Thank you, @AlexL that was helpful! But it leads me to another question: Reimbursed Expenses are an income category so when I look at Reports, and specifically Profit & Loss, they are considered profit. This seems odd to me.
For example, I drive 100 miles for a client and bill them for mileage at $.50/mile. When they pay me $50 for mileage, should that really be considered profit?
Or, let's say I invoice a client for a photo shoot (I'm a photographer) for $1,300 with 2 line items--Photography Fee for $1,000 and a Photo Assistant for $300. The client pays me $1,300 directly and I pay the assistant $300. Should that $300 I'm paid from the client really count towards my profit?
In each of these cases, do I need to be making a journal transaction for those reimbursed expenses? E.g. I have $300 income (reimbursable expense) for the photo assistant on an invoice--do I also need to make a journal transaction for the expense? That way the income (profit) and expense (loss) would cancel each other out on my P&L? For these examples, I don't usually make a journal transaction for the expenses--I just bill for them in my invoices. So maybe this is my issue?
Also, how does COGS fit into this? Let's use the above example of the photo assistant but instead this time I just bill the client a flat $1,300 with no line item for the assistant. Would I then make a journal transaction for $300 for the assistant as a Subcontracted Service under COGS?
Thank you so much for your help and patience with us accounting greenhorns!
@AlexL already done, but how do I place it in my invoice? Can you please add screenshots with a step by step of what happens once I have properly categorized the expenses in transactions?
If recorded correctly, your reimbursed expenses should not appear on your profit and loss report. If they are appearing on your Profit and Loss report, this is most likely occurring because the initial expense transaction wasn't recorded in your Wave account (as outlined in step 2 under the second header) to offset the "income". Essentially the income that you get here is not really income since you are just getting reimbursed for an expense that you incurred. It should not show up on your Profit and Loss as income. If you follow this articles workflow, you would see that on your "Account transactions (general ledger) report, the balance for the account would eventually be 0 since you are always getting reimbursed on the expense. Below I attached a screenshot for reference:
When it comes to allocating your income to a contractor (your assistant), since we here at Wave support are not Accountants, I recommend reaching out to a professional CPA to help you record this so your books are accurate. If you are getting the funds directly and then paying them, then you will most likely have to record this as income from what I understand.
When adding your reimbursable expense item line to your invoice (if you haven't already, you will need to add this as a product/service), make sure the product/service has the "Reimbursed Expense" account selected as the income account. When this is done, and your invoice gets paid, it will zero out your Reimbursed Expense account.
Hello, I have recorded my expenses as "Refund for Reimbursed Expenses" and also assigned them to a customer (should I not do that?) -- and yet they do not show up in the list of items for me to choose on my invoice. In your last comment to @franmorfini were you saying that we need to record all reimbursable expenses both as expenses in Accounting > Transactions AND also make each one a Product & Service (Sales > Products & Services) manually ?? Does this mean I'm manually entering expenses twice, just to add them to an invoice ?
The purpose of Automation is to make work easy, effortless and serve the user. Instead, the user is now serving the automation, because the process was not designed thoughtfully, or there were other limitations.
The invoice should be a draft.
We should be able to add Expenses to the invoice directly from the downloaded bank statement.
I'm not using Wave for invoicing, so should I expect this process to work the same way? I'm tagging expenses I incur on behalf of clients as expenses in the Transactions view, and I just converted the Reimbursement account to Other Income. The reimbursements are still appearing under income on my P&L and the expenses are showing up alongside other expenses. Should I just plan to point this out to my accountant when I do taxes next year? Do the expenses offset the reimbursement for tax purposes anyway?
If I understand your post correctly, it sounds like there is some confusion occurring around step 3. When you created your reimbursable expense account on your Chart of Accounts page, did you add it as your product/services income account on your invoice?
This workflow is specifically intended for reimbursable expenses on invoices. If you are looking to account for traditional reimbursements, this workflow may suffice. Otherwise, as much as we try to help answer every question we get, this one may be better suited for an accounting professional. Our support team is trained to help you find the best way to use Wave, but this is a bit outside of what we can advise on.
You can also see what other entrepreneurs have done to solve a similar problem, or find an accountant near you in our community forum.
Thanks for sharing your screenshot with me. That's odd. I'm not seeing the same behaviour on my end after trying it in my test account. If you are still experiencing this issue, I suggest actioning some basic browser troubleshooting steps.
Yes, I've done this and used different browsers. It's not a browser issue. What's the next step for figuring out this issue?
Could you show me what I should be seeing when you add your reimbursable expenses to an invoice? Where do they come up?
I think there may be some confusion on how to record reimbursements here! To clarify, the reimbursed expense transactions won't appear when you're adding the item to the invoice. What we're doing here is adding a product line to the invoice, to record the expected income to the reimbursement account. Then, when the invoice is paid, the actual income will be recorded to this reimbursement account.
Here is a screenshot from my test account of what you should see when adding these expenses to an invoice:
The link to the full article on the very first page no longer appears to be working. I keep getting an error and have tried it on my computer and mobile device.
Comments
Thank you, @AlexL that was helpful! But it leads me to another question: Reimbursed Expenses are an income category so when I look at Reports, and specifically Profit & Loss, they are considered profit. This seems odd to me.
For example, I drive 100 miles for a client and bill them for mileage at $.50/mile. When they pay me $50 for mileage, should that really be considered profit?
Or, let's say I invoice a client for a photo shoot (I'm a photographer) for $1,300 with 2 line items--Photography Fee for $1,000 and a Photo Assistant for $300. The client pays me $1,300 directly and I pay the assistant $300. Should that $300 I'm paid from the client really count towards my profit?
In each of these cases, do I need to be making a journal transaction for those reimbursed expenses? E.g. I have $300 income (reimbursable expense) for the photo assistant on an invoice--do I also need to make a journal transaction for the expense? That way the income (profit) and expense (loss) would cancel each other out on my P&L? For these examples, I don't usually make a journal transaction for the expenses--I just bill for them in my invoices. So maybe this is my issue?
Also, how does COGS fit into this? Let's use the above example of the photo assistant but instead this time I just bill the client a flat $1,300 with no line item for the assistant. Would I then make a journal transaction for $300 for the assistant as a Subcontracted Service under COGS?
Thank you so much for your help and patience with us accounting greenhorns!
@AlexL already done, but how do I place it in my invoice? Can you please add screenshots with a step by step of what happens once I have properly categorized the expenses in transactions?
Hey there @jstuk !
If recorded correctly, your reimbursed expenses should not appear on your profit and loss report. If they are appearing on your Profit and Loss report, this is most likely occurring because the initial expense transaction wasn't recorded in your Wave account (as outlined in step 2 under the second header) to offset the "income". Essentially the income that you get here is not really income since you are just getting reimbursed for an expense that you incurred. It should not show up on your Profit and Loss as income. If you follow this articles workflow, you would see that on your "Account transactions (general ledger) report, the balance for the account would eventually be 0 since you are always getting reimbursed on the expense. Below I attached a screenshot for reference:
When it comes to allocating your income to a contractor (your assistant), since we here at Wave support are not Accountants, I recommend reaching out to a professional CPA to help you record this so your books are accurate. If you are getting the funds directly and then paying them, then you will most likely have to record this as income from what I understand.
Hey there @franmorfini !
When adding your reimbursable expense item line to your invoice (if you haven't already, you will need to add this as a product/service), make sure the product/service has the "Reimbursed Expense" account selected as the income account. When this is done, and your invoice gets paid, it will zero out your Reimbursed Expense account.
Hello, I have recorded my expenses as "Refund for Reimbursed Expenses" and also assigned them to a customer (should I not do that?) -- and yet they do not show up in the list of items for me to choose on my invoice. In your last comment to @franmorfini were you saying that we need to record all reimbursable expenses both as expenses in Accounting > Transactions AND also make each one a Product & Service (Sales > Products & Services) manually ?? Does this mean I'm manually entering expenses twice, just to add them to an invoice ?
The purpose of Automation is to make work easy, effortless and serve the user. Instead, the user is now serving the automation, because the process was not designed thoughtfully, or there were other limitations.
I'm not using Wave for invoicing, so should I expect this process to work the same way? I'm tagging expenses I incur on behalf of clients as expenses in the Transactions view, and I just converted the Reimbursement account to Other Income. The reimbursements are still appearing under income on my P&L and the expenses are showing up alongside other expenses. Should I just plan to point this out to my accountant when I do taxes next year? Do the expenses offset the reimbursement for tax purposes anyway?
Hey @moohappy !
If I understand your post correctly, it sounds like there is some confusion occurring around step 3. When you created your reimbursable expense account on your Chart of Accounts page, did you add it as your product/services income account on your invoice?
Hello @CJLengua !
This workflow is specifically intended for reimbursable expenses on invoices. If you are looking to account for traditional reimbursements, this workflow may suffice. Otherwise, as much as we try to help answer every question we get, this one may be better suited for an accounting professional. Our support team is trained to help you find the best way to use Wave, but this is a bit outside of what we can advise on.
You can also see what other entrepreneurs have done to solve a similar problem, or find an accountant near you in our community forum.
Yes, I've done this and used different browsers. It's not a browser issue. What's the next step for figuring out this issue?
Could you show me what I should be seeing when you add your reimbursable expenses to an invoice? Where do they come up?
Hey @aderkon ,
I think there may be some confusion on how to record reimbursements here! To clarify, the reimbursed expense transactions won't appear when you're adding the item to the invoice. What we're doing here is adding a product line to the invoice, to record the expected income to the reimbursement account. Then, when the invoice is paid, the actual income will be recorded to this reimbursement account.
Here is a screenshot from my test account of what you should see when adding these expenses to an invoice:
The link to the full article on the very first page no longer appears to be working. I keep getting an error and have tried it on my computer and mobile device.