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arkvalleyinfo
December 11, 2018
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How would I go about setting up my used car dealership? We buy cars, have things fixed on them, get them inspected, and then sell them. I need help from the first step?

  • December 11, 2018
  • 3 replies
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I need help setting up my used car dealership with QuickBooks pro desktop. I am a beginner. I don't know how to set up accounts since we primarily deal with cash. 

Best answer by Rustler

QB is accounting, are you a beginner at accounting or with QB, or both?

in QB, company menu select the home page, then use menu edit>preferences and select the desktop on the left, select show home page when opening on the right and save.  The home page will show you the flow to some extent. You need to work with someone  who knows QBDT to get you started.

You will also have to turn on inventory in preferences

Click chart of accounts and use the button bottom left to create new accounts

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create a dummy bank account called WIP (work in progress)

Purchase the used car and use that WIP account as the expense for the purchase.

Any thing you buy to repair the car is also posted to that WIP account.

If you use on hand inventory items for the repair to get it ready for sale, use inventory adjust, set the adjusting account to the WIP account and lower the qty of the items used.

That accumulates all costs for the car in the WIP account.

When the car is ready for sale:
1. Create the inventory item for the car in the products & services list
2. create (if you need to the first time you do this) a dummy vendor named in-house
3. Use the WIP bank account to "buy" the used car item you just created from the in-house vendor, the qty is one, and the total item cost is the total amount in the WIP account

The inventory item car is now in inventory with total costs to get it ready, and the WIP account is zero balance ready for the next car you need to do.  You can have as many WIP accounts as you need if you are getting more than one ready at a time.  ie WIP, WIP-1, WIP-2, etc

And of course you use the inventory item for the car you are selling on an invoice or sales receipt.

Any costs to keep the car running after it is ready for sale is repair cost expense and not part of item cost.


3 replies

Rustler
RustlerAnswer
December 11, 2018

QB is accounting, are you a beginner at accounting or with QB, or both?

in QB, company menu select the home page, then use menu edit>preferences and select the desktop on the left, select show home page when opening on the right and save.  The home page will show you the flow to some extent. You need to work with someone  who knows QBDT to get you started.

You will also have to turn on inventory in preferences

Click chart of accounts and use the button bottom left to create new accounts

----------

create a dummy bank account called WIP (work in progress)

Purchase the used car and use that WIP account as the expense for the purchase.

Any thing you buy to repair the car is also posted to that WIP account.

If you use on hand inventory items for the repair to get it ready for sale, use inventory adjust, set the adjusting account to the WIP account and lower the qty of the items used.

That accumulates all costs for the car in the WIP account.

When the car is ready for sale:
1. Create the inventory item for the car in the products & services list
2. create (if you need to the first time you do this) a dummy vendor named in-house
3. Use the WIP bank account to "buy" the used car item you just created from the in-house vendor, the qty is one, and the total item cost is the total amount in the WIP account

The inventory item car is now in inventory with total costs to get it ready, and the WIP account is zero balance ready for the next car you need to do.  You can have as many WIP accounts as you need if you are getting more than one ready at a time.  ie WIP, WIP-1, WIP-2, etc

And of course you use the inventory item for the car you are selling on an invoice or sales receipt.

Any costs to keep the car running after it is ready for sale is repair cost expense and not part of item cost.


    A
    arkvalleyinfoAuthor
    December 11, 2018
    Having installed and worked with auto dealer computer systems for over 30 years I find it hard to believe that the method needed for keeping control of perpetual inventories on QB is so convoluted.  I like your workaround but tried entering the car directly into used car inventory when purchased. When repairs or equipment are entered, I added them to the WIP account as you suggested but then immediately adjusted the inventory value so the inventory would always be correct and the WIP would always be "0".  Is there something I haven't thought of here?  I think it might work better.
    qbteachmt
    qbteachmt
    December 11, 2018

    I responded to @arkvalleyinfo on another topic where you commented. I will copy that here:

    "Someone suggested a WIP account as a work around"

    Yes, because that is an Asset with Multiple inputs = accumulating the total invested. This is done for any process that improves the asset, or the asset cost comes from multiple inputs such as Purchase Cost, Import Duties, Broker Fees, improvement labor and materials, etc.

    "leaving all of the costs in the WIP until the unit is sold."

    No, you don't have to Leave it there. If you want to manage this as a unique inventory item, you them "buy from WIP" by using a Vendor name of WIP, and listing the WIP account on the Expenses tab with the negative total; put the real item on the items tab with the total Basis. Hit re-calc. This is a $0 Bill. Now your product is On Hand in inventory and fully costed.

    "I toyed around with adding the unit into inventory immediately and adding the additional costs to the WIP account. Then turning right around and adjusting the inventory value by doing and inventory adjustment using the WIP account."

    Yes, that works, too. The real issue is Dates Matter. Pay attention to the Date reporting.

    "That cleared the WIP account and keeps the inventory value for all of the units correct.  I worked in the auto industry for over 30 years and find it hard to believe that QB can't get perpetual inventory right."

    This isn't Perpetual Inventory. This is specific Items Names as "in progress." This is Production, really.

    WIP = Work in Progress

    CIP = Construction in Progress

    Law firm = Advanced Costs

    Lots of Industries use Other Asset tracking for expenditures for operational requirements.


    Heck, I set up a Corrections Facility that is all Liability accounting, of three liability types.
    M
    MasterMar
    December 18, 2024
    This post has been deleted.

    Is there an updated step by step process to do this on QB Desktop Pro Plus 2024? it would be very helpful.

    A
    AnneMariee
    December 18, 2024

    The process is similar to the 2024 version, MasterMar. Let's set up your used car dealership in QuickBooks Desktop together.

     

    First, adjust some settings in QuickBooks so you're greeted with the home page whenever you open the software. Follow these steps to do so:

     

    1. On the top menu, go to Edit and then Preferences.
    2. Navigate to the Desktop View on the left panel.
    3. Tick the Show Home page when opening a company file option.
    4. Click OK.

     

    This will give you an overview of your workflow. Then, let's turn on the inventory option. Here's how:

     

    1. On the same Preferences window, go to Items & Inventory.
    2. Ensure the settings are adjusted to make inventory active in the Company Preferences tab.
    3. Tick the Inventory and purchase orders are active option.
    4. Click OK.

     

    Afterward, create new accounts for your dealership. You can refer to Rustler's answer in this thread on the specifics. When the car is ready for sale, follow the steps below to guide you.

     

    1. Create the inventory item for the car.
    2. If you don't have one yet, create a vendor.
    3. Use the bank account to buy the used car you just created from the vendor.

     

    I'll also leave this article on setting up sales tax in QuickBooks Desktop so you can easily monitor and remit them to the appropriate tax collecting agency: Set up sales tax in QuickBooks Desktop.

     

    I'm confident this guide will help you to manage your dealership efficiently. If you have any questions or need further assistance, don't hesitate to reach out. Here's to a seamless setup!

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