Many people see that there is an “Item List” in QuickBooks but don’t fully understand what it is used for. I have had a bunch of clients that just create one item in the item list and use that item on every invoice. Then on a per customer/per invoice basis, they change the description and the price for what they are actually billing for. Definitely not the most efficient and accurate way to use QuickBooks.
The easiest way to begin to understand the Item list is to think of it in the sense that you will put into this list EVERYTHING that you would ever bill for and EVERYTHING that you would buy to then resell to your customer. The item list can also handle things such as Sales Tax rates, Discounts, Group, Assemblies etc.
You really should spend some time deciding how you can make Items work for you before you start setting them up and using them. Below are some tips for creating your QuickBooks Item List:
-Use a current list of services and products
-Consider how much detail you want or need to display on your Estimates, Purchase Orders, Sales Orders, and Invoices
-Consider how much detail you want or need to track for Job Costing purposes
-Make sure that each of your items are set up to track both income and expenses
QuickBooks allows you to create several different types of items to help you create Purchase Orders, Estimates, Sales Orders and Invoices for your customers and fill out bills and checks to record the money you spend in order to get the job done. Choose from the following types of Items:
-Service – used for tracking specialized labor, consulting hours, and perhaps professional fees that you charge for or purchase from others
-Inventory Part – used for tracking goods or materials that you purchase, track as inventory and then resell to your customers
-Inventory Assembly – (available in Premier and Enterprise versions only) used for assembled goods you build or purchase, track as inventory, and resell
-Non-inventory Part – used for tracking goods and/or materialsthat you purchase for a specific job
-Other Charge – used for tracking miscellaneous labor,materials, delivery charges, setup fees, service charges, recording bounced checks, late fees, opening balances, reimbursable expenses, retainers/deposits, retainage, shipping and handling fees and more
-Subtotal – used to create a total of all items above it on an Invoice, useful for applying a percentage discount or to deduct retainage
-Group – used to associate individual items that often appear together on Estimates, Invoices, Purchase Orders, etc. Build groups so that all of the items that are in the group can be added to the form at the same time
-Discount – used to subtract a percentage or a fixed amount from a total or a subtotal. Do not use this item type for an early payment discount
-Payment – used to record a job deposit from a customer
-Sales Tax Item – used to calculate a single sales tax rate that you pay to a single tax agency
-Sales Tax Group – used to calculate and individually track two or more sales tax items that apply to the same sale – for example, if you have to collect a local, a county and a state sales tax, each of these items would be set up as individual Sales Tax Items and then combine them into a group.
If you need help setting up your item list or if you would like us to review your current setup, give us a call!