Items Vs Expenses Tab

I would worry about the placement if I were you. Then again I'm not you so I don't have to worry. Super question by the way.

Why is it a "super question"?

-Mark Bole

Not sure. At the time it seemed like a "super question".

Here's what I've found. Tax accountants like account numbers or the expense tab because that way they don't have to look up things in the item list to see what account number they are posting to. That's the only reason I've even been able to come up with. Of course in SlowBooks the item list is king, so why they tell you not to use it is obvious. If you don't use items you can't look up how many widget A's vs. widget B's you bought. Tax accountants don't care about management accounting, their focus is get the tax return done in fifteen minutes so they can do as many as possible.

That why the question is super.

Super theory, by the way you have no idea what you are talking about. There are occasions where a user, that knows what they are doing, needs to enter a line item on a bill or invoice that posts to a general ledger account that normally does not get posted to. QuickBooks requires the user to first set up an item that points to the general ledger account in question even if the company will use that new item only once in the life of their business. Its a minor issue and has absolutely nothing to do with tax return preparation.

Allan, you are in the minority of the tax accountants I've run into. Your position is sane. The ones I've run into don't want anything but an inventory item to use the item list. Never mind that you order the supply twice a month on a PO and it has a 20 digit part number you would otherwise have to remember and enter on the PO. No no no, it's not a inventory part so it can't be an item, it has to directly post to an account or at least that's what I've been told way too frequently. I put the foot down and the issue usually goes away. Too many old pencil pusher types I guess.

So the bottom line is don't worry about whether an ordinary non-inventory expense shows up on the Items tab?

Your accountant, if you have one, is the person to ask regarding preference. None of the accountants I work with take issue with how the entry is done as long as its done correctly.

As a bookkeeper, I make Items for all the things a client company buys & sells. I don't create Items for overhead expenses like utilities, advertising, m&e, etc.

-- Tara

The main focus of my practice is accounting software consulting, not tax preparation.

Your

Hard to believe that you never had an occation to do so or realize that you should.

I think you have it Grasshopper. Just remember that an item does not have to only represent physical matter that is placed on a shelf for resale but can be sales tax, travel, office supplies or anything your heart desires. Hell they are also used for subtotals and prepayments.

What occasion would dictate the need to setup overhead expenses like utilities/rent/advertising as Items? None of my clients invoice for their overhead and since expenses are allowed in the Enter Bills window I can't think of a reason why they "should" be items.

-- Tara

There are many users that set up POs for non-inventory items and services. There are also times when a user needs to create an invoice for their customer and one or more lines on the invoice offsets a normal expense. For example, lets say I prepare 1099's for one of my clients and as part of my service I mail them to the recipients and bill for reimbursement. I need an item set up that offsets my postage expense. There are also times where I require a client to reimburse me for tolls and parking. I have to set up an item for each.

Funny you should mention advertising. Now for the yellow page ad on the phone bill I'd agree with you there isn't really a need for an item. However when making a media buy usually the seller wants a purchase order detailing the space / time that is being bought and a description of what is supposed to run there, especially when you are on terms.

Now on to utilities and rent. Suppose you are an IT company and one thing you do is rent space for your clients to come in and place a web server machine to be connected to your super fast connection. Well suddenly utilities and rent aren't just overhead items any more.

In short there are exceptions for any rule.

That all makes sense but doesn't apply to me at this time. None of my clients use POs properly (one was trying but failing miserably) and reimbursable expenses, when they occur, are posted as reimbursable income rather than an offset to the expense account...per the accountant's wishes.

-- Tara

Sure, which is why the only recommendation I made was to ask the OP's accountant.

-- Tara