and now we will learn how to create markups for reimbursable expenses a
markup is the extra amount you charge the client above your cost for the expenses that you put
on an invoice as billable you can set a default markup in the Preferences window as a percent of
the cost you must choose an account to record the mark-up and of course this is an income
account because the extra amount above your cost is income to you don't worry you can change the
mark-up directly on the invoice at the moment that you build a client for the reimbursable
expenses let's change the default to a 25% markup and create an account called profit from me umber
scible expenses from the main menu click Edit preferences scroll all the way down to time
and expense click company preference and we will click default markup percent we will change from
0 to 25 and leave the percent symbol there now the default markup account is the income
account that the excess goes into we have not created it yet but we can create it now click
the pull down arrow and you get your entire chart of accounts and instead of opening the
chart of accounts window we can just scroll all the way up click add new and notice QuickBooks
knows this is an income type of account and we will type in profit from reimbursable expenses
okay click save and close and now we have the account that we just created you could go to
the chart of accounts window in the list menu or you could do it this way as long as it's an income
type of account it doesn't really matter the name now click OK and congratulations you're ready to
charge extra to your customers for the billable expenses to see if it works we have to record
a couple of billable expenses and then put them on an invoice for example let's record the March
12th check to Staples check number 4 for supplies expense $100 billable to the Mockingbird Lane job
from the main menu click banking write a check QuickBooks remembers its check number 4 let's
go forward to March 12 of 2017 ok the I believe the vendor was Staples okay don't worry that we
have an open bill just click continue writing a check the money amount is $100 so we have
supplies expense for $100 and then the job is the Mockingbird Lane job and we'll mark it as billable
we'll click Save and close and we'll record the next expense so let's record the next one March
14th received bill number 8 1 8 1 from Rex repair for a repair job billable to the Mockingbird Lane
job $300 from the main menu click vendor and your bill now this is March 14th the bill number is 8 1
8 1 it's for rex repair repair expense i believe the money amount was $300 and of course this is
the Mockingbird Lane job and have to check the billable box because we never switch the default
back when we click Save and close we can open the unbuilt cost by job and we can see now we
have these two unbuild costs waiting to be put on an invoice just like the previous video now
in a moment we're going to put these expenses on an invoice but please note when we build them the
expenses will become zero instead of being added to income that's because we never setup income
accounts for these expenses even though we change the default in the Preferences window now let's
imagine on March 17 we build Braun company for an additional 10% of the Mockingbird Lane job we
will include all billable expenses we open the invoice window change the date to March 17th
choose the Mockingbird Lane job of course here's the estimate so we click on it click OK just like
in the earlier videos we create an estimate an invoice for 10% of the estimate and when
we click OK we get the warning message that we have billable items for this job click OK click
expenses now let's put both of these billable items on this same invoice click to select them
in the left margin by placing the checkmark notice the profit from reimbursed expenses is here as an
income account reminding us where it will go click OK and if you scroll all the way down notice what
QuickBooks put it put each individual expense and you could type the description on the invoice if
you want demolition askew yashi this was supplies you don't have to but your client might want you
to and this is dem coalition and then of course here's the total reimbursable expenses and here's
the markup and here's the total that the client actually has to pay in this case five hundred
additional dollars or excuse me one hundred additional dollars over and above what we paid
for these services when we click Save and close oh excuse me when we click Save and close we can open
the profit and loss by job and you can see aha income from reimbursable expenses has shown up for
the first time in this report for the Mockingbird Lane job a hundred dollars in our second example
we will use the two expenses that we created income accounts for so let's do the first
one March 20 paycheck number five to Gregg on for demolition $200 for the Mockingbird Lane job I'll
be moving a little more quickly in this case from the main menu click banking write a check confirm
that QuickBooks remembers it's checked number five the date we'll have to put forward to March
20 now we'll choose grec on as the vendor and QuickBooks remembers this is demolition expense
the money amount is $200 the only additional step now is to put the Mockingbird Lane job and make
the checkmark here so that QuickBooks knows it's billable click Save and close and now let's enter
the second one March 22 received bill number nine one nine one from UPS for delivery billable to the
Mockingbird Lane job so vendor enter bill March 20 to the vendor is UPS the expense is delivery
the bill is nine one ninety one for $600 and of course now we have to put the Mockingbird Lane job
and mark billable save and close now you should know that when we bill them the expenses will
stay and the amount paid to the vendor will be in their income accounts we set up income accounts
for these expenses after we change the default preference in the previous video so because
demolition and delivery have their own income accounts and because we change the preferences
in the previous window they will not be removed from the job costing report they will simply be
added to income and additionally 25% of that will be added to the profit from reimbursed expenses
let's take a look at what happens on March 25th we build the brown company for an additional 10% of
the Mockingbird Lane job we're going to include all billable expenses but the mark-up will only
be 250 by default or 200 by default we are going to change it to 300 at the moment that we make
the invoice we open the invoice window the date is March 25th the job is Mockingbird Lane of course
this is the estimate now we're doing an additional 10% just like we did in previous videos we are
going to select the outstanding billable time and when we click here we will choose both of these
click in the left margin to place both of these billable expenses on the invoice click OK now
when we scroll down we can see that this was for the demolition and this was for the delivery and
the total mark-up is $200 it's nice to describe it on the invoice demolition and this is for delivery
you don't have to but it's nice to describe it for your client here's the total reimbursable
expenses here's the $200 twenty five percent markup which means a thousand dollars has been
added to the invoice as a result now you have the physical ability to change the default markup from
two hundred to three hundred at the moment that you record this invoice now when we click Save
and close okay this default keeps coming on save and close we open the profit and loss by job and
we can see profit from reimbursable expenses for the Mockingbird Lane job is four hundred dollars
notice the demolition and delivery demolition and delivery stayed here in the brown company
Mockingbird Lane job and of course they have been added to delivery fees and demolition fees for the
Mockingbird Lane job and only the excess amount was put into profit from reimbursable expenses
you can double click that profit right now and see it comes from two invoices the previous
invoice the mark-up for the expenses was only one hundred and in this invoice march twenty second
the one that we just made the profit from the reimbursable expenses on this particular invoice
was three hundred dollars because that's what we changed it to at the moment we made the invoice