Recording Employee Reimbursements in QuickBooks Online
This guide shows how to record reimbursements when an employee paid for a business expense with personal money. The goal is to record the business expense properly while tracking what the company owes the employee until repayment.
Step 1 Create an “Employee Reimbursement” Account
You only need to do this once:
- Go to Settings → Chart of Accounts → New
- Set:
- Account Type: Other Current Liabilities
- Detail Type: Other Current Liabilities or Payroll Liabilities
- Name: Employee Reimbursements Payable (or one account per employee)
This account tracks how much the business owes employees.
Step 2 Record the Original Expense
Even though the employee paid personally, you must enter the business expense into QBO:
- + New → Expense
- Payee: Employee name
- Payment Account: Employee Reimbursements Payable
- Category: Actual business expense (Office Supplies, Travel, Meals, etc.)
| Field | Entry |
|---|---|
| Payee | John Smith |
| Payment Account | Employee Reimbursements Payable |
| Category | Travel Expense |
| Amount | $120 |
Records the expense and shows the company owes $120 to the employee.
Step 3 Record the Reimbursement Payment
When paying the employee back:
- + New → Expense or Check
- Payee: Employee
- Payment Account: Bank account used
- Category: Employee Reimbursements Payable
- Amount: Reimbursement amount
Clears the liability, shows the expense only once, and reimburses the employee.
Complete Example
- Employee paid $75 for office supplies.
- Step 2 entry: Debit Office Supplies $75, Credit Employee Reimbursements Payable $75
- Step 3 reimbursement: Debit Employee Reimbursements Payable $75, Credit Bank $75
- Perfect match books show the real expense, employee reimbursed, no duplicates.
Multiple Receipts or Employees
- Record each receipt as a business expense in the same liability account.
- Sum accumulates in Employee Reimbursements Payable; reimburse the total later.
- If reimbursing via payroll, use Expense Reimbursement on the payroll form; QBO Payroll records it automatically.
Best Practices
- Track per-employee balances if needed.
- Clear partial reimbursements carefully using the liability account.
- Do not duplicate the expense in P&L only record once.