Rustler’s Quickbooks Tips

Have I confused you? ROFL - yea well.

In QB and on all the forums, everyone talks about inventory as being something you have for sale, or something you use to create something for sale. And I fell into this habit too, …….. my bad.

What about that other stuff you have that you want to track, what we think of as equipment inventory? Desks, computers, copiers, filing cabinets, all that stuff. It is inventory to the business, even if you expense it off using the Section 179 deduction, it still exists in the business and you want to make sure you still have it.

To do that you have know you have it, or have 5 filing cabinets, 4 desk lamps, etc etc.

Unless you just like following obscure uses for QB, or have a need to track this stuff, go read something else cause this in going to get real complicated.

When you set up an inventory item you generally pick the COGS and sales accounts and leave the asset account alone - it defaults to inventory asset. BUT, if you change that asset account to something like Office Equipment (an Other Asset account) then the cost of the inventory item you are creating or buying will go to that account and the number on hand will reflect how many you bought. (You do have to keep a COGS and an income account on the item screen, but since you are not going to sell it, it makes no difference.)

In the item list you should segregate these items away from the inventory you sell. Make a blank line, a divider and label it non-sale items or equipment or something. Then make the desk item a sub item of that divider.

If you do it this way then the shortcut I talked about in the Misc Category under Section 179 Deduction wouldn’t be used. But interestingly enough, when you have a desk with a value of say $498.00 as an inventory item (in the Office Equipment asset account), and you do a journal entry to expense $498.00 off to the Section 179 expense, QB **only** removes the value from the asset account, the quantity on hand is still there.

So now you have a piece of equipment in “Equipment” inventory that you can track, the cost is easily found, and if it is expensed to the Section 179 Deduction that is also easily found. If you need to do the actual depreciation for an item of equipment then you can - the cost is readily available.

The other way to accomplish the same thing is to use the shortcut Section 179 deduction that I explained. That expenses the item off the books right away. Then create an inventory item with zero cost and the quantity of the item on hand. With zero cost it makes no difference what asset account you use, but you should use the Office Equipment asset account to keep things logical. I don’t particularly care for this way of doing it, because the cost is just too hard to track. When I buy the item and put it in the Equipment Asset account the cost is there in that account, and then the entry to move that cost to the Section 179 deduction is also there.

And hopefully at some point your business will make too much money to qualify for the Section 179 deduction, then you will have to cope with depreciation on the desks, copiers, etc. And if the cost is in the Equipment asset account, that makes it easier.