Renting Items
Renting poses some problems in QB. QB treats inventory as being sold when you put it on an invoice, and in a rental situation it is not sold, but it is not there either, so it should not be in inventory, but you still own it so the value should stay on the books.
In my view a capital asset is the easiest. Capital assets are things that cost a lot and have a long life, like a back hoe.
So lets say you are buying 5 back-hoes to rent. If this the first time you will have to create a fixed asset account, and then buy the item on the expense tab of “Enter bills and expenses”, when you select the fixed asset as the expense QB will ask if you want to bring up the fixed asset list and add the item, say yes and fill in the blanks - that gets it on the books. I would suggest you enter each back-hoe as an individual entry, rather than a quantity of 5, that will make selling or disposing of one later on easier. (Capital assets have to be depreciated, see the entry on depreciation in the Bean Counting 3101 category in this blog)
Now you need to track it. Create an inventory item called back-hoe, and then use enter bills against inventory and “buy” 5 back-hoes for zero dollars. When you rent an item, use the inventory item back-hoe on the invoice, that gets it out of inventory but does not increase COGS since the cost of the back-hoe in inventory is zero. When the item is returned use inventory adjust and increase the number on hand by the quantity of the item returned. If you want to identify each back-hoe specifically you will have to either enter each one by serial number as an item, or enter the serial number on the invoice itself, QB does not track specific items at all.
If the rental is month to month then you will also need to create a service item called something like rental. For following months use the service item to invoice for the monthly rental and in the description block put the item being rented. Kind of a pain, but QB does not really handle rentals very well.
In truth if all you do is rent items you could list all items for rent this way, even if they are not normally considered capital assets, say something like a circular saw, jig saw, etc etc.
But let’s say you also sell items as well as rent them, saws, drills etc. That poses a new problem, well several problems. If you rent an item, the value has to stay on the books but you have to know it is not there ready to sell. And if you sell an item that has been rented, you probably will not sell it for full retail value either, so you have to know how many new items you have for sale and how many used items (returned rentals).
There are two ways to do it that I know of - both require attention to detail, neither is a good solution IMO but in QB you have to work around what it will an will not do.
1. Use a sales order to show items being rented. Add the column “On Sales Order” to the item list (click the column header and select customize, then add the column). When you look at the item list you can do the mental math to subtract the items being rented (on the sales order) from what is on hand and only sell what is on hand. Use a service item to rent the item (do not put the item on the invoice, but you can put the description of the item rented in the description area of the invoice). But you have to look at the item list before selling, QB will sell an item in inventory even if it is on sales order, sales orders are non-posting. So if you do not look at the item list first, QB will sell the item and it may not be there at all, it is rented.
2. Create a sub-item called something like widget-rented. When you rent an item use inventory adjust to decrease the number on hand of the parent item widget and increase the sub item widget-rented. That moves the item out of the parent item and shows it being rented, so when you go to sell the item (parent item) only the number of widgets on hand and available for sale is there.
I would also create a sub item called something like widget-available to show items that are used (have been rented) and are on hand. Then if you want to sell a used item, you can use that item on the invoice. When the item comes back from being rented use inventory adjust to move the item from the widget-rented item to the widget-available item to show it is back in the shop and can be rented.
