 QuickBooks Online 2023. Rental Income Setup Service Items. Get ready to start moving on up with QuickBooks Online 2023. Here we are in our Get Great Guitars practice file. We started up in a prior presentation using the 30-day free trial. We also have opened the free QuickBooks Online sample company. If you want the to open at the same time, we suggest using Incognito. You can open the Incognito window if using Google Chrome. Support Accounting Instruction by clicking the link below giving you a free month membership to all of the content on our website broken out by category further broken out by course. Each course then organized in a logical reasonable fashion making it much more easy to find what you need than can be done on a U2 page. We also include added resources such as Excel practice problems PDF files and more like QuickBooks backup files when applicable. So once again click the link below for a free month membership to our website and all the content on it by selecting the three dots in the browser incognito window and then type into the search engine QuickBooks Online Test Drive. We're going to use the sample company to compare the accounting view the view that Get Great Guitars is in and the business view the one the sample company is in. You can toggle between the two by going to the cog up top and switch the view down below. Let's open some tabs duplicating them to put reports in like we do every time right click on the tab up top to duplicate it right click in the duplicated tab to duplicate it going back to the middle tab to open up the reports on the left hand side and we want yes the favorite report the balance sheet reports one of the two faves the balance sheet where do you find that on the business view we find that by the way in the business overview and then the reports on the left hand side back to the accounting view tabbing to the right down to the reports like we do every time opening up the profit and loss the income statement closing the buggy and changing that range in 010123 to 022823 let's see the side by side for the months instead of the total and then run it so we've got the Jan we've got the Feb we got the total tab it to the middle close up that buggy and then change the range 010123 to 022823 and then once again we run it to refresh it like we do every time so now we're going to be imagining here in our business that we're going to be renting out some of our guitar equipment so this is another kind of business stream that we're thinking of putting together within the business if i go back on over to our float chart note that if we're looking up the customer cycle at the end of the day we expect revenue to be coming into the business now we have multiples ways that might happen if the easiest way if it was gig work and you just got paid by youtube like a platform or something you can wait till it comes through possibly using bank feeds and record the deposit if you're at a cash register you'll typically want to use the create sales receipt and then record the deposit and if you have to invoice because you're in like an accounting firm or law firm or landscaping where you have to do the work first invoice the client increase in the accounts receivable you'll do that then receive payment and then make the deposit so in our case we've been thinking about a cash register situation primarily when we sell the inventory or we've made invoices on the sale of inventory we've talked about situations where someone might come in and order a guitar and we might take a down payment for it in which case we got a payment before we create the invoice and we talked a little bit about a situation a job cost kind of situation where we're applying out the billable hours in like a guitar lesson type of situation similar to a law firm or cpa firm that we're then billing clients for so now we're thinking about a different concept which is going to be the rental income so now we're going to imagine that we have our equipment we started up the business we've got the equipment put together we've invested our capital in the equipment and now we're going to be renting it out as another source of revenue generation so the process with that is that someone might call us in we're going to imagine and ask for some kind of set of of rental equipment for possibly a band and then we're going to invoice it and rent it out but we're going to when we make the estimate want to collect possibly a deposit a down payment so that we are committed to the rental process in the future and they're more likely to follow through with it so we might make an estimate we might receive the payment first in terms of a deposit and then we will create the invoice when the actual rental transaction takes place so that's the the process we're going to imagine here to set that up then we're going to first set up the items for our new rental revenue stream so when we set up the items these are going to be the things that we sell when we populate the invoice and the estimate so we're imagining now that if someone comes in and they and they call in for example and they say they want to rent like band equipment for a weekend or something like that we want to make it as easy as possible for anybody that is on the phone to give them an estimate possibly take a deposit at that point in time to do that we want to make up we want to make the items to populate the estimate as easy as possible so let's go down to where those are located let's go to the sales tab let's go to the products and services product service items and then i'm going to close up the hand boogie if you're in the business view by the way it's under the get paid and paid tab on the left and then we've got the product and service items so i'm going to put this down so so now you might say well i can just create like a rental item for like every guitar so we've got multiple guitars down here and we might have amplifiers and drum sets and whatnot and we'll create a rental kind of cost for each of those and you can do that in like a piece mail type of scenario and and let them have a lot more customization over the equipment that they're going to be purchasing but obviously that'll be a lot more difficult in terms of coming up with a someone over the phone trying to come up with like an estimate and collect the deposit it might be easier oftentimes if you're in a situation like this to come up with a package bundle as your baseline bundle this is the bare minimum you can't pay us less rental than this you can't basically rent out one drumstick or anything like that because it's not worth our time to do that we're going to set up the baseline rental and then possibly you can add to it or improve on it from there so the idea might be we're going to give you like two guitars a drum set an amplifier as the baseline bundle with our baseline selection of equipment for that if you want to level up the guitars or get another guitar then we piece mail possibly up from there in some incremental way so getting your getting your items right whatever you're doing setting up your items right is going to be the key thing you have a similar issue if you were to have a law firm or a bookkeeping firm or something like that and someone wanted a project that was going to be put together how were you going to do that you just can say well how many hours is it going to take whoever's on the phone has no idea we don't really know the client but if we can if we can bill it out by how many transactions it's going to take do you have payroll or not and bundle those kind of things together we can get much more close to some kind of estimate and bill out on something less ambiguous than just say time for example okay so i'm going to add some items here i'm going to go up top and say let's say we're going to have a new item and it's going to be we're going to call it a service item because it's going to be rental so we're not actually even though it's dealing with the inventory we're not selling the inventory we're just renting the inventory and i'm just going to call the baseline rental we'll just call it banned i'm going to call it banned set number one rental so so we're going to start to say hey we're renting out banned set stuff and this is our baseline set that you can possibly level up from but this is this is the baseline and so i'm going to not going to put it into a category we could make a category for like rental stuff maybe let's do that let's let's actually make a category for for rental stuff and so we'll just practice with the categories we'll put that in the band set and then we'll have the price and then down here i'm going to let's put a little bit more detail in the description i'm going to say this includes two guitars like one drum set and and amplifier like for a weekend or something like that or two days i don't know how long it would be two days i don't know but you want to be specific on that well that's well i'm going to put i'm going to put 2000 here i have no idea how much that should actually go for so so we're just doing it for the practice problem it's going to go into then the account it's currently going to services which might be good but if you have another kind of source of income and we have multiple types of rental it might justify then another income account for rental income remember that you don't want to have too many income accounts i don't want an income account for every item that i sell but i might want for example to have an income account by the major groups of items inventory or possibly guitars versus drums or rental versus other service items so let's add let's add a new one i'm going to hit the drop down and i'm going to say i want another income account i'll break it out and so we're going to make an income account as we go hitting the drop down i want it to be an income type of account this subcategory other primary income i'll say and then i'm just going to call it equipment equipment rental income let's call it no sub account we'll keep it as is let's save it and close it so there we have it shouldn't be any tax applied to it because it's a service item so uh tax let's see if i can go into the tax edit the tax and say that we want it to be non tax and then okay and then so that looks good so let's save it and close it now remember if i just go on to the income statement over here that our income accounts what i'm trying to point out is that the income accounts you you don't usually want a whole lot of income statement accounts and you don't usually want to set up an income statement account for every item that you sell or every customer which is a common error that sometimes people make now sometimes you might deviate from that general rule because if you're in like gig work and you're getting paid by multiple platforms like a youtube or an uber or multiple platforms like that then and you're just using bank feeds to record your transactions instead of using the invoices and sales receipts then you might just make an income account called like google or youtube or something like that because you're losing some of the added detail that you would have on the sub ledgers to break out your income line items by item and by customer but uh if you if if you're doing the full service accounting for most types of businesses uh then then it's it's you don't want to have too many income accounts because you do have the sub ledgers if you want to break it out by customer and you don't want your income statement to be a big tediously looking thing you want it to be the summary document and you can go to the other sub accounts and ledgers for more detail all right so there's that one let's go back to the tab to the left and now let's say okay that's my baseline item which is now under uh the rental i've got my rental uh stuff let's add another one so i'm gonna say a new up top and i'm gonna say okay what if i what if they want to add on to the baseline i won't let them rent something for less than that because it's not worth the time but if they want to level up then i'm gonna say okay then we're gonna say if they want to level up they can add add a guitar maybe add one guitar to the standard package parental one package we'll say and so i'm gonna copy that and then i'm gonna say this is going to be in the rental category i'll put that here as well the price let's just say that that's going to be $50 that's going to be part of rental income as well so i'm going to call it kind of just type it in here rental rental equipment rental there it is hold on a second equipment rental income yes okay and then short term rental of tangible it's trying to select a category that's probably the best way to go but i'm just going to tell it not to apply the sales tax i'm just going to tell it instead of it's trying to help out by selecting the category but and which is great usually but i'm just going to go generic here and say that there's no tax applied to it so i'm going to say save that and so now if i scroll down uh we've got the the rental item down below and you can see down here that it's it's in the category of rental so the rental categories are in this little subtext okay let's do another one and let's pretend they want to add if they want to add an amplifier now to make it like super loud i'm going to say new so they're like dude i really want to piss off my neighbors can we make it louder and so we're like okay we get a lot of requests for that so if you want to add an amplifier to rental one we can upgrade or add an amplifier and we're going to put that into the category of rental again boom and let's say that's going to be 40 i'm just making up the numbers here it's going to go into rental uh equipment rental again equipment rental and so let's do that and then again it's trying to help mess out with the tax but i'm just going to do generic generic non-taxable and okay and save it and close it so if i scroll down then these are grouped together with that little sub category that little subline for the rental items down below so it's not in alphabetical order even though it starts with an a because it's grouped with the rental stuff okay so now the idea is that if someone calls in now and says i want to rent a band set and we have just someone answering the phone and wants to give them an estimate they can hit the plus button and say okay what do you what do you want to do and then we can we can say whoever it is and we can just a generic let's just go customer a a a here i won't record this i'm just gonna show you and they call in they could say okay you want to you want the rental rental equipment band set so that's going to be i said bank set that's great okay i should change that but you want that that's our baseline we don't have anything under that and then if they want to add on to that then we can add on you know rental or add add you know a guitar or something like that and that can help us to generate our estimate and then maybe we have a policy of collecting like 10 of it for down payment so that we can hold on to that band set equipment for them so i'm gonna i'm gonna close this out i'm gonna go so i'm gonna do you want to leave without saving i'm gonna say yes i'm gonna go back into my products and rentals and then go down here and show you how you can change the error which i did on purpose just to show you that if i if i then want to edit let's close up the boogie so if i want to edit this i can just edit it and then change it to bank or band set from bank set it's not a bank set it's not like a toy bank or something what are you doing customers are gonna laugh at you all right so now save it okay confirm they wanted i'm just gonna do the tax thing here they're trying to change the tax thing again so i'm just gonna say none all right so there it is so no change on the on the financial statements yet so we'll be sold notes so we won't do the trial balance thing but there will be changes in the future and this stuff we did now will lay the foundation for those changes so we'll tune in next time