Interior design is a unique challenge, especially when it comes to accounting, but the geniuses behind Ivy have seemed to figure it out … and the best part is that it integrates with QuickBooks® Online (QBO). *mic drop*
So, What is Ivy?
Ivy is a business management software for interior designers. The general consensus seems to be that people generally underestimate the complexity of this industry and designers feel it the minute they get their first big project. An individual designer deals with not only a handful of wholesale vendors, but also hundreds of different vendors. This vast pool of vendors generally have different terms, billing requirements, lead times, sales tax exemption processes and more.
Not only do designers deal with the complexities of that on a single project, but they often must also deal with PO’s, sales tax nexus requirements, multiple local business licensees, time billing and flat fee billing, markup and so much more. One of the biggest hurdles when a new designer enters the scene is that they don’t understand all that goes into the other side of the business.
It helps to have someone in their corner that can lay it down in terms they can understand and offer guidance. With the help of Ivy + QBO, accountants can effectively be that person. Both the designer and accountant now control each of their own programs, and as long as the rules are followed in the game, the right and left brains of the world can work in harmony. Logistis accountants believe in a very specific set of steps used to help this relationship yield optimum results. When the steps are followed and the chart of accounts is customized for the industry, the results are magic.
Setting up QBO Chart of Accounts for Designers
We prefer a very specific chart of accounts for designers. This chart of accounts breaks down product by taxable goods and common COGS deductions. This chart of accounts yields accurate financial reports that make sense for both the tax preparer and the designer. The reports are used to prepare taxes or make managerial decisions. It allows designers to easily calculate gross profit percentages and measure if they are charging enough markup.
R – Ivy Sales Income (Income/Sales of Income)
C – Ivy COGS COGS/Materials & Supplies)
R – Ivy Service/Design Fee Income (Income/Service Fee Income)
C – Ivy Service/Design Fee COS (COGS/Cost of labor)
R – Ivy Labor/Repair/Install Income (Income/Service Fee Income)
C – Ivy Labor/Repair/Install Cost (COGS/COS)
R – Ivy Shipping/Delivery Income (Income/Other Primary Income)
C – Ivy Shipping/Delivery Cost (COGS/Shipping)
R – Ivy Tax Paid Income —– Gets mapped to ‘”Tax Paid” in Ivy (Income/Other Primary Income)
C – Ivy Tax Paid Cost (COGS/other)
R – Ivy Reimbursable Expense Income —–Gets mapped to Expenses
C – Ivy Reimbursable Expense Cost
R – Ivy Uncategorized Income —— Gets mapped to other in Ivy
C – Ivy Uncategorized Cost
R – Ivy Transaction Fee Income
C – Ivy Transaction Fee Cost
L – Ivy Payable Account (A/P)
L – Ivy Sales Tax Payable — Don’t need to map in Ivy just rename in QBO
How to Add Value to Your Services When Accounting for Designers
Basic financial reports are second nature to accountants, but not every person understands how to fully interpret the information presented. It is important to bridge the gap so that accountants can assist designers and break down what they are seeing into important usable information.
It is similar to a person bringing a broken car to an auto shop and saying my car overheated so my engine must be broken. The person wants to understand how their car works, but they never went to school to be a mechanic. It is not as obvious to some that there may be other reasons for the problem and those reasons might have nothing to do with the engine of the car. Increasing the value of services preformed helps both you and the client succeed. We recommend that designers hire an accountant who is familiar with interior design and has an extensive knowledge of QBO’s capabilities for integration.