This is a challenging topic for QuickBooks, but try the following suggestions:
If you are accepting goods for consignment in many cases you are actually creating a liability on your part. You have someone else’s goods in your control and you own them if your place should burn down or get broken into and the goods stolen This needs to be addressed in your Agreement with the Consignor.
- IF you are responsible for the goods in case of fire, theft, etc. then you have a “contingent liability” the minute the goods hit the door.
- For your own benefit, make clear who has responsibility for goods that are lost to fire, etc. This could also have an impact on your business insurance, so you need to clarify your position with them. Saying you have “no inventory” may not be correct if the place burns down. Your consignors are not going to accept “The place was broken into” when you have neither their goods nor their money.
That being said, here is the process for QuickBooks:
- Set up the Consignor as a Vendor
- Create Purchase Order for what they want to sell, it may be one item or several.
- Create an Non-Inventory “Item” for every item they are consigning, point to account “Cost of Goods Sold”.
- Suggest creating “Item” for Last Name of Consignor, and then “Sub-Items” for each item they are selling
- If you do not have an agreed sell price leave blank.
- When an item sells, create a Bill for that Vendor, selecting the appropriate Purchase Order.
- Select the item(s) that sold and enter the sales price. Enter Zero “0” in quantity field for items not sold so that the Purchase Order remains open if multiple items.
- Create “Items” for any Consignor Agreement costs such as Storage Fees, Sales Tax Liability, Commission, and enter into Bill.
- Deduct these items as agreed upon from your Bill.
- The balance is what you owe the Consignor.
Contact us with any bookkeeping questions, we will find you a solution.
MJB’s Bookkeeping Solutions 502-309-9652