It’s important to keep your QuickBooks data accurate so that you can use it to run your business effectively. There are certain situations where you pay an expense but may want to log that expense to a previous time period.
In today’s episode, Bernard Roesch explains situations of when you may need to do this, and how to log expenses to previous time periods in QuickBooks.
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Why log expenses to a previous time period in QuickBooks?
There are many reasons why you might need to log expenses to previous time periods in QuickBooks, but we will use a simple example in this episode. Assume that you are working with a vendor that typically bills you in the month that the service occurs. For some reason, this vendor bills you the following month, and you pay the bill in that month. If you simply log the expense within QuickBooks, then your monthly expenses will not be similar month to month. Ideally, you want to have the expense logged in the month that the service occurred, so that your monthly expenses are similar month to month.
How to log expenses to a previous time period in QuickBooks?
There are a few options of logging expenses to a previous time period in QuickBooks. While you could simply change the vendor bill date from the date they billed you to the date that you want the actual expense logged, this is not best practice. It does accomplish your goal of moving the expense on your reports into the previous time period, but it’s not accurate since that’s not when the transaction actually happened on your bank statement. Ideally, you should leave the bill as is, with the actual dates of the bill, and use the QuickBooks journal entry process to move the expense for reporting purposes.
The first step to do this is to enter a journal entry to log the expense to July. Second, you would enter another journal entry as a liability to owe money to the consultant. Both of these would be in the time period where the service occurred. In this case, we’ve been using the month of July. When you actually enter the bill in August and pay the bill, you should log the payment against the liability owed to the consultant, not as a typical expense. This will accomplish the goal of having the expense be logged in July, but having the actual bill be paid appropriately according to the dates the bill was paid.
Need help logging expenses to a previous time period in QuickBooks?
If you need help configuring this process for a specific set of transactions or as a recurring routine in your business, contact Bernard today. Although the steps in this episode sound complicated, this is something that is quite simple to set up once you have seen it occur with an expert’s guidance.
You can also visit MissionBusinessPodcast.com for more insights that Bernard has been sharing with us in the previous episodes.