QuickBooks Desktop 2023 enter service items. Let’s do it within two, it’s QuickBooks Desktop 2023. Here we are in QuickBooks Desktop get
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great guitars practice file we set up in a prior presentation going through the setup process we do every time maximize and the homepage to the gray area, go into the view drop down,
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no team that we have the hide icon bar and open windows list checked off, open windows open on the left hand side, we’re now going to be setting up our service items, those things necessary to make the data input of our sales forms,
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invoices and sales receipts as easy as possible, so that the financial transactions can be created by them having an impact on the end result balance sheet income statement or profit and loss and the substance in the other reports related to it.
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Now note how sophisticated your items are will depend on the needs of your company, which will depend typically on the industry you are in and how large your company is. So note that you could be in an industry where you have like gig work,
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you’re just getting paid by YouTube or something like that. In which case, you might not use the sales forms at all skip that and just enter the deposits as a deposits possibly using bank feeds recording the other side to income.
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Now that means that you’re going to lose some of the added detail that you get on some subsidiary reports breaking out sales by item, for example. But that might be a worthwhile system.
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If you have a very easy kind of business or industry that you are in like gig work. But you might be in a system where you have a cash register situation where you’re imagining someone’s entering data into the cash register as you make a sale.
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And in that case, you’re going to need items to help the data input be as easy as possible. You can imagine a situation like a grocery store where you have a checker entering the data, they might not know what the items mean, they might not know the end impact on the financial statements, but they can still do the data input.
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And we can even do the data input these days with an automatic checkout. But the items and all that has to be set up properly to make that work.
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And if you’re entering an invoice, then that means that you have to basically build a client that will depend on the industry, you’re in like a bookkeeper a law firm, for example, have to enter the invoice and then track the accounts receivable.
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If we enter or look at an invoice or sales receipt, we see the items down below the items are the things that we’re going to be selecting.
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So if you imagine someone coming up to the cash register and giving a guitar that they’re going to buy, then the item we can find that guitar and that will list out what we’re going to charge. So that’s how the items are going to work. Now there’s inventory items are going to be more complex,
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because they’re gonna have to track the inventory as we enter the data. Now we’re going to be looking at service items which do not have an inventory component, which will typically be easier.
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And but you still want to kind of think in detail how you’re going to be billing someone. So for example, if you’re in a service item, like a law firm, or like a CPA firm,
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then you might be saying, okay, the standard billing process, if you were a partner, for example, you enter the time of you and your staff, and then you have a billable rate for the time that you’re entering.
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And that’s how you create the invoice. That’s one way that you can do it fairly straightforward, easy way, not very sophisticated items that you have to set up that way.
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But a lot of times the law firms and the CPA firms are using other systems that might be easier to go through the billing process and more transparent to the customers.
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So for example, for a bookkeeper, you might try to look at using the transaction forms, the transaction detail forms, how many transactions you’re making on a monthly basis,
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and try to build people by saying, hey, if we enter this many transactions for you, you’re within this range, this then is going to be the bill. So you might run a transaction list by date, for example, and count the transactions are exported to Excel and just let Excel,
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I count the transactions. And that’s a little bit more concrete. And that can actually make the agonizing situation of counting your hours and so on a little bit easier.
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So you might want to even if you’re in a service area, try to think about what’s the structure of your billing process, is there a way that you can move away from just an hourly billing and try to try to say I’m going to build by what I’m doing.
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And that could also limit like, the work work just kind of increases over time, you’re doing more and more stuff.
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And you’re you’re kind of charging them the same amount and whatnot. So that’s going to be the work creep or something they call it like that.
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So any case you want to keep those things in mind. Now also note as we enter these items, we’re going to be Thinking about the beginning balances that we want to enter into the system. For the items, we have to deal with the inventory items.
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But we’re not going to be entering inventory items at this time. This is kind of the precursor to inventory items, which will have a Balance Sheet component to it. If we already have inventory on hand,
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the Inventory Service items don’t have any physical inventory that we need to be tracking, it’s just going to be what we’re charging for our services in the future.
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Okay, that said, you might get your items possibly from from the prior accounting system, if you have a prior accounting system, or you want to then structure what those items will be.
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And then if you have a prior accounting system, you might be able to export those items, say to an Excel worksheet, so you have a list of those items. And then we’ll try to enter them into QuickBooks as efficiently as possible.
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So how can we do that if we go back into QuickBooks, go to the lists drop down, we’re looking at the item list now. So we have here, these are the sales tax items, which those are also called items because they drive the sales tax calculation.
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But usually, we’re thinking in items, the main two things are inventory and service items. Now, if I wanted to add a new item,
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I can go to the items drop down or rise up because it goes like up and go to new up top. And then I can choose service item or inventory port.
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So notice service item is a lot less detailed inventory port, I got to enter these sales prices. So we could enter the service items one at a time, as we go here.
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Or we we could I’m going to close this out, we could as we enter invoices, I could enter the item, as I enter an invoice, make a new item just to enter the item on the go as we enter data. Or if we have a bunch of items that we’re setting up beforehand, which if you’re starting a new company file, it’s probably the best way to do it.
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Because then you think about the items that you’re going to be setting up, then we can enter multiple items. So I’m going to go to the rise up. And I’m going to say that we want to have add edit multiple items, add edit multiple items.
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Okay, so we’re going to do that. And then the drop down says Do we want service items or inventory parts, we’re going to be looking at service items,
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active service items that would that’s what we typically want to see not inactive service items. These are the ones that are going to be live ready to go.
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And then we have the headers up top. So notice it’s got item name, sub item, sales price income account. Now what I would like to do is customize these headers to match what my data is formatted in. In other words, if I exported these items,
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for example, from a prior software, I want to tie out my headers with what is in the QuickBooks system, so that hopefully, I could just copy this data, and then just paste it down here in Excel, or in QuickBooks.
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So to do that, I’m gonna have to, I’m gonna have to make sure that I have the same formatting of sales, the same headers up top. So we could go to the Customize up top and say, Alright, let’s look at this. So on the right hand side, we’ve got the chosen columns,
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so you could so you can see it’s in vertical order here mirroring the horizontal order item name, sub item, right item name, sub item sales price, and then we have the other available columns on the left hand side. So these are going to be what’s required.
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Typically, we definitely have to have the item name, we might not need a sub item category, the sales price, that’s what’s going to be needed because it’s going to be needed to populate.
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When we make an invoice or sales receipt income account, that’s going to be the account that will be impacted when we create the invoice and the sales tax code, whether or not it’s going to be taxable or not. And then we could have these other items full item name,
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purchase description, we’re not purchasing anything that would be more of an inventory port. The cost there is no cost because it’s a service item. preferred vendor,
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we don’t have a vendor because we’re not purchasing so these are mainly going for the service item, and inactive. Okay,
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so now let’s see if I can mirror this I’ve got the item name, and then the sales description and the purchase description. I probably don’t need a purchase description, and then the sales price.
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Okay, so so we’ve got the item name, and then the sales description so I don’t need a sub item. So I’m going to put my cursor on this, I can add and remove. So I’m going to remove this one.
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So I’m going to remove and then I’m going to add the sales description by clicking on this one and then add that I’m going to move it up by hitting this item and move it up to the second one. So item name sales description.
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Okay, and then it’s got purchase description which I don’t think I need but I can add it whatever it’s not going to hurt I’m going to say okay, add the price. Just description. Move it up.
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Okay, so then the next one is going to be what’s next? Where’s my Excel sheet. So next we have the sales price in the income account. So now we’ve got the sales price here, income account. Now I should have the sales tax code, because it’s non taxable.
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So I’m going to, I’m going to add one more line to my sheet over here, call it sales tax code. And I’m just going to say non, because none of these are taxable. I think that’s the code for it. So I think that’ll work. And let’s format this with some borders around it.
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Okay, so now, if I go back on over, I say, Okay, now I’ve got the item name, sales description, purchase description, and then sales price, so that looks the same. And it needs to be non tax.
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Okay, so I should be able to copy this stuff, I’m just going to highlight it now, in my Excel worksheet, Ctrl, C, copy, and just drop that in right there. CTRL V, or paste. And I think that looks good. So now notice that my items are kind of generic for this particular company.
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So I chose like a diagnostic, right, that seems kind of an unusual thing, possibly for our guitar business, we’re having to diagnose sounds like a car business or something like that.
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So these are kind of random items, but bear with me, they’re the they’re gonna be the sort of service items services not active. So now I got this account right here is not set up. So they’ve got on the chart of accounts.
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So if I look at the chart of accounts, lists Chart of Accounts, I’ve looked at my income account that I have to assign it to, this is the account that’s going to be hit by the service items when I sell the service items.
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And notice, we’re kind of focusing on selling guitars, which means for selling inventory, but I also want to look at the service items as well. So we can see the distinction between the two. So that’s why we made up kind of some service items,
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so we can see the two. So in other words, when I make my invoice or sales receipt, this is going to increase accounts receivable, the other side is going to go to some income account, run by the item. So I have to set up my income account.
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So here in my chart of accounts, sales is usually what we use when we’re selling to a, a inventory. So we might want to say service item income or something like that.
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So let’s just make one here, I’m going to hit the drop down or rise up, and I’m going to say a new I need a new account, I’m going to make it an income account. That’s important.
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That’s the type of the account. Next, and I’m just going to call it a service, revenue, service revenue or service income, just a generic name, I’m not going to name each service that I do.
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Because if I do this properly, I should have sub accounts that will then further break down by item. So I don’t want to have all everything I do broken down into item by item on the income statement.
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So that’s a key component. Because sometimes people fall into that trap, I don’t want to break it out by customer. have too many customer accounts on the income statement, right? Or any or too many. I just want the full categories of what I’m selling. And then the sub accounts or the sub ledgers.
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The other reports will give us more detail. All right, save it. So there we have it. Hopefully I spelled that right. If I didn’t, I apologize. And then I’m going to change these to service revenue. And service is not an active account. I know. That’s why I’m changing it. QuickBooks, that’s why I’m trying to fix it. Service Revenue.
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Okay, and then service revenue. Okay, so there we go. So there we have it. So we got diagnostics $68. It’s non taxable, meaning we’re not subject to sales tax,
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because in the United States, services usually are not we’ll have to deal with sales tax when we get to the, the inventory, hourly service one, whatever that is, that’s pretty generic. But you know, we’ll, that’s what we’re going to do with our practice. And then hourly service to is $100.
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And then the tuning support. So this is tuning support, we charge a lot to teach your guitar. Let’s give you some fancy tuning. You’ve never seen the way we tune the guitar. It’s like some ancient tuning method.
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Okay, so then we’re gonna say let’s save it and close it. And zero items recorded have been saved, okay. And so there. Now for some reason, it gave me an error to add an expense account, which I shouldn’t need, because because these are service items,
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and so But I chose an expense account I customized and I added the expense account from here on over.
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So I removed it, I add the expense account. And then I chose the expense account of cost of goods sold, nothing should be going to cost of goods sold because these are service items.
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And we’re not buying and selling or tracking any inventory. So I’m not sure what required that but I’m going to say and then say Save and changes.
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Then if I go back on over, now we’ve got these items set up. So we’ve got these, this is in our items list Chart of Account item list right here. And so now, I’m sorry, lists items list.
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Okay, so there’s our diagnostic. And there’s our items. Now, if we wanted to, if we wanted to adjust any of these, I can right click on it and edit the item. And then you can see it on a single item mode, where we’ve got the name,
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the sub item, if there were one, and then we’ve got the cost, there is no cost, and then the sales price at the 68. Notice that this being checked off this service is used in assemblies or is performed by subcontractor.
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That’s kind of why we’ve got this description, we shouldn’t, we don’t need that for this particular item. So I can uncheck that. And then you’ve got a more simplified field here.
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So that’s probably why they needed the expense field, I’m going to say, okay, not sure exactly why edit, I’m going to edit this one, edit the item.
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So again, I don’t really need these. I don’t think it’ll make a difference. But I’m going to uncheck that. Right click, edit the item, uncheck that. Just so it’s, it’s simple when we go in there and look at it.
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And then this one, I’m going to edit that item and uncheck that here. Okay, so then when I record something, tuning, I spelled wrong, great. That’s great tuning, whatever I’m gonna, I’m gonna just keep it.
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So bear with me on that. If it’s spelled wrong, such as you crazy, I’m sorry, we’re gonna go back to the home, now we’re gonna enter something into an invoice, then now I can just choose the item. So whatever we did, we should be able to choose it.
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Again, these are kind of generic items. But if I did a diagnostic, we should be able to come up and just be able to plug that in. For someone that doesn’t know anything about the item, the rate should pull up.
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And I can just enter that into the system as quickly as possible either entering an invoice, which will then increase the accounts receivable other side go into that service income, no sales tax being taxed on it. Or if I entered a sales receipt,
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like at a cash register, again, I can choose whatever item would be applicable and be able to charge no sales tax being applicable because this item doesn’t have sales tax applied to it.
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And then of course, again, if you if you don’t need the items, and you’re waiting for an electronic transfer from like a YouTube or some gig work, then if you enter like a deposit, you don’t have the same item component.
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But by not using the items by not using the sales receipt and the invoice you lose some of the added detailed reports you might otherwise have, which would be the Sales by Customer and sales by item reports.
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So next time we’ll we’ll do a similar thing with the inventory items which is a bit more complex because we have to deal with sales tax, and we have to deal with the cost of the of the inventory as well as the sales price.
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Thinking about the purchasing side as well as the sales side thinking about entering the bill or the check as well as creating the invoice and the sales receipts, the items being involved in those processes.