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  • Categorizing non-inventory parts in QuickBooks

    Posted by reliableautocenter on August 14, 2015 at 4:51 pm

    Our shop currently uses BayMaster automotive software. We use QuickBooks for accounting. BayMaster transfers information over to QuickBooks. The problem I am having is inventory. We do not keep an parts in inventory. We purchase parts as they are needed. We have some (oil filters, bulbs, etc.) but other parts we order on an as-needed basis. The last few accounting cycles has our numbers all over the place and my supervisor cannot figure out why. I enter in the parts into BayMaster under non-inventory. When we use the part, I list the amount we paid for the part and the amount charged to the customer. BayMaster keeps track of the profit for the parts. When the information is transferred over to QuickBooks, I think there is an issue. When the information gets transferred over, the parts are put under and Item titled simply “Parts” and it is Non-Inventory. Now, when I enter in my payables to pay our vendors for the parts we purchased, she has me listing the parts under an expense titled “Inventory Assets”. To me, that doesn’t make any sense. My thinking is that if we get paid by a customer for a part and it’s being listed under an Item “Parts”, wouldn’t it seem only right to list the payable for those parts under an Item “Parts” to equal them out? If someone has a process they use that has worked well, please share! Thank you!!

    Joseph Van syoc replied 6 years, 10 months ago 4 Members · 3 Replies
  • 3 Replies
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  • Tom Ham

    Member
    August 17, 2015 at 4:56 pm

    I have used several management systems, although I am not familiar with Baymaster so I don’t know if this will help.

    In general with software I have found that it is much cleaner and more accurate in the long run to make every part that is ever purchased an “inventory part” and add it to “inventory” when it arrives. That does not mean I stock it – stocking levels are zero on anything that I do not want to stock so it does not get reordered, but there is a good record of the purchase, sale, details, etc.
    I know this approach has improved things at a number of shops.
  • quickbooksrus

    Member
    August 18, 2015 at 2:52 pm

    Paula,

    The process that you are using is based on accounting for WIP … since when you purchase the parts for a job they are not immediately “costed” since the sale has not been recorded (or possibly will not before the end of the accounting period, month)…. The setup you currently have probably nees to be looked at and corrected for your business flow …

    There is a much better way to account for WIP and the parts should not be an “expense” but a COGS account so you can see your Gross Profit before Expenses …
  • Joseph Van syoc

    Member
    August 18, 2015 at 4:52 pm

     I had this issue with Quickbooks the first year, and entering parts as non inventory causes alot more work and some problems.  I just enter all parts as inventory parts, makes life much simpler.  You can also print a physical inventory list that deletes any item with a zero qty, so that you dont have pages of items that you do not stock in your checklist come inventory time