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RunningRoan

Bookkeeping & Job Costing in Quickbooks - how to tally up profit

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I use Quickbooks for my tack store, which is just buy/resell so the bookkeeping is pretty easy. Now that I've branched out into making my own stuff, I'm facing a new accounting challenge. I would like to record my leatherworking venture in Quickbooks as well. There must be a way!

Does anyone else use Quickbooks? I could really use some input on how others have theirs set up.

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I do not use quickbooks, I use MS Accounting but I think some of the features are similar.

MS Accounting allows you to set up an item as a "kit" or assembled product.

This allows you to set your labor rate as a unit.

Materials as a unit.

Plus you have a few customizable fields. You can call them hardware or whatever. However you want to record your other parts/findings. This way you can track inventory and cost of goods sold.

The Item name can be whatever you want and you can change the units within the assembled product.

For instance let's say we are making a saddle.

Materials will be entered into the field.

Labor entered.

Hardware can be it's own field.

You get the drift. When you print or invoice the customer sees

Custom Saddle on their receipt.

You track the materials, labor and what not behind the scenes.

Same item name and you do ALOT if custom tooling.

Labor times go up...

Customer sees Custom saddle on thier reciept.

Your accounting sees additional labor charges in the correct columns.

Hope this helps!

Allen

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Thanks for the reply! So do you record the amount spent buying supplies as cost of goods sold? Then keep a guesstimate of how much each item costs you in supplies?

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I'm not sure what the settings are on QB. My program allows me to enter the items by name, cost and sales price.

Then these items can be added to the "kit" for assembly.

These items are not shown individually on the invoice, only the item name.

Allen

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You can do quite a bit in QB. Even though it is not set up specifically for custom work inventory tracking, it can be made to do it. The most useful thing is the group item, which is completely flexible, and can be changed on the fly within an invoice or sales receipt so that you can deal with custom things without having to create individual items for every custom product you make.

For example: I can create a group item, "Notebook", and define it as having an item "cover leather", and item "lining leather", and item "labor". When I use the group in a sales receipt or invoice, I can fill in the actual amount of each item used and the price I want to apply, add additional items or remove unused items. It will only affect the information on this sales receipt or invoice, and the next time I use it I can do different things with it as needed. Totally flexible. QB will reduce the amount of "cover leather" and "lining leather" in inventory (if those items are inventory items) and add their values to COGS account, and the total sale amount goes into whatever account you defined for the income. You can also use this with non-inventory items, QB just handles the information a bit differently.

You can try out the technique easily enough by abusing one of the sample companies that QB has (at least in the old version I use).

What will mess with your head is trying to decide what to track as inventory and non-inventory parts without spending all your time bookkeeping, yet provide accurate enough cost info (how many rivets can a project use before they become a significant part of the cost tracking? Ahh, ahh!!!).

Feel free to pm me if you want more info.

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Sounds like this group deal in QB is similar to the Assembly/Kit feature in MS Accounting.

I like it as well as I can make whatever item I want and track any parts or consumables inside the program without a lengthy cluttered invoice.

The customer sees only the finished product and thier expense. I see all the ancillary stuff.

Allen

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Great info! I'm gonna do some exploring in Quickbooks and see what I can do. Thanks everyone!

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I use Quickbooks for my tack store, which is just buy/resell so the bookkeeping is pretty easy. Now that I've branched out into making my own stuff, I'm facing a new accounting challenge. I would like to record my leatherworking venture in Quickbooks as well. There must be a way!

Does anyone else use Quickbooks? I could really use some input on how others have theirs set up.

I use the manufacturing edition of Quickbooks to track raw materials and components used to make my products. It has a feature called "inventory assembly" which allows you to list other inventory items used to make a final product. Once you have defined an assembly, you can "build assemblies", which automatically deducts the raw materials and components, adds finished items to your inventory, and makes all the necessary journal entries to keep everything balanced. Very slick.

Is that what you had in mind? (I'm a huge fan of Quickbooks.)

Kate

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Thanks for the reply! So do you record the amount spent buying supplies as cost of goods sold? Then keep a guesstimate of how much each item costs you in supplies?

The way I was edgemakated in accounting (please note I am not an expert, but have really dug into this)... any materials that become part of the final product are not "supplies" (which is an expense), but counted as inventory (an asset) and the amount used for each finished product are deducted from your assets as COGS.

Kate

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The way I was edgemakated in accounting (please note I am not an expert, but have really dug into this)... any materials that become part of the final product are not "supplies" (which is an expense), but counted as inventory (an asset) and the amount used for each finished product are deducted from your assets as COGS.

Kate

I was thinking about this the wrong way....you're right, they should be classified and accounted for as assets. Hmmm....

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Now that being said, I do not track as inventory things like dyes, adhesives, or finishes, even though they do technically become part of the product. I expense the entire amount of those at the time I buy them. Why? Because there are some things that are simply not practical to track as inventory. For example, I might just use 3 drops of dye out of a 32oz bottle on one piece, and sometimes I just can't predict exactly how much I will need from one piece to the next. And after taking out those 3 drops, how much would you say is left over?

But things like square feet of leather, rivets, beads, buckles, etc., which can easily be counted or otherwise quantifiable, both in terms of knowing exactly how much goes out of inventory to "build an assembly", and knowing how much is left afterwards, those should be tracked as inventory assets.

Kate

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Good info on this thread. I'm going through my books now and trying to figure out what exactly I want to do and how do I do it. I'm currently using downloaded templates as my foundation and I would like to upgrade a bit to become more efficient and more accurate in my reporting.

I'm especially interested in the "inventory assembly" aspect.

Between QuickBooks and MS Accounting, are there appreciable differences in the two?

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Based on their product literature (I've never use the Microsoft product), there is little or no support for "manufacturing", which requires advanced inventory tracking features (raw materials, assemblies, etc.). Maybe someone who has used MS Office Accounting can provide more first-hand feedback.

Kate

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