Items for Shop Use

GAMartinGAMartin Member Posts: 11
How are other shops accounting for items that are being used for shop use and not being charged directly to customer. Example 12oz can of lubricant is used by our mechanic to lube 5-10 bikes. Lubrication is covered in our tuneup charge. The same lubricant is also available for sale to customers. Keeping our inventory straight and knowing whats happening is important to us. Currently we have a 'shop use' customer/account in Light Speed and just charge it to that account, but now what is happening is we have this big outstanding account in Light Speed and Quickbooks because we use the LS accounting QB sync. Anybody find a better way to do this?
Simple things should be simple, complex things should be possible. Alan Kay

10 comments

  • TourightTouright Member Posts: 5
    I do it similar yet I do not sync.
    (Tried that in the past and had too many issues.)

    So you are a bicycle shop? Whats the name if you dont mind me asking?
  • GAMartinGAMartin Member Posts: 11
    So now you just let that big out standing account show in Light Speed., and just ignore it. Or do you do something with it at the end of the year etc.
    Simple things should be simple, complex things should be possible. Alan Kay
  • wocrucwocruc Member Posts: 10
    In addition to having a "Shop Use" customer, we also have a discount for internal use only that is set for a 100% discount. The discount is applied to the Shop Use customer account. It is working well for us. We have no account balance building, no sales revenue showing that is not actually sales revenue. Meanwhile, we do have an easy way to see what was consumed internally so that we can be accurate with our Use Tax reporting. The data shows the cost of the items which we use for the value on our use tax report.
  • kevinneubkevinneub Member Posts: 2
    We have a store account as well. But I created a payment type called "Store Use" that keeps track of all sales to the store as though the products were paid for without having an ever increasing account balance. This allows us to keep the daily margins correct as though the products were sold as normal. Otherwise the product cost would drag margins down on other sales.
  • TourightTouright Member Posts: 5
    Was thinking last night when I was not sleeping. When I do it the way I have I count what I sell to myself as income I believe. Do I?
  • Gabriel GivensGabriel Givens Moderator, Lightspeed Staff Posts: 19 moderator
    Touright said:

    Was thinking last night when I was not sleeping. When I do it the way I have I count what I sell to myself as income I believe. Do I?

    Normally when you store use an item, you as the business are buying it for business use from your inventory. This also means that in some states (see your local laws or consult with your local taxing agency in your state or province) that you are subject to sales tax for that item because you didn't resell it (applicable to the US usually). It's called USE tax which is usually the same as sales tax. So this would be regarded more as a cost for your business.

    Example:

    If you order 10 wrenches for your bike shop from your vendor, then decide "I need a new wrench, I'll just take it from inventory". And say each wrench's cost is $2.00. Right now you have $20 in inventory worth of wrenches. When you store use, you remove $2 of that $20 from inventory because it is no longer for sale, but now an asset of the business' equipment. And is also now considered a cost of the business' operations. This is normally documented by deducting the inventory you store use from the total inventory and adding it's cost to the store's overhead.

    For more information about the accounting of this, you will want to speak to your accountant.
    Gabriel Givens
    Senior Frontline Support
    Lightspeed HQ
  • TourightTouright Member Posts: 5
    Gabriel
    Can you do that and still charge tax on the item at cost? As one needs to in this case pay use tax
  • GAMartinGAMartin Member Posts: 11
    OK @Gabriel Givens and then how would your suggestion work with the Light Speed accounting that auto syncs with Quickbooks? That new payment type "Store Use" is going to need to go some where when it gets to Quickbooks. I already paid for the item once I don't want to pay myself a second time...
    Simple things should be simple, complex things should be possible. Alan Kay
  • Gabriel GivensGabriel Givens Moderator, Lightspeed Staff Posts: 19 moderator
    Touright said:

    Gabriel
    Can you do that and still charge tax on the item at cost? As one needs to in this case pay use tax

    Check with your local laws to see what the rate would be if different from your sales tax. But yes, you can.
    GAMartin said:

    OK @Gabriel Givens and then how would your suggestion work with the Light Speed accounting that auto syncs with Quickbooks? That new payment type "Store Use" is going to need to go some where when it gets to Quickbooks. I already paid for the item once I don't want to pay myself a second time...

    Lightspeed Accounting would record the store use payment as a payment. This can then be mapped into your accounting to a QB account or Xero account meant for expenses. However you will want to talk to your accountant about how they would advise you to map it specifically. An accountant would be best to explain how the accounting for this works when you store use. The most basic way to explain store use is a debit from your inventory account, and a credit to your expenses account, whatever that may be. Your inventory account is more for holding inventory value you intent to gain from later whereas an expense account is a cost incurred from doing business. It should just be transactions being moved around. Again though for information about this, speak with your accountant and they can explain the more indepth accounting for this.
    Gabriel Givens
    Senior Frontline Support
    Lightspeed HQ
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