I have an LLC for a software company. I file as an S-Corp.
Sometimes on a project A customer may want/need equipment (i.e. a computer, printer,etc..). Usually I just tell them "I'll buy it for you and you pay me back".
For example, for a customer I bought 2 computers from Dell for $2000 total.
In quickbooks the expense goes to a "ReimbursableJobExpense" Expense account. So when the charge shows up in my credit card I assign it to this account.
I invoice them $2000 in quickbooks (I make a separate invoice for these)
WHen they pay I assign it to "ReimbursableExpenses" Income account.
So, now when I do my profit and loss (ignoring everything else) I see this:
Total Income: (ReimbursableJobExpense) 2000.00
Total Expense (ReimbursableExpenses) 2000.00
So, when I do my taxes
and put in my expenses/deductions
would I just put the reimbursable expenses as a line item? (next to stuff like Office Supplies, Bank Charges, Telephone, etc..). It doesn't seem right, wouldn't the IRS wonder what those expense are?
Is this the right way to do this? ALso, what would happen if I buy something for a client for $100 but when I bill them I charge them $110. The $100 is a reimbursable expense but the $10 is just profit.