Updated: Aug 31
Most business owners do a pretty good job tracking incoming revenue, but are your payment records given the same attention?
It’s an easy error to meet a client for lunch and forget to save the receipt. Besides, it's just lunch and you figure it’s not that much money, anyway. Or you pick up a ream of paper and fresh ink cartridges at the office supply store and neglect to record the purchase. When you disregard your business expenses, even the small ones, you create two problems: one, your books may not be accurate, and two, you just never know how an extra $42.21 under Meals and Entertainment could affect your income taxes.
QuickBooks Online provides two ways to enter expenses. You can create a record in QuickBooks itself. Or you can use your phone to snap a photo using the QuickBooks Online mobile app to document the money spent. The latter is a great way to capture your receipt as soon as you make an in-person purchase, without having to worry about where that little slip of paper went hours later.
In this tutorial, we'll break down how both of the above payment tracking methods work.
Documenting At Your Desk
Let’s say you just had lunch with a vendor to negotiate pricing for some product you plan to purchase for a customer project. You charged lunch to your company credit card, which you track in QuickBooks Online. Your credit card feed is automatically updated in QBO, but you still have to enter your lunch receipt as an expense so that when your credit card statement comes, you can match the transaction to the expense you recorded.
To do this, hover over Expenses in the navigation toolbar and click on Expenses. Click the down arrow in the New transaction button and select Expense. Fill in the fields at the top of the screen with details like Payee, Payment date, and any Tags you want to specify. Under Category details, select the correct category from the drop-down list and enter a Description and Amount.
QuickBooks Online allows you to thoroughly document expenses. You can attach a picture of a receipt if you’d like.
Since you’re going to bill this to the customer as a part of your project fee, click in the Billable box to create a checkmark. Select the Customer/Project. Add a Memo to remind yourself of the reason for the lunch (very important!) and attach a photo of the receipt if you take one. Click Save. Your record of the lunch will now appear on the Expense Transactions screen. It will also show up in the Expenses by Vendor Summary and Unbilled Charges reports, among others.
Recording on the Road
In the example we just went through, attaching a photo of the receipt was the last thing we did to record an expense in QuickBooks Online. Alternatively, by using the QuickBooks Online mobile app, you can document a purchase by starting with a photo of a receipt. Bonus: this method should save you some data entry. The app uses Optical Character Recognition (OCR) to “read” the receipt and transfer some of its data to fields on the expense record.
If you haven’t installed the QBO app on your smartphone, we really encourage you to check it out. You can complete a lot of your accounting in real-time through it, like tracking mileage, recording receipts, and even accepting payments from customers. All of this work will automatically synchronize with QBO and it’s free, too. Visit your app store to find it.
Once you've downloaded the app on your smartphone, open it and log in with your Intuit credentials. On the opening screen, you’ll see an icon labeled Snap Receipt. Tap this button and your phone’s camera will open (note: the first time you do this, you’ll be asked to authorize QBO to use your camera in order to access this feature--click yes). Position your phone over the receipt until you see the blue box covering the content of the receipt. You may need to adjust the angle of your camera for QuickBooks to recognize the receipt. Snap the picture. You’ll see the receipt displayed on your phone with a message saying, “Use this photo.” If it looks good, click the link.
A message on the screen will tell you that the upload is complete and that the app is extracting the information from it. Click “Got it!” Your receipt should only take about a minute to appear in the list on the Receipt snap screen. You’ll see the details that the app has automatically pulled from your receipt. Tap the matching expense and click Done on the next screen.
You can snap a photo of the receipt in the QuickBooks Online mobile app, and some fields will be automatically entered on a receipt form in QBO.
When you’re back at your computer again, open QuickBooks Online and go to Transactions | Receipts. At the end of the row that contains your receipt, locate a down arrow next to Delete, click it, and select Review. QBO will display the partially-completed receipt form alongside the photo you took of said receipt. Fill in any missing fields and save the transaction. Click Create expense on the screen that opens. Then open the Expenses menu and select Expenses; there should be an entry for the receipt you just added.
The QuickBooks Mobile app's OCR isn’t perfect; every receipt has different fields in different places, and sometimes they’re just not very legible. But in our tests, the app picked up an average of four fields, which is still helpful in saving you some time.
Documenting your expenses using one of the methods above is so important. It will help you remember why you stored the receipt and make your reports more accurate. As long as you’re categorizing each transaction correctly, it will also make your tax preparation easier and faster and ensure that you’re charging customers for billable expenses. And if you’re ever audited, your meticulous work may come in handy.
While QuickBooks Online offers reasonably simple expense management solutions, we know these recording tools can leave you with questions from time to time. As always, we’re here to answer them.