Once you know what you're spending on each project, you'll know which types of clients and projects bring you the highest profit. You'll also know where you might be able to cut costs.

In this article, we'll cover:

1. Tracking Expenses in QuickBooks
2. Billing Expenses Back to Clients
3. Tracking Expenses as Both Income and Expenses
4. Gaining Insight by Using Reports

1. Tracking Expenses in QuickBooks
   

   Before you can charge costs back to your clients, you have to first enter the costs into QuickBooks as Bills or Mileage, and associate them with a client or project. Then, when you invoice, it's easy to charge back the cost on the invoice.

   Assign costs, time, or mileage to a client or project
   
   For billable time: Record the hours spent on the project, using either a weekly timesheet or a single activity entry. Assign the hours to the customer or project. QuickBooks will automatically mark each entry as billable in the last column on the form.

   For project-related purchases: Use a bill, check, or credit card charge to record the purchase in QuickBooks. On the Items tab, enter each item or service you purchased. In the Customer:Job column, be sure to assign each item or service to the client or project.

   For mileage: Record the mileage in the Enter Vehicle Mileage window. If you want to change the amount for this expense (to charge the customer more than the standard rate), you can change it on the invoice.

   For other expenses: For miscellaneous expenses, such as freight charges, and postage, use a bill, check, or credit card charge to record the expense. On the Expenses tab, enter each expense. In the Customer:Job column, be sure to assign each expense to the client or project.

   Note: If you want to track your overhead costs so that they also show up on your reports, you can do it by assigning them all to a fake Customer:Job called "Overhead."

   
   
2. Billing Expenses Back to Clients
   
   

   1. From the Customer Navigator, click Create Invoices or Sales Receipts, whichever form you use to track income for your business.

   2. Choose the Customer or Client you're billing.

   3. Click the Time/Costs button on the toolbar that appears across the top of the Create Invoices or Enter Sales Receipts windows. This will bring up the Choose Billable Time and Costs window.
      
      Note: If you haven't assigned bills or mileage to client, you won't see any information here. You must go back to the bill or mileage entry and assign it.
      
      
   4. Choose the appropriate tab for the first kind of cost you want to charge back, Item, Expenses, or Mileage.
   5. Click in the Use column next to each entry you want to charge. (QuickBooks will show a checkmark next to each one that you click.)
   6. Repeat steps 4 and 5 until you've charged all the appropriate expenses back to your customer or client.
   7. (Optional, for expenses only) Add a markup to the expenses you selected.
   8. (Optional, for mileage and time only) Click Options to determine how you want the items to appear on the invoice.
      
      You can combine several time or mileage activities, include descriptions, etc. These options allow you to view the detail in QuickBooks, even if you print the sales form showing only single line items.
      
      
   9. (Optional) If you want the costs you select to appear as a single line item when you print the invoice or sales receipt, select the "Print selected time and costs as one invoice item" checkbox.
      
      When you print the invoice or sales receipt, it'll show one amount (the sum of all the expenses plus any markup). The Description column lists the amount as "Total reimbursable expenses." If you want, you can change this description by editing the onscreen version of the invoice or the sales receipt.
      
      Important: Do this only if you're certain you want the printed invoice to show only the total of the costs (and not a line-by-line listing of each cost). Once you record the invoice or sales receipt, it's difficult to print the costs separately. To go back, you'll need to delete the original expense transaction and then select the invoice column (to the right of the Customer:Job column) on the Expenses or Items tab.
      
      
   10. Click OK to add the costs you selected to the invoice or sales receipt.
   
   
   
3. Tracking Reimbursable Expenses as Income and Expenses
   
   To have reimbursable expenses show up as both income and expenses on your reports:
   1. From the Edit menu, choose Preferences.
   2. Select the Sales & Customers icon, and click the Company Preferences tab.
   3. Select the "Track reimbursed expenses as income" checkbox and click OK.
   4. For each expense account you use for reimbursable expenses:
      • Select the name of the account in your chart of accounts.
      • Choose Edit from the Account menu button.
      • Select the "Track reimbursed expenses in" checkbox.
      • Enter the name of the name of the account you want to use to track the income you receive from reimbursable expenses.
   
   
   
4. Gaining Insight by Using Reports
   
   There are four reports you can use to see your tracked expenses applied to your business profitability.
   
   Expenses by Vendor Summary Report
   As the name implies, this report shows you how much money you paid each of your vendors, for example, sub-contractors or materials suppliers.
   
   
   1. From the Reports window, select Company & Financial.
   2. Choose Expenses by Vendor Summary.
   3. Click OK.
   
   Job Profitability Summary and Detail
   These reports show you how much income you took in for each project, vs. how much in expenses you paid out, giving you your profitability per client and per project.
   
   
   1. From the Reports menu, select Jobs, Time & Mileage.
   2. Choose Job Profitability Summary or Job Profitability Detail.
   3. Click OK.
   
   Job Estimate vs. Actuals Summary and Detail
   This report shows you how well you estimated the costs and revenues for each project.
   
   
   1. From the Reports menu, select Jobs, Time & Mileage.
   2. Choose Job Estimates vs. Actuals Summary or Job Estimates vs. Accuals Detail.
   3. Click OK.
   
   Unbilled Costs by Job
   This report shows you what project-related expenses you've tracked, but not charged back to customers.
   
   
   1. From the Reports menu, select Jobs, Time & Mileage.
   2. Choose Unbilled Costs by Job.
   3. Click OK.