How to Set Up Prepaid Expenses in QuickBooks Online

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Paid for insurance or software annually but need to see the cost monthly?
Prepaid expenses allow you to split annual costs over months, quarters, or any other time period, so you can accurately see how your costs are incurred monthly, even if you're only paying for a cost annually.
Watch the video for a how-to on how to set these up.

Опубликовано:

16 сен 2024

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Комментарии : 12

@carlasandy4132 9 месяцев назад

This was incredibly helpful. Thank you.

@bitesizebookkeeping 8 месяцев назад

Thank you! it's really helpful!

@davida99 Год назад

Thank you!!!

@user-zy8mi8pg4x 7 месяцев назад

does this work for prepaid income? We have clients pay for our services in full that we deliver over 9 months. Would the same logic apply in creating a prepaid income note? Thanks for the helpful vid!

@navigatorbookkeeping 7 месяцев назад

Yes! We would usually call that "deferred revenue" but it's essentially the same process. You would create a deferred revenue account, place the deposit into that account and then adjust that account monthly to show the revenue that was recognized for each month.

@user-eb8ci6fe5p 5 месяцев назад

What about prepaid expenses that are only for one month in advance. For example, the insurance prepaids are set up on a recurring monthly payment system rather than 1 lump sum. September payment pays for October and so on. Would we be able to create this occurring transaction and match it to the banking transaction? This would save time during the audit trying to 'remember' which are prepaid and not. Thanks!

@jamesbaxter2812 11 месяцев назад

I'm watching this. If you have stock/tickers. Can QB work with the stock exchange

@navigatorbookkeeping 11 месяцев назад

Hi James, I don't believe so, but I haven't tried. It does connect to some retirement accounts, but the connection is not usually the best.

@dtnlivinglife6731 Год назад

Great video thanks. What about prepaid expenses that are different each month and those expenses are billable to clients. Tolls equals to a prepaid amount and then debits that prepaid amount. I pass tolls onto my client. What should Indiana ezpass toll be in QBO as? Indiana ezpass charges a deposit for tolls to be debited from. Then when a toll is processed and debited from the balance of ezpass, how should that entry be put in QBO? When the balance gets to a certain point, Indiana ezpass charges the bank or credit card to build its balance. How should that entry be put in QBO? Thank in advance, hope to see a video of setup and then how to process it.

@navigatorbookkeeping Год назад

In that circumstance, I probably wouldn't be concerned about the pre-paid nature. The real reason behind a prepaid expense is spreading that expense out over a long period of time. With tolls, there's not much you need to do on that side of things since it's being paid right away and you're just waiting on the reimbursement. I would just classify those as an "other expense" (create a separate other expense category in QBO for it), then, when you need to get reimbursed, split out the reimbursement for that under a new "other income" category in QBO. This allow you to clearly track the tolls you're paying and being reimbursed for.

@jaygoyal4772 8 месяцев назад

what do you think of creating a recurring expense instead that is "paid" from a prepaid account? I just switched to that method from the JE system because the expenses tie to the vendor better whereas Journal entries, even with vendor name, is not as well associated.

@navigatorbookkeeping 8 месяцев назад

That's a good thought, I haven't tried that method but that should work as well. As you said, it would tie it to the vendor more nicely.