How To Customize Expense Settings in QuickBooks Online

hi this is tim yoder with fit small business today i'm going to show you how to customize your expense settings in quickbooks online this is one of our free 46 quickbooks online tutorials if you prefer written instructions including screenshots you can google fit small business quickbooks online tutorial you may want to follow along in your own quickbooks if you don't already have a subscription to quickbooks online there's a link below this video you can click to sign up for a free 30-day subscription so let's get started customizing your expense settings in quickbooks online so the first thing we need to do is from your dashboard we need to go to your quickbooks online company settings so let's click the cogwheel in the upper right corner and then in the first column under your company let's go to account and settings and then let's go to the expenses in your left menu bar and here are the three sets of options we're going to work with today so bills and expenses click anywhere in this box to open up the options the first option is show an items table on expense and purchase forms so that's if you want to use items versus expenses previous lessons have talked about how to set up items we're going to keep that turned on track expenses and items by customer we're going to keep that turned on this is important if you want to both track expenses for or your profitability by customer as well if if you want to bill customers for the expenses so in addition to having the customers turned on if you want to bill customers for the expenses you're incurring you'll need to turn on this next box make expenses and items billable you can set a default markup rate perhaps you just want to pass through the cost but you may also want to mark it up so here is a default we have a hundred percent you'll be able to change that when you actually enter expenses this box lets you track billable expenses as income i think that looks a little bit odd on an income statement but i'm going to go ahead and check it for now so i can show you what it does and we'll just do it in a single account and then we'll check this to give us the ability to charge sales tax so obviously you're going to have to check with your local taxing authority see if you need to charge sales tax on the markup of expenses and then a default bill payment term so when you enter invoices from your vendors it'll give a default of net 30. of course you need to make sure when you enter the expenses that if it's different from net 30 if the terms the vendor gives you is different than net 30 that you change it to what the vendor actually specifies so that you're not late paying your bills okay so these are a little bit confusing so let's go ahead i want to do an example of setting up some bills and expenses and billing them to customers so you really understand what these options are doing so i'm going to first start by entering an invoice to record the expenses one thing if you're new to quickbooks you may not know you can do i'm just going to go up to the tab here so that i don't lose our spot in the account and settings i'm just going to right click and hit duplicate and i can have multiple tabs open in quickbooks at the same time now if you switch back and forth between tabs you'll need to update the screen to make any changes effective but you can work in multiple screens so that you don't lose your spot pretty cool and you can actually drag this around and if you wanted to you could drag it over put on a different monitor so you can view two screens at the same time a lot of people don't realize that you can do that and now you know okay so this is our duplicate screen so let's get out of accounting settings and let's go to expenses and i'm going to create a new bill so this is an invoice i just received from a vendor okay so let's say we incurred some sort of permit fee so let's find a vendor here that looks like it might charge us a permit fee county of middle field here we go county of middle field everything fills in according to how i set up the customer category details so this is when you do it directly to expense and so let's so what do we got for licenses we'll call it a business license and fees describe it as a permit let's say the amount was a hundred dollars okay oops sorry i closed that field amounts 100 now notice we have a billable column here okay this allows us to make it billable to a particular customer okay so we can pass through the expense on an invoice to a customer now let's flip back to our settings here in our settings make expenses and items billable if this was turned off we wouldn't have any of these options available okay so if you get to enter an expense you decide you want to pass it through to a customer by making a billable if this billable field is not here well this is the problem you don't have billable turned on in your settings okay excellent so we're going to make this billable remember our default percentage is 100 so that's what it's doing automatically let's say in this instance we only want to make it 50. so we can change our default here no problem okay so make that default kind of whatever you normally do but you can change it on every expense transaction if you'd like we're just going to build it to our very first customer erin and if we're keeping track of stuff according to class then we could enter a class here okay there we go so we've entered the expense we're going to mark it up fifty percent okay so let's hit save and close and now we've entered the expense okay now because we've made it billable to customers the invoice here is really easy so we can go sales let's go over to the invoices and we do have other tutorials that will step you through more slowly the process of creating invoices i'm just doing it quickly here trying to show you exactly what these options do in the settings so we're going to create an invoice let's choose that same customer as our very first one aaron fills in all the information because we've already set them up as a customer now this is the important part over here on the right hand side is expenses we can add to this invoice the reason it's showing up here is that when we entered the expense we said bill to aaron okay bill to this customer and so now we can see it shows up as a hundred and fifty dollars the hundred dollars expense plus the fifty percent markup so all we have to do is click add boom okay now it's added uh two lines in our screen here to our invoice the hundred dollar expense and the fifty percent markup now notice it tells us our customers won't see this i doubt you want your customers to see exactly how much you're marking up your expenses if you want we can just do a print here let's do a print preview just so you can see that in fact it does not show the fifty percent markup okay just shows permit hundred and fifty dollars okay good and that's all we've have to do so that's how easy it is to when you incur an expense market is billable give it the customer it includes it in that customer account until you create your next invoice for the customer then you look on the right hand side and it gives you all the expenses that can be added to that invoice pretty cool right okay so in order to do that let's flip back to our settings got to make sure that you have track expenses and items by customer turned on and mark expenses and items as billable turned on okay now let's talk about what this option does so remember i told you i don't really like having this turned on but i'm going to turn it on now it was turned i turned it on so you can see exactly what it does so let's go back over to our other tab and let's look at our income statement this is the only transactions i've had this period so we can see exactly what it did okay um so it showed our oh you know what i hadn't saved the transaction yet that's okay so this shows this is the way i like to show it it shows markup of fifty dollars and it shows an expense of zero because you've had the original expense and then it was reimbursed so the net expense is zero this is how i like to show it and this is how it'll show up when this button is off okay the reason it didn't show up the way i thought it would is i hadn't saved the settings yet if this gets turned on and i'll have to turn it on and then redo both the expense and the invoice so let's not do that but if it's turned on the way this income statement shows up is that it still has a separate line for markup but then it has another line for business expense reimbursements of a hundred dollars and then you come down here and the business license and fees would be a hundred dollars so you'd have 150 of income shown on two different lines and a hundred dollars of expenses for net income of 50. i don't like showing that i think it overstates your gross profit to me it makes a lot more sense to have the income and the reimbursement for the income directly offset each other and then just show the markup as profit okay so that's what that does okay again so i think that's that's what you need to know about those expense options okay hopefully the little example helped you understand what it is you're doing so i'm going to turn this off again i don't like that so let's hit save okay if you want to use purchase orders you can if you decide to use purchase orders if you're trying to use them and you can't find them make sure you come back here you probably have them turned off okay so you can turn on your purchase orders here you can use custom fields up to three of them so approved by is a very popular custom field you can show who approved this purchase order and then you can have a default message on your purchase orders custom transaction numbers if you turn this off quickbooks online will automatically generate your purchase order number if you turn it on it will automatically generate a number but you'll have the ability to override that number with a custom number usually when you do that is when you're trying to match your quickbooks transaction numbers to a separate system so if somehow you have a separate system using purchase orders but you still want to record purchase orders in quickbooks online then you need to turn on custom transaction numbers so you can input the purchase order number and then you can then match it between the two systems okay so let's keep our purchase orders turned on and now our email message to go with purchase orders so when we send a purchase order to a to a vendor so we're ordering materials we're going to send the purchase order to the vendor this is the default message that will go with that emailed purchase order okay pretty straightforward if you use purchase orders you can then once a purchase order is sent and you receive your goods and you receive an invoice you can convert that purchase order to an invoice automatically so that you don't have to duplicate the work that you'd already done setting up the purchase order so some some businesses like using purchase orders sums though that's going to be a personal preference but that's all there is to setting up your expense options in quickbooks online i hope you found this tutorial useful again we have 46 free tutorials if you simply google fit small business quickbooks online tutorials you have a great day and i appreciate your time thank you very much

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