 Zero Accounting Software 2023 Rental Income Set Up Items Get ready to become an Accountant Hero with Zero 2023 First a word from our sponsor Well, actually these are just items that we picked from the YouTube Shopping Affiliate Program But that's actually good for you Because these aren't things that were just given to us from some large corporation Which we don't even use in exchange for us selling them to you These are things that we actually researched, purchased, and used ourselves Hug slippers I usually walk around my home in just my socks But I wanted a high quality pair of slippers that didn't have a heel on them So I can slip them on easily Give me a little bit more warmth than just my socks provide And which has a sole on them so I can deal with messes in the home Such as spilled liquid or broken glass Without getting my socks wet or my feet cut up And the hug slippers do a great job with that I like the quality of the slippers They feel like they're going to last a long time They will probably outlast me So I recommend the hug slippers Accountinginstruction.thinkific.com Where we have many different courses You can purchase one at a time Or have a subscription model Giving you access to all the courses Courses which are well organized Have other resources like Excel files And PDF files to download And no commercials Here we are in our Custom Zero home page Going into the company file We set up in a prior presentation That being get great guitars Duplicating tabs to put reports in We're going to right click the tab up top So we can duplicate it Right click in the duplicated tab And duplicating again Back to the tab to the middle Accounting drop down We want to open the balance sheet Then we'll tab to the right We want to open the accounting drop down This time the income statement But the comparative income statement The one we set up in a prior presentation Comparing January and February Currently working on the month of February If you don't have that one You can just open the normal income statement Tab into the left We're going to change the date range We're going to select the drop down Custom range to file it And then go into 2023 End of it and update So there we have it So we're going to imagine We're going to be adding another form Of income to our business So in our business We've currently been generating Revenue by selling guitars Buying guitars, marking them up And then selling them And now we want to And we've done some guitar lessons as well Now we're going to imagine That we're going to have rental income So I'm over here on the income side of things And we're going to imagine We're going to add rental income to the mix Now as we do that Here first we're going to be setting up The foundational items That we're going to use And think through the process Of a rental kind of system That we might set up for generating income So first we might think about The type of income account That we want to be impacted We don't need to set up Another income account But we could right We could say I could just put it Into another form of service That being a rental income But I might put it into another New account called rental income And half our items go to that new account as well So that's what we'll do We'll add another account But I just want to point out to be careful When you're thinking about the number Of income accounts that you're setting up Because generally you don't want A whole lot of income accounts And the place where people usually get mixed up Is sometimes people start to Create income accounts by customer Meaning they try to assign Their income accounts by each customer Having a different income account You don't usually want to do that In part because you can run other reports Which will break the information out by customer Although there are exceptions to that rule For example if you're getting paid Through like platforms like a YouTube Or something like that Then you might just say Your customer is basically YouTube And you might just call it YouTube revenue You might have a different line item In part because you're just recording Directly to it with like bank feeds But if you're doing a full accounting Process usually you don't want to set up Your income accounts by customer But rather by general category The other thing that people often do Is they set up their income accounts To detailed by a very specific category So in our example, for example We wouldn't want to set up a different income account For each guitar that we sell In part because we can run other reports Breaking out the sales by item that we sell If we're properly tracking the items That we're selling usually So that's why we just have these two categories Of service and sales Sales be the inventory that we're selling Service being everything else I'm going to add one other account For our rental income Let's do that first Going to the tab to the left We're going to go into our accounting dropdown And let's go into our chart of accounts Here's the chart with the accounts of it The chart of the accounts Now they have this nice system in zero That I can go to the revenue accounts Those are the ones I want to be looking at here So let's tab on over to the revenue And so we've got sales We've got service And now let's make another one for rental income Which I'm going to make 4, 3, 5, 0 Let's say add a new one We want to say add an account I'm going to type in the code 4, 3, 5, 0 Account type is going to be an income Type of account Come on in, income So we'll say Have I been saying revenue or sales? I'll say it's a sales type of account But the name is going to be Rental income And so there we have it Tax is We don't have any tax Exempt I'm going to say In general And so the default tax setting for this account And so I'm going to say If I choose by the way Revenue Let's keep it at sales And I'll say tax exempt Alright and so I'm going to say save it And so there we have it So there's our rental income And now I'm going to set up some items That will be pointing to that rental income So I'm going to go to my dropdown Up top for the Business And go down to the products and service I call them product or service items Now let's take a look at the flow chart Just so we can see, get an idea Of how this is going to work So we can populate our items So I'm going to go to a screenshot Of the QuickBooks desktop But we're just looking at the flow Which would be the same for most accounting systems To try to think about what the flow will look like In terms of forms So that we can then plan out how this is going to work So we have in our shop We have guitars And guitar equipment We are imagining here Basses, drums and so on and so forth And we're thinking for another revenue source We can rent out As opposed to just selling The items that we have on hand So how would that work We can imagine someone would call in maybe And request That they want to have a band set To be rented, right, so we're going to say They call in, maybe we make an estimate At that point in time And then possibly we get a down payment When they reserve the equipment So that we can then lock them in To that actual reservation So we don't double book the equipment And then you would think that Would be a receive money So when we get the down payment We have this prepayment situation We have unearned revenue We got paid before we did the work Before we provided the equipment So we'll have to deal with that And then when they actually rent The equipment, we'll have an invoice That we can generate from the estimate And then of course from that point We'll have the normal kind of process Which means we would receive the rest Of the payment Applying out the prepayment to it The credit amount And then we can record the deposit So that's the general flow that we will have The other thing we want to keep in mind Is that if someone is calling In for an estimate About renting equipment Possibly for a band session Or whatever they're doing on a weekend Then do we want to have Each of the items, each guitar Each piece of drum set, each amp Listed separately So they have complete customization For the amount of rental that they want Usually no, I would suggest Because that will be too Chaotic of a system Oftentimes And if they don't clear a minimal amount Of rental income It's probably not worth our time To be renting the equipment So oftentimes you might think Well how am I going to group this together So whoever's calling or taking calls For someone who wants to rent the equipment Can do this as easily as possible So you might have like a set band set Right, so we might say this is the minimum That you could rent It includes two guitars A microphone, drum set Amplifier, whatever And then possibly you can customize it From that point Switching out more expensive guitars Or having another amp Or something like that That's how you might kind of set up Your baseline items, remembering When you set up your items This is going to be the underlying Foundational thing As well as possible So that the actual process Of doing business And doing the rental will be easily To flow through the forms So we're in our items again Business drop down, we're in our products And services, so let's set up our baseline item Which is just going to be A band set rental A standard rental set So we'll hit the drop down I'm sorry, new item And we're going to say it's going to be A band Set Rental And we'll just say this is package number one Let's say And I'm just going to say that's the same name and code We're not having any inventory We're not tracking the inventory We're going to be giving them physical things But we're not selling those physical things We're just renting them We're not going to have to purchase this stuff So I'm not going to uncheck the purchase We're going to sell it For our sales price For our band set I'm just going to say 2,000 I have no idea, I'm just making up a number here And then I'm going to put it into my new sales account That we set up Which is the sales rental Income And then I'm going to say it's tax exempt Because we're not actually selling inventory So I'm not going to record any tax to it But if it was taxed In whatever region you're in In the description, maybe I say what's included in here We'll say Two Guitars Drum Set Microphone Microphone I was just checking We have the spell check, yes Microphone What else? Amplifier Amp So I think that's good What's included in Our standard set So you have to buy that If you want the rental, we don't go under that If you only want one guitar, cool It still costs $2,000 So you might as well take the two of them And then when they come in, they can pick the guitars That are in the category possibly Of that range of rental Alright, so then we're going to say But maybe we can customize it A little bit, say If they buy that baseline But then They want an added guitar Or something like that You can add to it, maybe If you want like three guitars Or if you want to improve your guitar, maybe So we'll say new item And I'm going to say this is going to be What did I call it? Band set Rental Guitar Band Rental Added Guitar So added guitar And we'll say boom, boom We're not going to track it again This is just renting out the added guitar And if they want an added guitar That Is going to cost Let's say $50 $50 per added guitar That's also going to go into the Rental income That's exempt There we go And let's add one more If they want to make it really loud And they want to add an extra amp Or maybe upgrade the amp So they can really piss off the neighbors So we'll say Rental Added amp Or amp upgrade Or something like that And so we'll say it's an amp upgrade And that's going to be $40 You do that And you're sure to have Cause trouble If the cops don't show up Then you get your money back After blasting out With this set of stuff Rental income Alright So there we have that And so we'll save that And so let's say That's our baseline stuff So where's my Let's see Do I have, can I see everything here Is that everything I got Where did the other two go We've got the band set And We've got the Here they are The Rental added amp And added guitar So now, next time we'll go through And start to add this in So now everything's set up Some punk kid teenager That's on the phone Working the shop while you're out Doing whatever you're doing They should have everything to be able to set it up Even though the punk kid teenager Is kind of not the brightest Punk on the block Or whatever So then, if someone calls in They could just be like They're like, we want a drum set And the punk kid teenager that we have Working for us is like, oh dude Rental, we rent Stuff now Let me do an estimate for you And so they could go down And do a quote And then You know Within the quote, they can select the items So, and they're like We just want like one guitar or something The punk teenager knows that They're like, no dude You have to You have to take The whole band set baseline $200 And then if you want to add a guitar Then you can So then if they wanted to add a guitar Or an amp, then they can add it So that's how it would set up And then we can Get a down payment based on this And so on and so forth We'll go from there next time But that's the general idea I'm not going to record it yet I'm not going to go back to the dashboard And go out of there. We haven't changed anything To the actual financial statements yet So we don't need to lick at the trial Balance So we will say audios for now Amigos But And we'll start to do the Rental revenue making next time