Tuesday, April 21, 2015

How to Record Prepaid Inventory in QuickBooks Online

A lot of manufactures, wholesalers, and distributors buy their products or materials from China. Along with a purchase order, a pre-payment (or multiple payments), usually in the form of a wire transfer, is generally required before the items are shipped and received. 

Here is the process for recording prepaid inventory in QuickBooks Online:

Enter a Purchase Order as you normally would for inventory items.

Record the pre-payment as a Check or Expense using Accounts Payable for the expense account.

The pre-payment will now show as a credit for the open balance of the vendor.

When the shipment is received, create a bill from the purchase order.

The remaining balance will now show as the open balance for the vendor.

Make a payment (bill payment).

The bill and the prior pre-payment(s) are checked automatically and the difference, if any, is recorded as a check (or credit card payment).

Monday, April 20, 2015

How to Track Non-Taxable Sales in QuickBooks Online

Unlike in QuickBooks for Desktop (Windows), there is no Sales Tax Revenue report in QuickBooks Online. Furthermore, you can't have multiple non-taxable sales tax codes. A customer or product/service is either taxable or not based on a checkbox. This can be a problem for small businesses in states such as Arizona that has multiple localities where sales tax is reported separately from the state and non-taxable deductions have to be reported on their forms when filing. 

However, there is a solution:

Create a new sales tax item called "Resale" with a zero percentage rate and create a new Agency called "Resale." 

For all resale or tax-exempt customers, check the box for taxable and use the Resale sales tax code.

Record the sales receipt or invoice for your customers as you normally would.

In the Sales Tax Center, your resale non-taxable sales amount for the period is now easy to find.

And in the Sales Tax Liability Report:

For non-taxable services, such as Labor, or products, such as Fuel or Oil, just create an item that is non-taxable.

Whether the customer is taxable or resale, use the non-taxable products and services on sales transactions.

Run a Report for each non-taxable product and service for the tax period.

Or just run one and customize it by Transaction Date: Last Month and Group by Product/Service (for General), selecting all non-taxable items (for Rows/Columns), and Save Customizations.

Then when working on sales tax, just run this report and use the total amounts for each non-taxable product and service.

It is important that all customers have the taxable checkbox checked so that only the non-taxable products and services will tie in with the non-taxable sales.