Remember that COGS are things that you are paying for. You may find this account type under "Other Account Types." Click Continue, enter the information in the "Add New Account" window, and click Save & Close. If you need to create a COGS account, from the Chart of Accounts window, click Account | New, and select the account type of COGS. You can have multiple COGS accounts if need be. View your Chart of Accounts and look for an account with a "Type" of Cost of Goods Sold. Creating a Cost of Goods Sold Account in QuickBooksīefore creating items that link to a COGS account, first must make sure a COGS account exists. Small tools are typically Expenses and not COGS - unless a tool is bought for a particular job and will never be used again. So is the cost of shipping the product to the customer. If you pay a subcontractor for a particular job, his cost is a COGS. If you purchase a ream of paper for a print job for a customer, is it a COGS? Yes, if you consume the entire ream. To qualify for a COGS, the part or supply must be used up in the sale or service. What you paid for the part should be classified as a COGS.Ĭosts that are directly related to a customer job should be posted to a COGS account, not an Expense account, so a business owner can determine Net Profit. If you purchase and resell parts, your profit is the difference between how much you paid for the parts and how much you sold the part for. Costs of Goods Sold include the cost of material, labor, subcontractors, and shipping. Costs that are directly associated with the product are called Cost of Goods Sold (COGS). When you sell a product, you seldom make 100% profit. To use many function of QuickBooks, items are required anyway!Īnother popular use of items in QuickBooks is for Cost of Goods Sold (COGS). To track sales for product categories or even individual products, create ITEMS for each and track their performance in this manner. Just create only as many income accounts as you need reported on the Profit and Loss Report. Separate revenue accounts could be created for each type of product or service, but that would be highly inadvisable! Most accountants recommend that a small business owner keep the Chart of Accounts as lean as possible. When the invoice is paid, Accounts Receivable is credited and Cash (checking account) is debited. When the invoice is created, the revenue account to which the items are linked is credited and Accounts Receivable is debited (if using the Accrual accounting method). By default, items do not appear on the printed invoice. When the drop-down arrow in the column is clicked, the Item List displays, and an Item must be selected.
Each invoice contains a column called Item, or Item Code, or Classification - depending on your version of QuickBooks. Items are required when creating an invoice in QuickBooks. As you can see in the "New Item" window, you can create Subitems, and you can enter the price of an item. Then, for each Item, choose the account to which it will be linked. Note: some versions of QuickBooks may be slightly different.) For products that you purchase, track as inventory, and resell, choose Inventory Part For purchased products not inventoried such as materials for a particular job or products that are shipped directly by the vendor, choose Non-inventory Part.
#FIND AND REPLACE ACCOUNTS IN QUICKBOOKS FOR MAC PROFESSIONAL#
For consulting or professional services, choose Service. At the bottom, click Item and then click New.Ĭlick the drop-down arrow next to "Type" and review the choices displayed. From the top menu line, click Lists | Item List. You don't want an excess of items, but you don't want to make continual changes because then your QuickBooks reports won't be very useful. Some companies will have items for both services and products, such as a landscaping company, and many small businesses, such as consultants, may have one revenue account and only a few items.īefore creating items for your business, it is imperative that you sit down and document all of the current product and/or service categories that you would like to track.
An item can, if desired, be created for each individual product and the product's price can be specified. For instance, a hardware store could create items for product categories, such as plumbing, electrical, and housewares and then create subitems to further break down the types of products sold. A business selling a large amount of products may wish to create an Item for each product type and subitems to further break down the product list.
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