes you’ve made, click the green Use standard message button to return to the original settings. The last option is to have a copy of the email sent to the QuickBooks master administrator.

When you’re done customizing your PO email, click the green Save button.


The Importance of Customizing Expense Settings in QuickBooks Online

One of the primary reasons small businesses use QuickBooks is to track expenses. By customizing your expense settings, your business can do more than track total expenses. You can track expenses by customer to analyze how your profit varies across customers and even bill customers for expenses incurred on their behalf, including a markup of expenses if you choose.

Wrap Up

You have now learned how to customize your expense settings in QuickBooks Online. The next tutorial in our QuickBooks Online Training Course is How to Set Up Advanced Settings in QuickBooks Online, which will cover a wide array of options that will fine-tune your company file to get the most out of QuickBooks.

← Previous Tutorial

Free QuickBooks Online Tutorials

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About the Authors

Tim Yoder

Find Timothy OnLinkedIn

Tim Yoder

Tim worked as a tax professional for BKD, LLP before returning to school and receiving his Ph.D. from Penn State. He then taught tax and accounting to undergraduate and graduate students as an assistant professor at both the University of Nebraska-Omaha and Mississippi State University. Tim is a Certified QuickBooks Time (formerly TSheets) Pro, QuickBooks ProAdvisor for both the Online and Desktop products, as well as a CPA with 25 years of experience. He most recently spent two years as the accountant at a commercial roofing company utilizing QuickBooks Desktop to compile financials, job cost, and run payroll.

Mark Calatrava

Find Mark OnLinkedIn

Mark Calatrava

Mark Calatrava is an accounting expert for Fit Small Business. He has covered more than 50 accounting software for small businesses and niche industries and has developed an in-depth knowledge of the important features of accounting software and how the importance of these features vary by business.

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