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Level 1

How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

I need help setting up my used car dealership with QuickBooks pro desktop. I am a beginner. I don't know how to set up accounts since we primarily deal with cash. 

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Best answer December 10, 2018

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Level 15

How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

QB is accounting, are you a beginner at accounting or with QB, or both?

in QB, company menu select the home page, then use menu edit>preferences and select the desktop on the left, select show home page when opening on the right and save.  The home page will show you the flow to some extent. You need to work with someone  who knows QBDT to get you started.

You will also have to turn on inventory in preferences

Click chart of accounts and use the button bottom left to create new accounts

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create a dummy bank account called WIP (work in progress)

Purchase the used car and use that WIP account as the expense for the purchase.

Any thing you buy to repair the car is also posted to that WIP account.

If you use on hand inventory items for the repair to get it ready for sale, use inventory adjust, set the adjusting account to the WIP account and lower the qty of the items used.

That accumulates all costs for the car in the WIP account.

When the car is ready for sale:
1. Create the inventory item for the car in the products & services list
2. create (if you need to the first time you do this) a dummy vendor named in-house
3. Use the WIP bank account to "buy" the used car item you just created from the in-house vendor, the qty is one, and the total item cost is the total amount in the WIP account

The inventory item car is now in inventory with total costs to get it ready, and the WIP account is zero balance ready for the next car you need to do.  You can have as many WIP accounts as you need if you are getting more than one ready at a time.  ie WIP, WIP-1, WIP-2, etc

And of course you use the inventory item for the car you are selling on an invoice or sales receipt.

Any costs to keep the car running after it is ready for sale is repair cost expense and not part of item cost.


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37 Comments 37
Highlighted
Level 15

How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

QB is accounting, are you a beginner at accounting or with QB, or both?

in QB, company menu select the home page, then use menu edit>preferences and select the desktop on the left, select show home page when opening on the right and save.  The home page will show you the flow to some extent. You need to work with someone  who knows QBDT to get you started.

You will also have to turn on inventory in preferences

Click chart of accounts and use the button bottom left to create new accounts

----------

create a dummy bank account called WIP (work in progress)

Purchase the used car and use that WIP account as the expense for the purchase.

Any thing you buy to repair the car is also posted to that WIP account.

If you use on hand inventory items for the repair to get it ready for sale, use inventory adjust, set the adjusting account to the WIP account and lower the qty of the items used.

That accumulates all costs for the car in the WIP account.

When the car is ready for sale:
1. Create the inventory item for the car in the products & services list
2. create (if you need to the first time you do this) a dummy vendor named in-house
3. Use the WIP bank account to "buy" the used car item you just created from the in-house vendor, the qty is one, and the total item cost is the total amount in the WIP account

The inventory item car is now in inventory with total costs to get it ready, and the WIP account is zero balance ready for the next car you need to do.  You can have as many WIP accounts as you need if you are getting more than one ready at a time.  ie WIP, WIP-1, WIP-2, etc

And of course you use the inventory item for the car you are selling on an invoice or sales receipt.

Any costs to keep the car running after it is ready for sale is repair cost expense and not part of item cost.


View solution in original post

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Level 2

How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

Having installed and worked with auto dealer computer systems for over 30 years I find it hard to believe that the method needed for keeping control of perpetual inventories on QB is so convoluted.  I like your workaround but tried entering the car directly into used car inventory when purchased. When repairs or equipment are entered, I added them to the WIP account as you suggested but then immediately adjusted the inventory value so the inventory would always be correct and the WIP would always be "0".  Is there something I haven't thought of here?  I think it might work better.
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Level 15

How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

In QBO you can not adjust inventory value, in desktop there is a way to do it.  Which type of QB are you using.

The issue I have with adjusting value is timing.  In theory an item in inventory is ready to sell, and for taxes the IRS says all costs to get it on hand and make it ready for sale are the item cost.  Once it is on hand and ready to sell, anything you do to the item is a repair expense.

But yes you can it that way one cost at a time, as long as the value adjusting account is the wip account
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Level 2

How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

All of the top automotive systems and the Ford and GM Accounting manuals add the vehicles into inventory as soon as they are received. This is important for tracking costs and # of days in inventory. All costs of making an item ready to be sold are capitalized. This also insures that the matching principle is adhered to. And yes, I am referring to Desktop. Not sure where you are getting your IRS info from. It would only be an issue at 12/31 anyway. It is absurd that you have to go through these workarounds in QB.
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Level 10

How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

Why are you using QB, that is a generic program that does not easily work for auto dealers,  if you have installed and worked with auto dealer computer systems for over 30 years?
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Level 2

How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

Haven't set it up yet. Most Dealership Systems are really expensive and really overkill for this small used car lot. I'm really only familiar with the big dealership Systems. If you know of a small inexpensive desktop product, I'm all ears. Currently I install, consult,and teach QuickBooks.  I think it will work for them in every other way except the inventory process is so convoluted.
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Level 15

How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

I responded to @hengel on another topic where you commented. I will copy that here:

"Someone suggested a WIP account as a work around"

Yes, because that is an Asset with Multiple inputs = accumulating the total invested. This is done for any process that improves the asset, or the asset cost comes from multiple inputs such as Purchase Cost, Import Duties, Broker Fees, improvement labor and materials, etc.

"leaving all of the costs in the WIP until the unit is sold."

No, you don't have to Leave it there. If you want to manage this as a unique inventory item, you them "buy from WIP" by using a Vendor name of WIP, and listing the WIP account on the Expenses tab with the negative total; put the real item on the items tab with the total Basis. Hit re-calc. This is a $0 Bill. Now your product is On Hand in inventory and fully costed.

"I toyed around with adding the unit into inventory immediately and adding the additional costs to the WIP account. Then turning right around and adjusting the inventory value by doing and inventory adjustment using the WIP account."

Yes, that works, too. The real issue is Dates Matter. Pay attention to the Date reporting.

"That cleared the WIP account and keeps the inventory value for all of the units correct.  I worked in the auto industry for over 30 years and find it hard to believe that QB can't get perpetual inventory right."

This isn't Perpetual Inventory. This is specific Items Names as "in progress." This is Production, really.

WIP = Work in Progress

CIP = Construction in Progress

Law firm = Advanced Costs

Lots of Industries use Other Asset tracking for expenditures for operational requirements.


Heck, I set up a Corrections Facility that is all Liability accounting, of three liability types.
Highlighted
Level 1

How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

3. Use the WIP bank account to "buy" the used car item you just created from the in-house vendor, the qty is one, and the total item cost is the total amount in the WIP account

 

I am unclear what exactly the steps you are wanting here.  I have the inventory item setup.  Can you go into a bit more detail on what you mean and how to "Buy" the item with the WIP bank account?

 

Thanks,

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Level 15

How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

I don't use a WIP Bank account; Rustler uses that. Bank = Asset. I use Other Current Asset, because I am already Spending, from checking and on the credit card.

 

Example:

 

I pay for a vehicle and post that to Other Current Asset. I pay for an alignment and the Credit Card Charge is entered to show I just paid for Other Current Asset. All of the Spending is in WIP = Other Current Asset. Then, I buy that inventory item for that Total seen in WIP, on a Bill for the Vendor name = WIP. The Item on the Items tab is the Vehicle total invested Cost; then click on the Expenses tab and post that Other Current Asset account here using Negative for the same Total.

 

You just Bought the vehicle, fully costed into Inventory; you just Cleared Out the accumulated costs in WIP Other Current Asset with that Negative entry. Hit Re-Calculate, to see this Negative and Positive create a $0 Bill = Done. Use a Vendor Name = WIP.

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Level 1

How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

Nice!  Thank You for the response.  I did it both ways.  Both worked but I need to do it again ;) and again...

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Level 1

How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

Is there a real life solution? 

 

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Moderator

How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

Hello there, Scarlett1963.

 

Thanks for joining this thread. So far, the solutions stated above by our dedicated Established Community Backers are the best way to handle your concern when setting up a used car leadership.

 

Allow me to add this article to get more information about certain topics you'd like to know more about: QuickBooks Desktop User Guidelines.

 

Please know that you're always welcome to post any questions you may have or want to share your insights and practices using the product.

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Level 1

How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

I have employees that do work on the inventory. How do i post through their time sheets my labor costs for each vehicle?

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QuickBooks Team

How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

Hello there, @vch.

 

I'd be delighted to help walk you through posting your employees billable time to record your vehicle's labor cost.

 

To start with, let's enable your time tracking preferences. Here's how:

  1. Go to the Edit menu.
  2. Select Preferences.
  3. Choose Time and Expenses.
  4. Go to the Company Preferences tab.
  5. In the question, Do you track time?, select Yes.
  6. Set the first day of your work week.
  7. Put a check mark on the following:
    • Mark all time entries as billable.
    • Create invoices from a list of time and expenses.
  8. Click Ok

 

b.gif

You can now record the hours spent working on each vehicle, using either a weekly time sheet or a single activity entry.

 

Here's how to create an invoice for time:

  1. Click  the Customers menu.
  2. Select Invoice for Time and Expenses.
  3. Hit Ok on the prompt that says Choose multiple customers to Invoice for Time and Expense.
  4. Choose the Date Range and Template.
  5. Select the Customer:Jobs.
  6. Click Create Invoice.
  7. Review the invoice detail.

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If you want to to enter a specific Billable Time and Cost,  ensure to select the box that says Let me select specific billables for this Customer:Job.

 

Lastly, you can create a service for each work and create a class list for each vehicle and associate it to each line item on your invoice.

 

For additional insights, you may check out this article: Track job costs in QuickBooks Desktop.

 

Should you have other questions about recording your employee's billable time per vehicle, feel free to visit us here in the Community. I'm always here to help.

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Level 1

How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

I am using qb 2016.  there is no Create invoices from a list of time and expenses. 

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Anonymous
Not applicable

How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

Hello, @vch.

 

I'm here to help figure out why the option to create invoices from a list of time and expenses is not showing on the preferences.

 

This feature is not available if you're using the Desktop Pro version. 

 

invoice.PNG

 

Let me route you to our desktop product comparison site for more information: https://quickbooks.intuit.com/desktop/.

 

Keep me posted if you have additional questions about creating invoices. I'll be here to help however I can.

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Level 2

How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

Using QB online for used cars, can I create a sales receipt that includes sale of the product or service, but also income accounts like doc fees or tag fees.  Those aren't necessarily considered "products or services".  Or is a journal entry better way to post a sale with credits to individual accounts from the chart of accounts? 

Highlighted
QuickBooks Team

How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

Hello EKH3,

 

You can create a service item for your document fees or tag fees to record your sales. Let me walk you through how.

  1. Click the Create (+) icon.
  2. Click Sales Receipt.
  3. Under Product/Service column, select your service item. Then, enter the other information needed.
  4. On the next line, click the blank field and select Add new.
  5. In the Product/Service information window, choose Service.
  6. Enter the Name, select an Income account from the drop-down.
  7. Click Save and close.

Please see attached screenshots.

 

Once done, enter your fees in your receipt under the Amount column.

 

I've also added our page about income and expenses for future reference.

 

Drop a comment anytime if you have more questions. I'll be here to help.

 

 

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Level 2

How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

Thank you ...

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Level 2

How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

Another question: I am trying to use"classes" to achieve the following. Enter an expense attached to a "class",  ie: the vehicle and have it increase the value of the asset as opposed to hitting the P&L as an expense. I might not sell the car for two months and I'd like to look at, say, an Inventory Valuation Summary report and see the total dollar value of the asset with all adds. Using this method, (unless I'm wrong), adds the expense to the vehicle "register" and P&L immediately, but does not increase the asset value on any reports. On desktop, I could post an expense, then go through an inventory adj screen and update the value with dollar amount of expense and the asset would increase and expense would come off P&L.

Highlighted
Moderator

How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

Hi, EKH3.

I'd like to provide few insights regarding inventories and classes in QuickBooks Desktop.

 

To answer your question, yes, the method you're using is correct. You can enter or post expense transactions and update the value with a dollar amount of the expense. This way your assets will increase.

 

The following articles are good references:

 

If you require more information about the inventory feature in QuickBooks, you’ll find detailed instructions by pulling up the article in your company file. Just press F1 on your keyboard.

 

z.PNG

 

For additional help, you can also reach out to our QuickBooks Desktop Support.

 

  1. Within your QuickBooks Desktop, click Help at the top menu bar.
  2. Click Contact Us.
  3. In order to route you to the correct support expert, we need to know what type of question you have. Give a brief description of your issue and click Continue.
  4. We’ll provide you a few options. You choose which one is best for you.

If you have additional questions about inventory, please let me know, Have a good one.

Highlighted
Level 2

How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

I have QB "Online"; would this be the same method?

Highlighted
Moderator

How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

Hi again, EKH3.

 

I appreciate your prompt response. I can help share information with you on how class tracking feature works in QuickBooks Online (QBO).

 

You can use the class tracking feature to help track income, expenses, or profitability by business segment. In QBO, we also have other features that is more specific for your tracking and reporting needs, these are the following:

  • If you do business in multiple locations, you can use location tracking instead. This is a more specific way of tracking your sales, purchases, and profitability by business location.
  • If you work on projects, use the Projects feature to track your job costs and income. You can manage your work and see your progress from a single dashboard.
  • If you need to classify the things you sell, group them into different categories. This way of grouping gives you a clearer picture of your sales.

To know more on how this feature works, you can check out below articles:

You can always get back to me if you have any other questions, I'd be happy to answer any questions you may have. Have a great day!

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Level 2

How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

I am simply trying to determine if I can add a repair or some other expense to an inventory asset (which would increase its value).  I can in QB Desktop, but am not seeing this capability in the Online version.

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