would you like an alternative way of recording billable expenses so that you
don't have to track them to income accounts well then you can record billable expenses
by decreasing the billable expenses when you place them on an invoice for clients
if you have any questions about this topic you can leave them in the comments section below and
i'll do my best to help you and of course if you feel the video helped you i hope you will click
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are two ways that billing a client for job-related expenses could affect our account balances at the
moment that we bill the client we could place them on an invoice that reduces the original expense
or we could place them on an invoice and have them be recorded as an increase to income instead now
this video is about the first choice decreasing billable expenses but you get to choose which
way your quickbooks online records these billable expenses so the way to choose is to click the cog
wheel to open the account settings window then you would click account settings and you would click
this gray expense area here and then you'd be able to open up the area with the pencil tool
once you do that that portion of the account settings window will look like this now notice
by default the check mark is already marked that's the way it was by default but what would happen if
we removed the check mark well if we remove the check mark and then of course you know click on
it to remove it we would click save then we would click done then this would be the behavior when we
pay the behavior would be the same the cash and bank would go down and the related expense that
we paid for would go up exactly the way it did in all prior videos however now that we check the box
when we bill of course accounts receivable goes up because we just sent an invoice to a client
but this time because the check mark is removed the related expense would go down and that's
going to be the difference in behavior when we record this next example when we do this no income
accounts change at the moment we bill instead the expense will go down now before we go ahead
and remove the check mark in the account settings window let's address one little technical point
that i found out about the hard way you see if you already mapped any expense to income accounts
like we did before then unfortunately you must unmap them before we click the check mark
in order to get this feature to work properly so bear with us we click accounting chart of accounts
let's go down to delivery expense edit and let's unmap by removing this check mark save and close
same thing with professional service expense edit and remove the check mark and unmap
the accounts before we change the account settings otherwise it might not work properly and again i
found that from experience so now we can click the cog wheel and go to account settings choose the
ex excuse me choose the expense area click the pencil tool now we will remove this check mark
click save and in the bottom right down here that you can't see click the green done button
now the defaults are changed now we can do our example let's imagine on july 31
we paid 700 to ups for a delivery related to betty boop and we will bill her later
so we know how to record that so let's just go ahead and record that we click new expense
we go back to july 31 of 2021 in our little story
and we are billing who are we billing we're billing
uh ups for delivery or we're getting a bill from ups and then it's for delivery expense
and it's delivery expense in the amount of 700 that relates to betty
and it's billable to betty so all we have to do is click save and close and exactly what we
expected to happen what happened if we look in the trial balance you can see here's delivery expense
you double click and you can see this is the july 31 delivery expense increasing it by seven hundred
dollars and having it become fourteen hundred dollars okay now reports let's look at the
profit and loss by client in this case and when we look at betty what we see is the delivery expense
and we do not see for betty any income from delivery expense we just double click and you'll
see only the delivery expenses that were tracked to betty okay now we can do the second half we
go to the second part of the example and imagine that it's august 1 that we're billing betty for
4 000 in legal fees and we're billing for the july for 31st delivery so what will happen when we bill
well when we send an invoice to a client accounts receivable goes up but the expense that we paid
for will go down at the moment that we bill the client because now that we build the client
the client is now responsible and we our company no longer has that expense so what will be the
results in the trial balance at the moment we record this well delivery expense assuming income
from bill delivery will not change at all because we're not bringing it into an income account and
delivery expense uh will decrease and become 700 because 700 that was there will now be
added to uh will now be removed because the client is now responsible and because we billed for 4 000
more in legal services this goes up to 39 000 and the total is owed and that's why the receivables
account under legal fees is on the debit side so if it's on the debit side it should really
be called legal fees receivable but this will be the final number so we click um new invoice
and we choose the client betty boop we have a billable expense that we click add
and of course the date is august 1 and we go under the billable expense in the next row
and bill for legal services rendered four thousand
okay now when we click save and close we can open the trial balance and see the numbers
are exactly as what we expected income from bill delivery did not change at all but delivery
expense decreased watch we double click and look that was the increase when we recorded it
and the decrease when we build go back to the trial balance to confirm that all the
other numbers are exactly as what we expected and now finally we look at the p l by client reports
now what should we expect on the profit and loss by client we should not see income from
build uh delivery up here and we would not see the full thousand down there we should see
only the three hundred so when we click profit and loss by client and we look in the column of betty
this is only three hundred because it decreased from a thousand when we build it
and there's no income from delivery in the betty section
you