Hi!
Kerry here from MyQuickBookKeeping.
One of the first things you want to do when you set up your QuickBooks' online file
is to create the products and services you'll be selling.
If you have not already done so, check out my video about personalizing your Chart of
Accounts.
When you've done that, you're ready to create the products and services you're selling
in your business.
Be sure to watch right until the end.
If all steps are completed accurately, it will also help with the accurate filing of
your sales tax returns and ensure you claim all the credits you're entitled to.
We're going to use a QuickBooks sample company again today, Long for Success – Event Planning.
See what products and services they offer.
Select the cog in the right top hand corner and choose Products and Services under Lists.
The services provided are split between Employee Events, General Services, Holiday Party, Promotional
Items, and Retreat.
Let's have a look at Silver Holiday Party.
It's a service that's sold to customers and posted to the account Sales.
That's not very imaginative!
Here's where you could have different income accounts set up to show a breakdown of sales
so you'd be able to run reports and see what percentage of your business came from
holiday parties, for example.
Note there's no tax selected here.
If you set a default tax code, it will be displayed every time you sell that product
or service.
That will save you time when you create invoices.
You will only have to edit it if the normal code does not apply.
Let's use the GST code.
Now, let's have a look at Product.
How about Guest Books?
Here we go.
This is an Inventory item and it has a SKU.
And account Quantity is 20.
You can enter a Reorder Point here so you don't run out of whatever it is that you sell.
Let's enter 10.
You will receive an alert for selling another 10 without reordering.
Next, we have a physical inventory of Guest Books.
They're included as an Inventory Asset.
They'll appear in our balance sheet in Costs.
And here is where it gets very interesting.
When we sell a guest book for $25, we'll have income under Sales of Product Income
for $25.
We will also record a cost of sales of $12.50.
And this amount will be reduced from the inventory.
If the term Cost of Sales is not clear, have a look at my video to understand the income
statement.
If you still have questions, then please send me a message, write a comment or reach out.
I'm thinking about writing a blog on terms that need further explanation, so it would
be great to know.
Now, let's set up a Service to use in this business.
Select New.
And to keep things simple, let's make it a Service.
Now, how about we add a Thanksgiving Holiday Party.
The name will be Thanksgiving.
It will be included under the category Holiday Party.
When you sell it, the invoice will say Thanksgiving Dinner.
Let's set a price of $1,500.
And now, we'll show it in, I guess, Sales.
Sales tax code we will apply to this item will be HST.
Let's go with Ontario.
Note that you should get proper advice about what to apply to your products and services
from your accountant and it will change based on where you live and where you sell to.
Now Save and Close.
In order to see how this works when we create an invoice, let's select Invoices across the
top here.
You could also access invoices from across at the top right hand corner.
Let's select the customer and we'll sell him a Thanksgiving Dinner.
Since this is a special occasion, let's add a Guest Book.
Here we go.
Here's our guest book.
And, as you can see, the default tax code is being filled in automatically.
Let's put this one in here too.
I'm going to change the date to next month.
Here we go.
Let's put it on October.
So I can run reports and show you how to sync tax to financial statements.
And now, we will save the invoice.
On the left hand tab, select Reports and choose Profit and Loss.
Let's use custom dating so we can find that transaction we just created.
Here we go.
And run the report.
And here, we have Sales $1,500, which was our Thanksgiving Dinner, Sales of Product
for $25, the Guest Book, and also we have the Cost of Sales of $12.50, which was the
cost of the Guest Book.
So by setting up the products and services, when we completed our invoices, it's easy
to select the items and our reporting was then accurately updated.
Now let's see how many Guest Books we have.
Scroll down here.
Oh look!
19.
It's all updated.
It works!
Now, without confusing things too much, let's have a look at the taxes.
There's another video to explain how to do this in detail so this is for illustration
only.
So let's change this date to include October.
Where are we?
Here we go.
Now we've got October.
That's it.
And we go in this tax collected.
And here we have our invoice.
The tax is being collected and everything will be ready once we come to complete our
sales tax return.
By setting up your products and services accurately at the beginning, your profit and loss in
the balance sheet will be correct and filing your sales taxes will be a breeze.
Now, let's have a quick look at the reporting you can get from the product section.
From the dropdown, select Run Report.
Now, if we scroll down, we can see the Thanksgiving Dinner.
Here we go.
And the Guest Book.
The Guest Book also shows the Cost.
So you're able to see the profit that you've made and also the quantity that you have left
on hand.
We certainly covered a lot.
Please don't hesitate to reach out if you have any questions or would like help getting
this set up.
If this video was useful, please hit like below and subscribe to my channel for more
QuickBooks tips and how to's.
Also, I've created a Small Business Monthly Checklist to help you be sure that your records
are up to date each month so you can make the best decisions for your business.
Click below to download a free copy.
If there's another topic you'd like help with, please make a note in the comment box.
My next video could be for you.
Cheers!
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