As mentioned in my last blog that covered “QuickBooks & Common Deposit Mistakes”, I’m a QuickBooks ProAdvisor and I assist my clients with fixing discrepancies. Another area that I get asked about often has to do with expenses. When do you use a check? When do you use an expense? What about vendor bills? Here are some common mistakes I’ve encountered and how to fix them.
Using a Bill and a Check
If you plan to enter vendor bills, it can certainly be a helpful function to utilize. Tracking upcoming bills due and how much is owed can be of great benefit when planning for future cash outflows. It is imperative though, to make sure you are not duplicating the bill when you cut a check.
When you are ready to pay a bill that has already been entered, you will likely pay one bill or pay an entire batch. If you are paying only one, go to the bill and click on “make payment” in the upper right-hand corner (Figure 1). Choose the payment method from the drop-down menu next to the Vendor name and then click “Save and Close” at the bottom. From here you can complete the “Print Checks” step.
If you are doing a batch of bill payments, click the “Plus” icon at the top right and choose “Pay Bills.” Here you can select multiple bills to pay that have already been entered (Figure 2). Finish by click “save and Print” in the lower right corner and print the batch of checks.
Either of these methods will properly record the bill (expense) and subsequent payment. The common mistake is posting a bill and then subsequently posting a check, without using the Bill Payment step. The expense will be recorded once on the bill and once on the check. This will also lead to showing bills an unpaid even after you have paid them.
Let’s say, for example, that our client Sue entered the PG&E bill in Figure 1 and then also posted the check in Figure 3. If Sue were to go to PG&E in her vendor list, see would see that the bill was unpaid. To fix this, Sue must go to the check and add the bill to it. Notice in Figure 3 on the right-hand side there are unpaid bills listed. Click on “Add” and then the bill will appear in the check detail. If the check amount defaults to $0.00 simply change it back to the amount the check was written for.
You can record a check directly to an expense, like was done in Figure 1. Just be sure that you have not already posted a bill for that item. These same steps apply to credit card expenses and bill payments as well.
These screen shots were taken using a sample company in QuickBooks Online, so QuickBooks Desktop may look slightly different. If you’d like personalized help with fixing your expenses, please contact me HERE and we can set up a one-on-one meeting. If you have another expense issue you’d like me to delve into in a future blog, please leave it as a comment below.