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PalletMikeB
Level 1

Account Setup/Basics

So....we finally took the leap and started a small business.  Our business purchases and sells used pallet racking.  We typically purchase from warehouses/businesses that are closing or are relocating.  We then sell this pallet racking nation wide to various customers.  I'm NEW TO QUICKBOOKS (I feel like I should make that disclaimer), I'm also not an accountant.  So I'm trying to get the best overall advice.  

 

I'd like to get the thoughts on how to setup the purchases so that I can see a true cost of goods and that all my bills/payments to various subcontractors show up in the right places.  

 

A typical order goes like this...

  • Business A calls and wants to sell us their Pallet racking.  
  • We estimate the value of their racking its self, then factor in paying for disassembly/removal, any equipment rental and freight to our warehouse. 
  • We then make an offer to purchase their racking.  In some cases we wind up removing it at no cost to the seller, as we pay for all the cost associated with it's removal (see above).
  • If I create a bill for them, do I itemize each of those things or factor all that into the cost of the inventory to get a true cost of goods? Then add negative dollar lines on the bill for the various fees so that the bill comes to a net of $0.00?

I'm guess then when I pay the disassembly crew, the equipment rental people and the freight company I would classify those all as COGS?

 

Thank you in advance. 

1 Comment 1
SashaMC
Moderator

Account Setup/Basics

Congratulations on starting your small business and choosing QuickBooks! Welcome to the QuickBooks Community, PalletMikeB! Since you would like to keep track of your cost of goods sold, you can create an account for it. Here's how:

 

  1. Go to the Gear icon at the top, then select Chart of Accounts.
  2. Click New.
  3. Choose Cost of Goods Sold from the Account Type drop-down.
  4. Pick the closest type of Cost of Goods Sold that matches your situation from the Detail Type drop-down.
  5. Hit Save and Close.

You can refer to this article for more insights: Understand Inventory Assets and COGS tracking.

 

As far as classifying what would be COGS, I encourage you to reach out to an accountant to determine what's the best fit for your business. We do offer a ProAdvisor service that connects you with QuickBooks-certified accounting professionals within your area. Many of them offer a free consultation. Simply enter your zip code and select search. You will be able to browse through and learn more about their services. 

 

I recommend that you go through these video tutorials for QuickBooks Online to learn your way around, whether it be banking, taxes, reports, expenses, and vendors, to name a few. Fill me in if you have other questions by commenting below. The Community and I are always here to help. I hope you enjoy the rest of your day.

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