Construction Accounting

by Lor

Reimbursement of Expenses

Reimbursement of Expenses

My husband works for himself in construction. I do his bookkeeping, he works alone.

I am wondering about billing customers when there are materials that need to be charged to them on the invoice. How do I record it?

When we purchase the materials on the credit card, I enter it as an expense. But when I bill the customer, it is not income, what would it be? I use Simply Accounting.


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Hi Lor,

I use QuickBooks, so I'm not sure how it works in Sage / Simply Accounting, but it is probably similar.

In QuickBooks, when you have an expense that you want to be reimbursed for, there is a field to enter the customer name associated with expense (allows you to do job costing) and a separate column to put a check mark in to say it is reimbursable.

When you invoice the customer, you click on the reimbursable expenses button to bring up the expenses and you select what you want to include in the invoice.

A few things to remember:

1. Reimbursable expenses are to be recorded to income, not offset against your expenses. Name your revenue account something like "Reimbursed Expense Revenue".

2. If you are a GST/HST registrant, reimbursed expense revenue is taxable. You can decide if you are going to pass on the expense at cost or with a markup. It will depend what is written in your contract. QuickBooks has a feature that allows you to markup the expenses if desired.

3. If you live in B.C. real property contractors no longer charge your customer PST on the materials unless there is a pre signed and prewritten agreement that meets strict criteria. The contractor must absorb the PST expense if the criteria is not met. This is a new rule with the reimplementation of PST in B.C.

Hope this helps.

P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.

Comments for Construction Accounting

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Oct 05, 2017
Expensing Materials
by: Erica

I just started doing the books for a construction company, and I was unsure of how to expense the materials purchased to use in a job that were included on the invoice to the customer.

I have been using an asset inventory account and then I expense cost of goods sold once the invoice is paid. I left the reimbursement in the regular revenue account.

Should I be putting the materials straight into a materials expense account instead? or inventory?

Oct 26, 2017
by: Laura

I'd have to do some research to answer this question Erica as I don't do construction accounting.

Steven M. Bragg has a good book called "Construction Accounting: A Practitioner's Guide". It is available on Amazon and you may find it useful. It is on the Globe and Mail bestseller list.

Oct 27, 2017
Thank you
by: Erica

Thank you for the recommendation. I am going to get the book now.

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