Hi could you please advise how i should enter inventory for goods i use for hire. One item can be invoiced over and over again. My small business is Wedding and Events decorating. Thank You
Enter them as
Sales Invoice Items under
Hi I have all my items in inventory and inventory kits as well, then when needed i use them in invoices. The problem is I have all these negative balances. One item shows as been sold several times. How can I solve this?
Also I think my invoices should be a service invoice, as this is what i am providing. Is this possible?
Per the nature of your business you must recognise the Inventory as fixed asset.
I don’t know what they are but I presume they are items which can last over a year.
If they last over a year, enter them as fixed asset and deprecate them with an appropriate rate, whiles you use the
Sales Invoice Items to bill customers.
Your current method is inappropriate.
Others will comment with different methods of accounting for your inventory soon.
How long do your inventory last?
Thank you for replying the inventory can last for years, updating and adding new items along the way. Some items will only be used once like candles.
Sorry I’m using using my phone at present to reply. Are you saying I can’t inventory the items?
You would only inventory items that you don’t get back - such as candles.
All the other items which are returned should be purchased as Fixed Assets.
Service Invoices would be a better description, but they could include inventory items.
You would use the normal Sales Invoice tab for Service Invoices. To invoice (hire) the items purchased as Fixed Assets, you would use Settings - Sale Invoice Items, where you can set (or not) a standard hire rate, but this rate can always be varied during the creation of the invoice.
@lisarhookI can tell you are not an accountant. Please see an accountant and get them to help you understand the difference between fixed asset and inventory.
Even if you list your items here, I may not be able to know what they are, but you really need to separate them and then also understand how to issue invoices charging the supply of inventory and the use of fixed asset items as described by @Brucanna.
Thank You No I’m not an accountant. i will get further advice.
I know I’m not familiar with this type of entry and lack understanding. Could you please give me a step by step guide.
Do i enter all items which can be used for longer than 12 months in Fixed Asset; do I tick the box Fixed asset deprecation?
When i depreciate them do I put the cost paid for the item?
My company is so small at this stage, I just want to learn as much as I can whilst we are not earning much. Although I do have a heap of products that i need to re enter.
I have purchase invoices for all my items, can they remain there and just change the account to fixed asset?
What you are asking requires a lot of detailed response. Have you read the related guides yet?
•Purchasing fixed asset
•Depreciating fixed asset
•Disposing fixed asset
Yes, all items for longer then 12 months should be assets.
The Depreciation amount equals a written down amount - if the asset cost 100 and has a life of 5 years, then at the end of year 1 (or a pro rata amount for part of the year) would be 20, Yr 2 = 40
Yes your invoices can stay and just have the account changed
@lisarhook, you also need to be aware of regulations in your tax jurisdiction. Often, various classes of assets are treated differently. There may be options for how they are depreciated (method) and over how long (depreciable or service life). Sometimes, there are special procedures for relatively small asset purchases (which might actually seem large from the perspective of a small company) that permit you to deduct what would otherwise be treated as fixed assets as current expenses. But there can also be strict procedures on recapturing taxes avoided in this way if you do not keep the assets in service through their defined service lives.
In short, depreciation can be a complex topic with potentially large interaction with your taxes. Manager’s methods for handling it are pretty simple, and @Brucanna has pointed you toward the right information. But Manager is just the tool for recording transactions related to depreciation. It does not help you decide method or depreciable life. Since you have said you do not have a background in this area, you really should obtain professional advice from a qualified accountant in your jurisdiction. This forum can only help you understand how to use Manager, not how to make accounting decisions.
Let say the following Items are what you have in your ownership.
The items which are reusable must be entered as fixed asset.
You already know how to create inventory items so let talk about the fixed items.
In the above table only the candles qualifies to be inventory items, I tried very hard to find another inventory item in a wedding context but failed because I don’t anything about weddings
Now let create fixed asset items.
Enable Fixed Asset under Customize to make it visible under the tabs.
Also, Fixed Asset items must be created before you Spend money or obtain them. You must also have a reasonable rate of depreciation for every group of fixed Asset items like above.
Fixed Asset tab and enter new fixed asset. Click on Starting balance and enter purchase cost there and also if any accumulated depreciation is applicable. You can just enter a fair value under purchase cost, ignore accumulated deprecation and proceed.
When buying a fixed asset do this if you spent money
You may enter the rate of depreciation for that asset in details so that you never forget. An item of 50% depreciation per year means the item is estimated to be useful for two years.
Now spend money to
Let do a billing example
Before that, let think of how you will bill for renting tables and other reusable items.
Settings tab and create items under
Sales Invoice Item. You will create them based on the list of items you have for rentals.
Sales Invoice Items help bill for
non-inventory items e.g. services. see
In my description I specified £10 for every table rented to the customer for every hour. So if they rented 10 for 6 hours and 5 candles (£ 2 for every candle) the invoice creation will look like this. Feel free to device whatever method you will bill customers for the rented items.
Note the inventory will reduce the candle quantity but wouldn’t touch the table quantity, table quantity usage is handled in depreciation.
Now assuming it year end and you want to enter depreciation for Wedding Tables fixed asset.
Click on Fixed asset
Click on accumulated depreciation for that asset
Enter the amount (1000 * 25%) = 250.
what this means is that 25% of the carrying value of the item has been used up to raise revenue for that year, so the carrying value is now £750.
If you have the time, you may divide £250 by 12 month and enter at the end of every month. You must also consider the months you acquired assets, you may have to prorate based on number of months used.
At the end of the next year change the accumulated depreciation to £500, meaning, the asset is 50% used up, you will notice that on the balance sheet.
There many formulas for depreciation but this is simple.
Yes make changes.
Create all the necessary fixed Asset items
Update/alter the purchase transactions selecting the fixed asset items instead.
Now edit/update your sales invoices which included the reusable inventory items replacing them with created
Sales Invoice Items make sure the edited invoice amount is equal to the old invoice amount.
Note: Sales invoice items are currently not usable in receive money so for receive money transaction (Cash Sales) which may have involved inventory which you want to replace with Sales Invoice Items, raise invoices, and click on receive money by viewing the invoice to complete the cash sale. Delete the Receive money transactions after you have replaced them.
After the inventory you created initially as reusable inventory items will be free to be deleted.
click on the link below, scroll and locate Fixed Asset topic and learn more
Digest the above and come back. we are here to help.
@Abeiku has provided an excellent demonstration of the various processes.
My only comment is - you would only enter a Starting Balance if you owned the fixed asset before you commenced using Manager as your accounting system - your Start Date - as those fixed assets would form part of your opening balances.
If you purchased the Fixed Asset after your Manager Start Date, then you wouldn’t use Starting Balance.
Thank you all for your comments. I appreciate your help.
Im going to start from scratch with Manager dating back to the 1st of April 2015. I want to track the amount of money spent (product bought) from our own bank accounts as our business is a partnership. We did not get a loan, we have spent around $25,000.00 between us, we pay expenses from our own bank accounts re insurance, web host etc. So I’m just double checking on my entries before I start. I would enter products under Expense Claim as a fixed asset? ( I know only products which would be reused over 12 months) I have receipts for all transactions.
Our business has not taken off as yet,we have around $4000 in jobs which are not due for final payment until next Feb 2016. So very slow at this point, but hopefully each year will increase with experience.
Thanks again for all your help
The fact that you are a partnership adds a level of complexity. You need to set each partner up with appropriate capital accounts, too. Expense claims can still be used, but they should be cleared to partners’ capital accounts as contributions of capital.
Your questions suggest a lack of experience in accounting. A brief consultation with an accountant might be a wise investment. Get your chart of accounts set up well to match your planned business model and necessary tax reporting. That step will save you a great deal of trouble in the long run.
Thanks Tut, yes i do lack experience.