QuickBooks is a well-known accounting software that many small businesses use. If you’re running a car dealership, especially one dealing with used cars, you might be wondering if QuickBooks can work for you. The short answer is yes, particularly QuickBooks Desktop (QBDT). It can be adapted to manage the specific accounting needs of a car dealership.
To get started with QuickBooks Desktop for your dealership, you’ll first want to navigate to the home page. If you don’t see it right away, you can easily set it to appear each time you open the program. Go to the “Edit” menu, then “Preferences,” and select “Desktop” on the left side menu. On the right, you’ll find an option to “Show Home Page when Opening.” Make sure this is selected and save your changes. This home page provides a visual workflow that can be very helpful as you learn the system. It’s also highly recommended to find someone experienced with QuickBooks Desktop to guide you through the initial setup and processes tailored for a car dealership.
Inventory management is crucial for any car dealership. QuickBooks allows you to track your car inventory effectively. You will need to enable the inventory feature in preferences. Once that’s done, you can begin setting up your chart of accounts. This is where you categorize all your financial transactions. To access this, click on “Chart of Accounts.” At the bottom left, you’ll see a “New” button, which allows you to create new accounts specific to your dealership’s needs.
For managing used car acquisitions and related costs, a useful technique is to create a “Work in Progress” (WIP) account. Think of this as a temporary holding space for all the costs associated with getting a used car ready for sale. A practical approach is to create a dummy bank account in QuickBooks labeled “WIP.”
When you purchase a used car, record this purchase in QuickBooks, using the WIP account as the expense account. Any expenses incurred to repair or refurbish the car before it’s ready for sale should also be recorded and assigned to this same WIP account. This keeps all the costs associated with each vehicle neatly organized in one place. If you use parts from your existing inventory to repair a car, you’ll need to make an inventory adjustment. Use the “Inventory Adjustment” feature, and set the adjusting account to your WIP account. This will reduce the quantity of inventory items used and correctly allocate their cost to the car being prepared for sale.
Once a used car is ready to be sold, you need to transition it from the WIP account into your sales inventory. First, create an inventory item for the car in the “Products & Services” list. Next, create a dummy vendor – you might name it something like “In-House.” Then, use your WIP bank account to effectively “buy” the used car item from this “In-House” vendor. The quantity will be one, and the total item cost should be the total accumulated amount in your WIP account for that specific car. This process transfers the total cost from the WIP account into the inventory value of the car. The WIP account should now have a zero balance, ready to track costs for the next vehicle. You can use multiple WIP accounts (like WIP-1, WIP-2, etc.) if you are working on preparing several cars simultaneously.
Finally, when you sell the car, you’ll use the inventory item you created on a sales invoice or sales receipt. It’s important to note that any costs incurred for maintaining the car after it’s ready for sale are considered general repair expenses and should not be included in the car’s inventory cost. These are separate operational expenses.
QuickBooks Desktop, therefore, offers a viable program for car dealerships to manage their accounting, especially when dealing with the complexities of used car inventory and the associated costs from acquisition to sale. By using features like inventory management, chart of accounts, and WIP accounts, dealerships can maintain accurate financial records and streamline their operations.
