Receiving Inventory With or Without Bills in QuickBooks

Receiving Inventory With or Without Bills in QuickBooks

When your goods come rolling in, be sure to document them correctly.

You’re probably happy to see couriers delivering inventory items you’ve ordered since it means you can ship to customers, but recording the new stock means yet another repetitive task.

QuickBooks’ tools can help with this, but you need to be sure you’re using the right forms. There are two different ones that you’ll use, depending on whether or not you’ve received a bill.

Bill in Hand
Either way, you’ll get started by opening the Vendors menu (or clicking the arrow next to Receive Inventory on the home page). If you do have a bill, select Receive Items and Enter Bill (Receive Inventory with Bill on the home page). The Enter Bills screen opens; select your vendor from the drop-down list. If you had entered a purchase order, you’ll see something like this:

Figure 1: If any purchase orders exist for that vendor in QuickBooks, you’ll see this message.

Click Yes. The Open Purchase Orders window will open displaying a list. Select the PO(s) for the items received by placing a checkmark in front of it/them and click OK.

Tip: If you accidentally click No, the vendor’s information will be filled in on the Enter Bills screen, and you can click the Select PO icon in the toolbar.

Now the PO item information has been entered in the window. Check the form for accuracy, then save it.

Of course, if there was no purchase order, you’ll enter the information about the items you received (descriptions, prices, etc.) in the Enter Bills screen.

Delayed Billing
If you receive items without a bill, you still need to document the shipment. Open the Vendors menu and select Receive Items (or click the arrow next to the Receive Inventory icon on the home page and select Receive Inventory without Bill).

The Create Item Receipts window opens. Select the vendor by clicking the down arrow next to that field. If a message about existing purchase orders for that vendor appears, click Yes or No, and either select the appropriate POs or enter the information about what you received.

If the items were already earmarked for a specific customer on the purchase order, the Customer column will have an entry in it, and there will be a check mark in the Billable column. If there was no purchase order and you’re entering the information, you can complete those two fields manually.

 

Figure 2: If a purchase order was already assigned to a customer and is billable, that information should appear in this window.

Enter a reference number if you’d like. The Memo field should already be filled in with Received items (bill to follow), and the Bill Received box should not be checked.

Warning: Be sure that the Items tab is highlighted when you’re recording physical inventory. If there are related costs like freight charges or sales tax, click the Expenses tab and enter them there.

Paying Up
When the bill comes in for merchandise that you’ve already recorded on an Item Receipt, you’ll use this procedure to pay it:

  • Click Vendors | Enter Bill for Received Items, which opens the Select Item Receipt window.
  • Select the vendor, then the correct Item Receipt.

Note: If the bill corresponds to more than one Item Receipt, you’ll need to convert each into a bill separately. You can create a new bill if some items received were not accounted for on Item Receipts.

  • Click the box next to Use the item receipt date for the bill dateif you want to match it to the inventory availability date.
  • Figure 3: You’ll select purchase orders that you want to create bills for in this window.
  • Click OK. The Enter Bills screen opens, which can be processed like you’d handle any bill.

Though it may seem like extra work, this last procedure is important, since it prevents you from recording the same inventory items twice.

It’s easy to get tangled up on these procedures. We hope you’ll consult us when you begin implementing inventory management in QuickBooks, or when you’re taking on a new task there. It’s a lot easier to prevent errors than to go back and fix them.

Federal Rules for Summer and Vacation Hires

  • Obtain W-4s from all summer employees, even the owners’ children, students working part-time and foreign students.

 

  • Withhold FITW from all employees, including the owner’s spouse/children, unless a W-4 claims exempt.

 

  • Withhold FICA from all employees, even high school students and those who receive SS benefits. Exception: Employees under 18 working for sole-owner parents.

 

  • Pay overtime for hours actually worked over 40 hours in the workweek. You are not required to include as hours worked paid time off (holidays, vacation days). Do not substitute paid nonwork hours for work hours to make all hours straight time, thus avoiding overtime pay.

 

Example: Julia works 12 hours a day the first 4 days of the workweek, but not on the 5th day, a holiday, for which she is paid for 8 hours. She is correctly paid 40 hours’ straight time + 8 hours’ overtime + 8 holiday (nonwork) hours. Julia’s employer cannot substitute the 8 hours’ holiday pay for the 8 hours’ overtime to avoid paying the overtime rate.

 

Paid holidays and vacations

  • Under federal law, paid holidays for part-time and summer help are always optional, but check state laws.
  • No paid vacation is required—but if you provide paid vacation, some federal and state laws apply.

 

Benefits

  • Temps and part-timers. Benefits are optional, but if offered, should be explained in a written benefits plan.

Real Estate

If you bought a home in 2008 and got the first-time buyer credit…IRS is no longer mailing letters to remind you about recapture of the credit. 

For buyers in 2008, the credit was really an interest-free loan from the government.  The credit you claimed is recouped over a 15-year period…$500 a year for most folks.  The Service will still track your reporting of the recapture amount on Form 5405.  Go to www.irs.gov/individuals/article/0,,id=252351,00.html to see what to report.

Please contact us for a free proposal.

Fringe Benefits

Ministers cannot exclude parsonage allowance for more than one home.

An Appeals court says in a case involving a minister who received a stipend that covered both his primary residence and a second home he owned on a lake.  A divide Tax Court had said that the tax law’s exemption of a parsonage allowance used to provide a home could be ready to apply to more than one residence.  However, the Appeals Court unanimously rejected that interpretation (Driscoll, 11th Cir.).

Please contact us for a free proposal.

Donations

There’s no tax write-off for letting a fire department burn down your house, an Appeals Court says. 

This situation commonly arises when a homeowner wants to demolish an existing residence and build a new home on the same spot.  Giving a firefighters practice exercise in burning it down serves the public good.  But to get a tax deduction, the homeowner must show that the value of the donation exceeded the value of the demolition services provided.  In this case, since the house had to be destroyed anyway, its value was negligible and didn’t exceed the value of the demolition services…worth $10,000…that the owners received (Rolfs, 7th Cir.).

Please contact us for a free proposal.

 

Enforcement

IRS reverses course on reconciling gross receipts with 1099-K forms. 

Businesses won’t have to separately report amounts sown on 1099-Ks on a special line on Schedule C on forms 1065, 1120, and 1120-S after all.  The Revenue Service had waived separate reporting for gross receipts for 2011, but firms squawked about the added work involved to reconcile the 1099-K data with their own recordkeeping systems.  So IRS waived the requirement permanently.  The Service had hoped to match amounts listed on 1099-Ks directly with return, making discrepancies easier to spot.  This decision will make the 1099-Ks less useful in uncovering businesses that underreport income, and will give more ammunition to critics in Congress who want to repeal the reporting requirements altogether.

Tax-exemption groups will get extra audit scrutiny from IRS on several fronts:

  • Unrelated business income.  Groups that listed unrelated business activities on Form 990 will hear from the tax man if they didn’t also file Form 990-T with IRS
  • Political activity.  With a presidential election coming up later this year, agents will be more watchful for impermissible intervention in political campaigns.
  • Labor unions, business leagues and organizations promotion social welfare.  These groups can declare themselves to be exempt without seeking a letter from IRS.  Now the Service has decided to send out questionnaires to check their compliance. 
  • Upper-incomers will continue to feel audit heat in 2012.  As we reported in January, IRS statistics show that people with income of $200,000 or higher has an exam rate of 3.93% in 2011.  And one in every eight millionaires was audited.  IRS officials now say that examinations of filers will incomes of at least $200,000 will be a priority this year.  Other areas that are signaled out for special attention: filers with abusive transactions, such as inflated business deductions, sham losses and false 1099-OID forms.  And visits to return preparers to check on compliance.

Please contact us for a free proposal.

Business Activity or Hobby

M had been a co-owner of a successful construction business before selling his interest back to the firm and leaving. He then started a new firm that bought and renovated distressed properties, purchasing two, working on them, then selling one at a profit and one at a loss, for a total net loss. He decided that the real-estate market had deteriorated and that there was no point purchasing properties he might not be able to re-sell, so he terminated the business.

At year end, he deducted on his Schedule C those expenses related to the purchase, renovation and sale of the properties and took a net loss. But the IRS said that his activities amounted to a hobby, not a business, and denied the deductions. M. appealed the decision.

Held: For the taxpayer. In addition to the taxpayer being experienced and successful in the business, he also appeared to be operating in a businesslike manner, keeping good books and records, and trying to make a profit.

For example, he carefully tracked each project’s expenses in 2006 and 2007 as well as his net profits and losses. When he realized that the prospects for future profits were bleak, he cut his losses and closed the business, which demonstrated a profit objective. [Morgan et ux. v. Commissioner, T.C. Summ. Op.]

Tip. Here are factors to be considered when deciding if a client’s activity is geared to making a profit:

  • the manner in which the person carries on the activity;
  • the expertise of the person or his/her advisers;
  • the time and effort the person puts into the activity;
  • an expectation that assets used in the activity may appreciate in value;
  • the person’s success in similar or dissimilar activities;
  • the person’s history of profit/loss in the activity;
  • the amount of occasional profits, if any;
  • the person’s financial status; and
  • any elements of personal pleasure or recreation.

Please contact us for more information.