How to create payments to an expense account
leander
Member Posts: 5
I have rental apartments that I pay for oil and then tenants reimburse me. This reimbursement is not "income." In quickbooks I could always take payemtns to an expense account. In wave, this doesn't seem possible. Maybe I'm missing something? Or maybe I've been doing his wrong all along?
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Hi @leander! Thanks for reaching out. We have a guide guide on accounting for reimbursements, but it is for the scenario where an employee made a purchase for a business and the business owes the employee. In your case, the tenants owe you. To make sure I'm on the same page I have a few questions to start with. How do you have the account set up in Wave currently for 'Oil'? Is it under 'Expenses' in your Chart of Accounts page? When you make a payment for oil do you categorize it to the expense account? Let us know!
Basically, for reasons I won't go into, the oil company delivers oil and bills us directly, then tenants pay for the oil. So the oil payment from the tenant should not be counted as "income" but should be applied to the "utilities" account. In Quickbooks, I could apply inflow and outflow of $ to a particular account (also useful for cancelled charges, etc.) In Wave, I can't figure out how to account for the $ being paid by tenants for utilities.
Hi @leander First off, in the chart of accounts, set up a liability account called "Due to Oil Company" or something similar. This will act as the account that stores what you owe to the company when your tenants pay you.
When one of your tenants does pay you through Wave's invoice, it automatically attributes this amount to an income account that you have set up. Moving forward, because this happens automatically, add an expense transaction (the amount paid towards oil) in the liability account that you just created and categorize it as "Refund for Income," then selecting the income account it was credited to when it was originally paid. Your income will be decreased by that amount, and the amount of the liability (money due to the oil company) is increased to what is actually owed.
When you do actually pay the oil company, you can categorize the payment as a transfer to the liability account to pay off the balance owed.
This is helpful, except the Oil company bills us directly via CC and then we have to pay it off from funds from the tenant. I think I can still set it up as you mention. I'm setting up "Oil Payments" in "Loan and Line of Credits" category.
...in fact... ...actually...
It seems like an easier way to do this is to put expenses charged by oil company under "Utilities - Oil" and then categorize payments from tenant as "Refund for Utilities- Oil".