Quickbooks Travel Expenses: A Step-By-Step Guide

If you're looking to enter travel expenses in QuickBooks, you're probably looking to write them off. Learning how to do this can save your business thousands of dollars each year. To write off a travel expense, the trip must be longer than a day, spent mostly on business, and only include ordinary and necessary expenses. You must also document trip plans in advance.

Ordinary and necessary expenses include transportation, lodging, meals, business calls, and tips. They do not include family travel and lodging costs, entertainment, or unnecessary expenses.

To write off a travel expense, confirm your eligibility, make sure expenses are ordinary and necessary, save all receipts from the trip, itemize your expenses, and file your write-off correctly.

How to enter travel expenses in QuickBooks when self-employed

If you're self-employed, you can use QuickBooks to automatically track and categorise your business mileage and expenses. This will save you from having to work out the sums yourself.

To enter travel expenses in QuickBooks when self-employed, you can set up an Expense account in your Chart of Accounts. Then, use this to deduct your travel costs. Here are the steps to do this:

• Click 'Accounting' on the left panel.
• Select 'Chart of Accounts'.
• Click the 'New' button in the upper right-hand corner.
• In the 'Account' window, select 'Expenses' under 'Account Type'.
• Enter the 'Detail Type' and the 'Name'.
• Lastly, create an 'Expense' transaction and select the account that you created.
• Click the 'Plus' icon.
• Under 'Vendors', click 'Expense'.
• Enter the payee's name.
• In the 'Account details' section, enter the account.
• Enter the amount that you need to deduct.

You can also use the simplified method to claim travel expenses. This means you can claim a flat rate for travel expenses instead of working out the actual costs. For example, you can claim 45p per mile for the first 10,000 miles travelled for business purposes, and 25p per mile thereafter.

How to enter travel expenses in QuickBooks when an employee

Entering travel expenses in QuickBooks is a straightforward process. Here are the steps you need to follow:

Step 1: Understand what qualifies as a business trip

Not all trips will qualify for tax deductions. According to the IRS, a trip must meet certain criteria to be considered a business trip:

• The trip must be primarily for business purposes and last longer than a regular workday.
• It should involve leaving your tax home (the place where you normally conduct business) for more than a day.
• The majority of the trip must be spent on business-related activities.
• Expenses must be "ordinary and necessary", meaning they are required and typical in your field.

Step 2: Understand what expenses are deductible

When it comes to travel expenses, there are several categories that are generally deductible:

• Transportation costs: This includes airfare, train tickets, taxi fares, public transportation, and car rentals.
• Lodging: You can deduct the cost of hotel rooms or other accommodations during your trip.
• Meals: You can deduct 50% of your food costs on business days.
• Incidental expenses: These include parking fees, laundry, dry cleaning, and other reasonable expenses.

Step 3: Keep track of your expenses

It is important to keep track of your expenses during your trip. You can use expense tracking apps or software, such as QuickBooks, to help you with this. Make sure to keep all your receipts and record the date, amount, and purpose of each expense.

Step 4: Fill out the appropriate forms

Depending on your location, you may need to fill out specific forms to claim your travel expenses. For example, in Canada, employees need to fill out Form T2200, Declaration of Conditions of Employment, while business owners or self-employed individuals use Form T777, Statement of Employment Expenses.

Step 5: Submit your expense report

Once you have tracked your expenses and determined their eligibility, you can submit your expense report to your employer for reimbursement. Make sure to attach all the relevant receipts and provide detailed information about each expense.

Step 6: Record the reimbursed amount

After your expense report has been approved and you have been reimbursed, the business can record the reimbursed amount as a business expense, impacting both the accounting profit and taxable profit of the company.

How to categorise travel expenses in QuickBooks

Categorising travel expenses in QuickBooks is a straightforward process. Here's a detailed guide on how to do it:

Step 1: Understand Eligible Travel Expenses

First, it's essential to know what constitutes a business trip and what expenses are deductible. A business trip typically involves travelling with the intent to conduct business, such as attending a work conference or meeting a client. The majority of the trip must be spent on work-related activities. Transport costs, lodging, meals, and incidental expenses like parking fees are generally deductible. However, it's important to note that the criteria may vary depending on your location, so be sure to check the guidelines applicable in your region.

Step 2: Track and Organise Expenses

QuickBooks offers expense tracking software that can be downloaded on your smartphone, making it easy to track and categorise travel expenses. You can connect your bank account to the software, download transactions, and categorise expenses accordingly. Additionally, you can capture and store receipt images through third-party app integrations. This ensures that you have a comprehensive record of your expenses.

Step 3: Itemise and Subtotal Expenses

When creating an expense report in QuickBooks, it's important to itemise each expense and provide as much detail as possible. Include information such as the date, supplier name, expense type, and total cost. You can also add columns for specific expense categories, such as 'Travel and Meals' if you frequently incur travel-related expenses. Don't forget to calculate the subtotal for each expense category and the grand total of all expenses.

Step 4: Attach Receipts and Submit

Once you've itemised and totalled your expenses, the next step is to attach the corresponding receipts. You can submit scanned copies or photocopies, depending on whether you're submitting the report electronically or in print. Finally, review your expense report to ensure that all information is accurate and complete before submitting it.

Step 5: Reimbursement and Record-Keeping

After submitting your expense report, your company will review and reimburse authorised expenses. The reimbursed amounts can then be recorded as business expenses, impacting both the accounting profit and taxable profit of the company. It's important to keep accurate records of these transactions for tax purposes and to ensure proper financial management.

How to use the QuickBooks app to enter travel expenses

Entering travel expenses in QuickBooks is a straightforward process. Here's a step-by-step guide to help you get started:

Step 1: Set up a New Expense Account

To begin, you'll need to set up a new Expense account in your Chart of Accounts. This is where you will record all your travel expenses. Go to the "Accounting" or "Gear" icon on the left panel and select "Chart of Accounts." Click on the "New" button in the upper right corner. In the Account window, select "Expenses" under "Account Type." You can also select "Travel" under "Detail Type" if you want to create a specific account for travel expenses.

Step 2: Provide Account Details

After creating the new Expense account, you'll need to provide some additional details. Enter a name for the account and, if desired, you can also create a sub-account of a main ("parent") account to keep your records organised. This is optional but can be helpful for more detailed reporting.

Step 3: Create an Expense Transaction

Once your Expense account is set up, you can start recording your travel expenses. Click on the Plus icon and select "Expense" under "Vendors." Enter the payee's name and, in the Account details section, select the appropriate Expense account you created earlier. Enter the amount you need to deduct or the total expense amount.

Step 4: Track Mileage and Other Expenses

If you're claiming deductions for mileage, it's important to keep accurate records. Use a logbook or a mileage tracking app to track the miles you travel for business purposes. Note the odometer reading at the beginning and end of each trip, and calculate the total miles travelled for business. This will help you determine the percentage of vehicle expenses you can write off. Additionally, keep receipts for other travel expenses, such as meals, lodging, and transportation.

Step 5: Pull Expense Reports

To stay organised and ensure accurate record-keeping, pull up expense or transaction reports periodically. In QuickBooks, go to the Reports menu's Standard tab and select the relevant report, such as "Transaction Detail by Account" or "Expenses by Vendor." This will help you easily track your travel expenses and ensure they are recorded correctly.

By following these steps, you can efficiently enter and manage your travel expenses using the QuickBooks app. Remember to review your expenses regularly and keep detailed records to support any deductions you claim.

How to enter travel expenses in QuickBooks when working from home

To enter travel expenses in QuickBooks when working from home, you can set up an Expense account in your Chart of Accounts. This can be used to record and deduct travel expenses such as car maintenance, fuel, meals, groceries, and more.

• Click "Accounting" on the left panel.
• Select "Chart of Accounts".
• Click the "New" button on the upper right-hand corner.
• In the "Account window", select "Expenses" under "Account Type".
• Enter the "Detail Type" and the "Name".

After setting up the Expense account, you can create an Expense transaction and select the account you created. Here's how:

• Click the "Plus" icon.
• Under "Vendors", click "Expense".
• Enter the payee's name.
• In the "Account details" section, enter the account.
• Enter the amount that you need to deduct.

If you are tracking expenses in a foreign currency, you will need to set up a multi-currency supplier. Here's how:

• Go to "Expenses" and choose "Suppliers".
• Fill in the "Supplier Information", including the "I pay this supplier with" and "Default expense account" sections.

Once you have set up a multi-currency supplier, you can create an Expense and select this supplier.

• Go to the "Plus" icon and select "Expense".
• Select the multi-currency supplier and post to the GBP account.
• Ensure the exchange rate is correct and the date on the expense is accurate.
• Attach the receipt to the expense at the bottom and save it.

Additionally, if you are reimbursing employees for travel expenses, you can record this in QuickBooks by following these steps:

• Go to the "New" (+) icon.
• Choose either "Expense" or "Check".
• From the "Payee" drop-down, find the name of your employee.
• Select the "Category" drop-down, then select a liability or reimbursement account.
• Enter the reimbursement details.
• Click "Save and Close".

Remember that you can always consult an accountant if you are unsure about which expense account to use or for further guidance on accounting for business-related transactions.

Frequently asked questions