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  #1  
Old 09-24-2007, 02:26 PM
jayjohnson jayjohnson is offline
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How to classify a reimbursable cell phone purchase?

I am a consultant doing providing work for an offshore company. The scope of work required me purchasing and using a cell phone which will eventually be returned to that company. The company is willing to reimburse me for that expense ($300) now.

My questions is: how do I classify this in QuickBooks 2007 (Premier)?

Initially, I thought of checking the preference "Track Reimbursable Expenses As Income", but a cell phone is not considered "expense", but rather "listed property" from the IRS point of view.

So, I am thinking to perhaps treat that as a sale (with no profit). However, I will have to charge some markup for the reimbursement expenses that I am going to incur. But won't this markup considered profit so I will have to pay tax on it?

My goal is that the reimbursement will cancel the expense to a perfect zero. Is this achievable?

If so, how do you propose solving this problem in QuickBooks?

Thanks,
Jay
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Old 09-25-2007, 08:16 AM
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lisa_mn lisa_mn is offline
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I'm not a tax expert, but if you will have to return the phone and you'll be reimbursed, then I don't think there's any reason you need to list it as an asset. The arrangement is clear that you don't own the phone, you're just facilitating the purchase.

I would code it to telephone expense, mark it billable and bill the client.
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Old 09-25-2007, 03:04 PM
jayjohnson jayjohnson is offline
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Thank you, Lisa. What you say makes sense. I hope that the IRS folks have the same sense of common sense.

Jay
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  #4  
Old 09-27-2007, 10:36 PM
jayjohnson jayjohnson is offline
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Smile

Follow up as I learn more about this amazing tool:

That cell phone, when purchased (by credit card), it goes under a new account that I created, named "Reimbursable Expenses" of type "Expenses".

When invoiced (yes, the customer wants an invoice), it is listed as an item of type "Non-inventory Part" under a new account that I created, named "Reimbursements" of type "Other Income".

Does that make sense?

If not, what did I miss?

Thanks,
Jay
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  #5  
Old 09-28-2007, 11:06 AM
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lisa_mn lisa_mn is offline
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Yep, that works fine.

Another way is to skip the item. On the expense entry, mark it billable and put in the customer name.

Then when you invoice the customer, click the time/costs button and pull that expense entry onto the invoice which reduces the expense by the billed amount resulting in a $0 effect for that expense.

just depends on how you want to see it.
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