QuickBooks Maximums

Summary

I would like to know if a new client of mine is suitable for QuickBooks Pro using their Job Cost feature. Background information: This is a new company (a corporation) that is taking over (buying the assets) an old company. I am involved in setting up the new company in QuickBooks and am concerned that QuickBooks may not be able to handle the volume. The company sells sporting goods and sporting attire. The sporting attire is custom sold with silk screening and embroidery. The old company has been using QuickBooks Pro (v.6) with Job Costing to trace jobs using a pre-assigned work order number. The company typically has 150-200 sales (new jobs) a month. Each job usually incurs three different types of costs (product cost, silk screen or embroider costs and freight). Can QuickBooks Pro Job Costing feature adequately handle 200 new jobs a month? If not, what would you suggest?

Question

I would like to know if a new client of mine is suitable for QuickBooks Pro using their Job Cost feature. Background information: This is a new company (a corporation) that is taking over (buying the assets) an old company. I am involved in setting up the new company in QuickBooks and am concerned that QuickBooks may not be able to handle the volume. The company sells sporting goods and sporting attire. The sporting attire is custom sold with silk screening and embroidery. The old company has been using QuickBooks Pro (v.6) with Job Costing to trace jobs using a pre-assigned work order number. The company typically has 150-200 sales (new jobs) a month. Each job usually incurs three different types of costs (product cost, silk screen or embroider costs and freight). Can QuickBooks Pro Job Costing feature adequately handle 200 new jobs a month? If not, what would you suggest?

Answer

From the information you've given, I don't see a problem with using QuickBooks. The number of new jobs each month is no problem, although you should be aware that the maximum number of customers in QuickBooks is 10,000. So you will probably reach that limit at some point. The hard decision here is whether to use Inventory. Assuming, for example that you purchase shirts in bulk, you don't know at the time of purchase which job will ultimately use a given shirt. Therefore, you're tempted to use Inventory, since the job costing of inventory happens at the time of sale, and it's automatic. On the other hand, if you have too many SKUs, your item list will grow out of control because you need a separate item for each SKU. Item lists growing out of control (more than about 200 inventory items is out of control, in my opinion) is the bigger concern here, so if you have too many SKUs you might need a different inventory tracking system. Since I assume the number of SKUs is small and the cost of inventory items doesn't fluctuate much, I'll say you should go ahead and use inventory for the sportswear. As for the work-order numbers, keep in mind that QuickBooks does not have any "order tracking" per se. You can use "Pending Invoices" to track orders that are not yet sales, but you should first check out the reports available to you if you use pending invoices. In brief, you can get a pending sales report of the total dollars, but you can't for example get a report on how many shirts have been promised to customers (on order). This may be really necessary to keep your inventory levels in line. Another issue is the costs of labor (embroidering, silk screening) and making sure that those get tracked by job. Since these are services, the only way to get them to allocate to jobs (on the cost side) is to use QuickBooks Pro's "two-sided service items". These are service items that have the checkmark by "This service is performed by a subcontractor". Two-sided service items allow you to track both costs and revenues by item. In transactions, you'll use the two-sided item on both purchases (or paychecks) and sales. If employees do the embroidery (I assume they do), then you should use time-tracking to track each employee's time by job and service item (e.g. embroidery). Set the payroll preferences to "Report all payroll taxes by Customer:Job, Service Item, and Class". Then set the employee records to "Use time data to record paychecks". Then, when you paychecks you'll get job costs automatically for wages and taxes. The Item profitability report shows revenues and costs (by item), and the P&L by job report shows revenues and expenses by job with full costing of products (inventory items), and services (two-sided services) that were tracked in timesheets through to paychecks. You'll probably be just fine with QuickBooks, but you'll need to make sure the client has the skills necessary to enter the data consistently and accurately. The system will be very dependent on that. If you don't use QuickBooks for payroll then you'll have a very hard time getting the costs of services recorded.