QuickBooks: Function Types

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The use of types in QuickBooks is an often misunderstood function of the program and just as often is neglected or misused. Because of the flexibility of the use of types is so vast it can be used to keep track of any kind of information desired about either customers, jobs, vendors and items sold or bought. Choosing which data to keep track of depends on the type of business.

Vendor Types

The proper use of types within the QuickBooks program allow you to generate customized reports and mailing lists using the data that is meaningful for a particular business. Business owners have many options in terms of vendor types. Some businesses choose to use a vendor's industry as a type. A retail store may set up vendor types reflective of the products they sell. Some vendors sell grocery goods, and others medicine or tobacco products. Other businesses may have vendors that are specific to a geographic region when delivery of product is time sensitive they may create types based on the vendor locations.

Those in the construction industry may choose to type vendors based on the type of services provided. For example, a construction company may use painters, drywall hangers, framers and electrical and plumbing contractors. If it is necessary to create a sub-type (for example if a company uses one subcontractor for interior paint jobs and another for exterior paint jobs) it would create a general type labeled painters and a sub-type for interior and exterior painters.

This is done through the edit vendor screen when entering in the type under the space for the name of the vendor's business.

Customer/Job Types

For those companies who perform more than one job for the same customer, QuickBooks allows the creation of jobs underneath the customer's name. Use the same types for customers as used for vendors, though a customer's geographic region may not be as important to know as it is for vendors. Some businesses have wholesale and retail customers and as such use those designations as types. If there are no obvious designations used to separate customers, use types to keep track of how customers heard of the business. These categories would include "word of mouth," "yellow pages," "newspaper ad," or "direct mail." At the end of the year, a report could be generated that would show which marketing campaign was the most successful in generating customers and sales. With job types, the businesses that would use the "jobs" feature are similar to construction related companies. One customer may have your company repair a roof one day and handle a plumbing issue on another day. Creating a job type for each service performed aids in finding out which services you offer that generate the most profit margin and those that end up costing more money in expenses than in revenues.

Item Types

Item types are the only type that is already defined by the QuickBooks program. There are 12 item types preset in QuickBooks. An item is a service or physical item that is sold. The item types are as follows:

  1. Service—if what you sell is services, e.g., a landscaping company, create an item "Mowing" and make it a "Service" type.

  2. Inventory Part—in the same landscaping business, if you sell parts to repair lawn equipment, for example "Mower Blades" these would be an inventory part.

  3. Inventory Assembly—An assembly is made up of a number of separate inventory parts to complete a whole product. For example if you were to build a stool, it would be made up of a seat, four legs with support and perhaps a stool cushion.

  4. Non-inventory Parts—Use this type to categorize things such as office and cleaning supplies. If you are charging your customer for items needed to complete a job, these items would be considered non-inventory parts.

  5. Fixed Assets—An asset you have that is essential for the running of your business and is more or less a permanent fixture. A vehicle, a building or computer would qualify as being a fixed asset.

  6. Other Charge—If you charge late payment fees, finance charges or shipping expenses, these would be considered "other charges."

  7. Subtotal—in order to include a subtotal on customer invoices you must create a "Subtotal" type. This adds all items and give a running total before the sales taxes are added to the total. This helps when you are using the "Discount" feature to remove a percentage discount before taxes are added.

  8. Group—Like an inventory assembly, a group is made up of items that are included in a "package" deal. For instance a complete lawn service detail may be made up of the separate service items, "Mowing", "Edging" and "Tree Trimming."

  9. Discount—Creating a discount item subtracts either a percentage or a fixed amount from the subtotal.

  10. Payment—If it is common for a customer to pay a portion of the total owed at the time of the sale, create a "payment" item that reduces the amount owed on an invoice.

  11. Sales Tax Item—Sales tax is usually calculated on a state and local level. This item allows the creation of a separate sales tax item for the state and for the local discretionary tax.

  12. Sales Tax Group—This item is made up of two or more separate sales tax items as one group. In your county, you may have a 1 percent discretionary tax and a 6 percent state tax, the "sales tax group" allows you to have one line item that keeps track of both types of "sales tax items" in the same transaction.