We have items that we use in our stores - we do not sell them to our customers. I would like to make them non-inventory items because we really don't track their usage, but if I do that, I cannot place them on a PO (which I need to do.)
Is there a way to order a non-inventory item through the system?
No not really. As Microsoft would put it 'that is by design'.
Do you mean items purchased from suppliers that are "used" in the store? To account for these products for tax and reporting purposes, setup a customer account called Store Expense, then receive and sell these items at cost to this account. Periodically pay off the account with a check (or Cash tender with note to your bookkeeper counted as cash). This will expense the items against your books. This is also a legal requirement for sales tax collection purposes (items should be taxable). Otherwise a tax auditor will estimate this figure and charge you a penalty for not collecting taxes on goods purchased for the business. So it is best to expense these goods as above and collect any sales tax. This also gives you a dollar figure and history for this type of expense.
Ron L.
We use a different workaround than Ron. I setup a reason code for inventory adjustment called "store use". I periodically run an item movement report filtered for the reason code "store use". Use that report to make the appropriate adjustments to your accounting software.
Marc
If your state collects sales tax, the workaround you mention won't survive a tax audit unless you are paying sales tax on the inventory you adjust out. It is easier to charge these items to a Store Expense account and track them as a transaction (invoice). Then you can quickly produce a report that shows amount and sales tax paid. Another way do to this would be to flag these items on the PO, don't receive them, but report the total cost on your monthly sales tax report and pay the tax amount due. I suppose you could do this with an adjustment report, as long as it tallies the costs and you report the total. The basic premise is you can't use your resale tax exempt status to purchase goods for the business and not pay taxes on them. This is a common question during a sales tax audit -- "Have you purchased any goods from vendors for business use?" The Store Expense account method provides you with a lot more information such as who, what, where, when, why along with an easily trackable expense whenever you write a check to the drawer. Or your bookkeeper could look up the balance and make an adjustment to that account once a month to zero it out.
Ron L.
The tax adjustments are exactly the postings made to the accounting software. The report totals the cost of the items used that tax is due on. I don't necessarily think one way is better than the other, but was just offering a suggestion based on how I do it.
One thing though - I would be sure to discount items that you ring up to a 'store' account down to cost, otherwise you are paying more sales tax than necessary if you base it on retail price.
Marc
Craig
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