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Level 1

Inventory vs. Expense, Mark-Ups, etc.

Our business is looking to move to QBO; we currently use another online program.  We are gardeners.  We purchase product (soil, fertilizer, plants), which are marked up to the client.  We bill an hourly rate.  We also mark up certain services provided by contractors.

 

Plants are "perishable".  What's the best way to treat these - expense or inventory?  We get deliveries for plants but pay (via credit card) upon delivery, so we do not use POs.  We download our CC transactions, and this is somewhat helpful, but we have to re-jigger this (as a "split") because we might have 5 or 10 or 50 or 100 plants on a receipt, and we need to associate each plant with a client (or container arrangement).

 

Another issue - even though we buy the same plant/size, the cost may vary depending on the season/who we buy from.

 

Thoughts on how to best account for plants?  It would be nice to charge a flat rate per container planting, but we don't want to be stuck not being able to use one (or more) great pieces of plant material due to their higher cost, so we've been billing based on goods (marked up) and our time.

 

Thanks for any suggestions!

 

Solved
Best answer 01-04-2018

Best Answers
Highlighted
Level 15

Inventory vs. Expense, Mark-Ups, etc.

@GardenerJ

To make this work in QBO you need a subscription to QBO Plus, that is the only version that has billable expenses

The work flow is make entries, download banking, match - if you do that then you will not have to re-jigger anything.

Enter the purchase of plants, each line would be billable to whatever customer it is being purchased for, mark it billable and select the customer name on each line.

When you invoice the customer, a panel on the right will open IF there are billable expenses, and you can click add to get them moved to the invoice.  If you have billable expense mark up turned on in company settings, then the markup will be also entered.  Unfortunately, QBO does not allow for billable expenses to be moved to the invoice as a single line entry, in QBO each billable expense is a line item.

I would enter the purchase using COGS as the expense account, I can not see any reason to use inventory from what you have said, but QBO+ is also the only version that has inventory so if you need it in the future you could turn it on too.

View solution in original post

3 Comments
Highlighted
Level 15

Inventory vs. Expense, Mark-Ups, etc.

@GardenerJ

To make this work in QBO you need a subscription to QBO Plus, that is the only version that has billable expenses

The work flow is make entries, download banking, match - if you do that then you will not have to re-jigger anything.

Enter the purchase of plants, each line would be billable to whatever customer it is being purchased for, mark it billable and select the customer name on each line.

When you invoice the customer, a panel on the right will open IF there are billable expenses, and you can click add to get them moved to the invoice.  If you have billable expense mark up turned on in company settings, then the markup will be also entered.  Unfortunately, QBO does not allow for billable expenses to be moved to the invoice as a single line entry, in QBO each billable expense is a line item.

I would enter the purchase using COGS as the expense account, I can not see any reason to use inventory from what you have said, but QBO+ is also the only version that has inventory so if you need it in the future you could turn it on too.

View solution in original post

Highlighted
Level 1

Inventory vs. Expense, Mark-Ups, etc.

Thanks so much, Rustler, I was hoping you would respond :-)  I have been going through old posts to learn as much as I can and your answers are always on target.

 

A follow up question:  Does QBO+ account for "negative" expenses, i.e., a credit from a vendor for a return?  I currently use FreshBooks, and this is an issue for me with their program.  For instance, if I buy some supplies and end up returning an item, I have to manually credit the customer - it does not flow through my bank/CC downloads because it is "negative".  I am thinking QBO+ accounts for this fine, but just want to confirm that I won't have the same issue if I switch.

 

I am going to search now for information about how mark ups work, but do I have to go in and manually set this every time?  How much flexibility is there?  I have some clients (my first few) for whom I mark up less.

 

Thanks again for your help/suggestions.

Highlighted
Level 15

Inventory vs. Expense, Mark-Ups, etc.

I don't use banking downloads, they are nortoriously unreliable.  Today a rep stated that auto match is not working and intuit is "working on it."

You can enter a vendor credit for a return and select the custome name, then when you run a P&L by customer it will show

You set the mark up in company settings, there is only one, so if you use a different mark up for different customers or jobs you will have to manually change the amount of the sale since  you can not click and change the markup percentage on the invoice

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