Distributing Complex Bills in QuickBooks (Part 1)
Handling Complex Bills (Part 1)
Another Common QuickBooks Mistake
There are many times the Bills you receive are complex and should be distributed into many accounts. Worker's Compensation Insurance payments, and most other insurance coverages, but even basic billings can require them to be distributed to multiple accounts.
All these add up to causing your financial reports to be inaccurate and benchmarking will not have significant value unless the expenses are properly distributed each month.
This is a very Common QuickBooks Mistake that may be considered an Advanced QuickBooks Process. To properly distribute your Bills & Expenses a review of what the items included are for (and not just what they are) is important to begin the process...
Step1: Determine how the Costs will be distributed
- Business Insurance as well as Medical and Disability Insurance are often too complex to properly distribute without assistance.
It may be the easiest to create an Excel Spreadsheet to obtain the proper distribution.
Spreadsheet Created to Properly Distribute Business Insurance Premiums
There many scenarios where a spreadsheet is your best option especially if the amounts can change regularly such as will medical insurance and even Business Insurance Packages. In Medical, Disability, Dental/Vision Insurance Billings, employees can change coverage, new employees added, and others may drop. In addition if the company is contributing a portion of the costs as a benefit, it will be very helpful to have a spreadsheet created for these. With Business Insurance Packages, they may include liability, building coverage, employee tools, company vehicles, loaner/rental vehicles, and even Worker's Compensation Insurance. All these simply should not be distribute to just, "Insurance". In cases where vehicles change often such as with loaners/rentals and company vehicles, a spreadsheet to calculate the distribution is definitely best. If the payment each month is actually not just that month premium then the steps for Accruals should be followed.
Step 2: Create a Bill/Check/Charge for the Bill Received
- Distribute the Bill to Accounts as needed.
Bill Created to Properly Distribute Business Insurance Premiums
The above is an example of a Business Insurance Policy that includes several different types of insurance: Company Autos, Loaner/Rental Vehicles. Trailers/Other Motorized Units, Building & Fire, General and Garage Keepers, Inland Marine, Umbrella, and Worker's Compensation.
Each should be distributed to the correct account and not just be lumped into one insurance cost. If you are using a Bill for this, make sure to put the correct due date and terms before the next step.
If the amount can vary in one area during the policy period such as Loaner/Rental Cars, you can still memorize the Bill and just change the last line depending on each monthly Bill received.
When you pay this Entered Bill, you can either pay by Check, Credit Card, or EFT. If you have the payment automatically withdrawn from your account or use a credit card on file, it is unnecessary to use a Bill entry. In these cases, it is better to use a check or charge.
Check Created to Properly Distribute Business Insurance Premiums
The Key Points to This Process Are:
- Using a spreadsheet to properly calculate the distribution is a good idea
- Do Not just lump everything into on Account just because it is "Insurance"
- If the payment is not just for a single month, setup an Accrual (Prior Issue)
- Bill date must be the month the expenses is to be taken
- Memorize transaction to improve processing. (Next Month)
I hope this explained a more accurate method to distribute complex and/or varying expenses so you can analyze your business performance better.
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Thank You and I look forward in sharing QuickBooks Tips and Tricks with you next month ...