If you buy and sell items of inventory with the same measurement units — suppose that you both buy and sell individual coffee mugs — you use a single unit of measure for your purchases and sales. Some businesses, however, use multiple units of measurement. Suppose that a business purchases boxes of coffee mugs, at 24 mugs to the box, but then sells those coffee mugs singly. In this case, purchases of an item probably would be counted in boxes (one
measurement unit). Yet sales of the item probably would be counted as individual mugs (another measurement unit). To deal with this complexity, where appropriate, the New Item dialog boxes include an Enable button. (Refer to Figures 3-3 and 3-4.) Click the Enable button, and QuickBooks starts a little wizard that steps you through identifying the units of measure you need to use and telling QuickBooks how to convert from one unit of measure to another.
Creating other wacky items for invoices
In the preceding section, I don’t describe all the items that you can add. You can create a Subtotal item to calculate the subtotal of the items you list in an invoice, for example. (You usually need this subtotal when you want to calculate sales tax on the invoice’s items.) You may want to create other wacky items for your invoices, such as discounts. I describe these special types of items in the next few sections.
Creating Subtotal items to stick subtotals on invoices
You need to add a Subtotal item if you ever want to apply a discount to a series of items on an invoice. (I show a Subtotal item in the invoice shown in Figure 3-1 earlier in this chapter.) To add a Subtotal item to your Item list, choose Lists ⇒ Item List, click the Item button, and choose New from the drop-down menu. This action displays the New Item window — the same window I show several times earlier in this chapter. Specify the item type as Subtotal and then provide an item name (such as Subtotal).
When you want to subtotal items in an invoice, all you do is stick this Subtotal item in the invoice after the items you want to subtotal. Keep in mind, though, that QuickBooks doesn’t set up a subtotal feature automatically. You have to add a Subtotal item; otherwise, you can create and apply a Discount item only to the single item that immediately precedes the discount. A Discount item, by the way, calculates a discount on an invoice.
Creating Group items to batch stuff you sell together
You can create an item that puts one line on an invoice that’s actually a combination of several other items. To add a Group item, display the New Item window and specify the item type as Group. QuickBooks displays the New Item window shown in Figure 3-5.
FIGURE 3-5: The QuickBooks New Item window with the item type Group selected.
If you sell three items — say, blue mugs, yellow mugs, and red mugs — but sometimes sell the items together in a set, you can create an item that groups the three items. Note that when you create a group, you continue to track the group member inventories individually and don’t track the inventory of the group as a new item.
In the New Item window, use the Item/Description/Qty list box to list each item included in the group. When you click an item line in the Item/Description/Qty list box, QuickBooks places a down arrow at the right end of the Item column. Click this arrow to open a drop-down menu of items. (If the menu is longer than can be shown, you can use the scroll bar on the right to move up and down the menu.) If you select the Print Items in Group check box, QuickBooks lists all the items in the group in invoices. (In the case of the mugs, invoices list the individual blue, red, and yellow mugs instead of listing the group name, such as Mug Set.)
Creating Discount items to add discounts to invoices
You can create an item that calculates a discount and sticks the discount in an invoice as another line item. (I show a Discount item in the invoice that appears in Figure 3-1.) To add a Discount item to the list, display the New Item window, specify the item type as Discount, and provide an item name or number and a description.
Use the Amount or % text box to specify how the discount is calculated. If the discount is a set amount (such as $50), type the amount. If the discount is calculated as a percentage, enter the
percentage, including the percent symbol. When you enter a percentage, QuickBooks calculates the
discount amount as the percentage multiplied by the preceding item shown in the invoice. (If you want to apply the discount to a group of items, you need to use a Subtotal item and follow it with the discount, as Figure 3-1 shows.)
Use the Account drop-down menu to specify the expense account that you want to use to track the cost of the discounts you offer.
Use the Tax Code drop-down menu to specify whether the discount gets calculated before or after any sales taxes are calculated. (This option appears only if you indicated during QuickBooks Setup that you charge sales tax.)
You probably want to check with your local sales tax revenue agency to determine whether sales tax should be calculated before or after the discount.
If you need to collect sales tax, and you didn’t set up this function in QuickBooks Setup, follow these steps:
1. Choose Edit ⇒ Preferences.
The Preferences dialog box appears.
2. Click the Sales Tax icon in the list on the left, click the Company Preferences tab, and then select the Yes option button in the Do You Charge Sales Tax area.
3. Add the Sales Tax item(s) to your Item list.
4. Click the Add Sales Tax Item button.
When QuickBooks displays the New Item dialog box (not shown), enter a name for the sales tax in the Sales Tax Name box, the sales tax rate in the Tax Rate box, and the state agency to which you remit the sales tax in the Tax Agency box.
5. Click OK twice to close the New Item dialog box and the Preferences dialog box.
Creating Sales Tax Group items to batch sales taxes
Sales Tax Groups enable you to batch several sales taxes that you’re supposed to charge as one tax so that they appear as a single sales tax in the invoice. Combining the taxes is necessary — or at least possible — when you’re supposed to charge, say, a 6.5 percent state sales tax, a 1.7 percent county sales tax, and a 0.4 percent city sales tax but want to show one all-encompassing 8.6 percent sales tax in the invoice.
To add a Sales Tax Group item, display the New Item window and then specify the item type as Sales Tax Group. QuickBooks displays the New Item window shown in Figure 3-6. Use the Tax Item/Rate/Tax Agency/Description list box to list the other sales tax items that you want to include in the group. When you click an item line in the list box, QuickBooks places a down arrow at the right end of the Tax Item column. You can click this arrow to open a drop-down menu of Sales Tax items.
FIGURE 3-6: The New Item window for the item type Sales Tax Group.
Editing items
If you make a mistake, you can change any piece of item information by displaying the Item List window and double-clicking the item so that QuickBooks displays the Edit Item window, which you can use to make changes.
The Item List window provides another tool you can use to enter subsequent, similar items: the Duplicate Item command. To use this command, select the item you want to copy, click the Item button in the bottom-left corner, and then choose the Duplicate Item command from the drop-down menu. QuickBooks duplicates the selected item and then displays the New Item window. Make whatever changes you want, and click Save.
The Item List window also provides a tool you can use to add and edit item information. If you click the Item button in the bottom-left corner of the window and choose the Add/Edit Multiple Items command from the drop-down menu, QuickBooks displays the Add/Edit Multiple List Entries window. This window provides a spreadsheet you can use to add or edit more than one item at a time. The method I describe in the previous paragraphs often works best because it allows you to collect more information — information such as item descriptions. But if you need to enter or edit a large number of items, check out the Add/Edit Multiple Items command. Sometimes, that command saves you time.
Adding Employees to Your Employee List
If you do payroll in QuickBooks, or if you track sales by employees, you need to describe each employee. Describing employees is pretty darn easy. Choose the Employees ⇒ Employee Center command to display the Employee Center window. Then click the New Employee button that appears just above the list in the top-left corner of the screen to have QuickBooks display the New Employee window. Figure 3-7 shows the Personal tab of this window.
FIGURE 3-7: The Personal tab of the New Employee window.
The New Employee window is pretty straightforward, right? You just fill in the fields to describe the employee.
Lesser computer-book writers probably would provide step-by-step descriptions of how you move the cursor to the First Name text box and type the person’s first name, how you move the cursor to the next text box, type something there, and so on. Not me. No way. I know that you can tell just by looking at this window that all you do is click a text box and type the obvious bit of information. Right?
I do need to tell you a couple of important things about the New Employee window:
When you release an employee, it’s important to enter the release date for the employee on the Employment Info tab after you write that final paycheck. (To change to a new tab, click the tab’s name. Click Employment Info to display the Employment Info tab, for example.) This
way, when you process payroll in the future, you can’t accidentally pay the former employee.
As for the Type option on the Employment Info tab, most employees probably fit the regular category. If you’re uncertain whether an employee fits the guidelines for corporate officer, statutory employee, or owner, see the Circular E publication from the Internal Revenue Service. And sleep tight.
The Address & Contact tab provides boxes for you to collect and store address information. The Additional Info tab enables you to create customizable fields in case you want to keep information that isn’t covered by the QuickBooks default fields — favorite color and that type of thing. Again, what you need to do on this tab is fairly straightforward.
By the way, if you told QuickBooks that you want to do payroll, QuickBooks prompts you to enter the information it needs to calculate things like federal and state income taxes, payroll taxes, and vacation pay by using boxes and buttons that appear on the Payroll Info and Worker’s Comp tabs.
After you finish describing an employee, click OK to add the employee to the list and return to the Employee List window.
You can also inactivate an employee from your list if the list starts to get cluttered with names of employees who no longer work for you. Read about inactivating items, employees, customers, and vendors in the nearby “Inactivating list items” sidebar. I recommend waiting to inactivate former employees until the year is finished and the W-2 forms have been printed.