How To Record Multiple Income Types in QuickBooks
It’s important to properly record multiple income types in QuickBooks correctly. The P&L (Profit/Loss Statement) often grows longer than necessary because clients do not realize there are other ways to see detail on customers and income types, but rest assured there are. The income section of the P&L should be a document that is a summary of your major streams of income. It should be a document that can be publicized without giving away too much confidential data – data often unnecessary to telling the financial story of your business to an outside stakeholder.
Common Occurrence in Recording Income
A client recently presented us with a very lengthy Income Statement. Not only was there one income account for each customer, but there was a corresponding deferred income account for each customer. A few of the accounts even had sub-accounts for the different types of income received from each customer. It looked something like this:
- Income from Customer A
- Income from Customer B
- Type I Income
- Type II Income
- Income from Customer C
- Income from Customer D
- Type I Income
- Type II Income
Now all of that information is important, but there are better ways to access it and it is easy to do as long as you use all the available features of QuickBooks.
What Are QuickBooks Income Types?
First, let’s discuss how to keep track of income types without having sub-accounts called “Type I Income.” QuickBooks’ invoices use something called Products/Services. Reporting is available for any given time period as it relates to the Products/Services. If you create your invoices using one or more lines each containing a different Product/Service you can get reporting, by the customer if desired, for each item.
Example of income Types
Within our accounting firm, we want to track separately the money earned from tax work, bookkeeping, and payroll services. Therefore we have three separate Products/Services by those names. All three products however point to just one income account called Service Income so there is just one line on the firm’s P&L. If we wanted the P&L to detail the three buckets of income, we could create a separate income account for each product service, but this is not necessary. Either way, no customer names need to be disclosed on the P&L.
Recommended Standard Reports Available: 1) Sales by Product/Service Summary (Detail) 2) Sales by Client Detail
Income By Customer
You can easily get reporting of how much you have invoiced any given customer. In addition to the above reports being able to be filtered by Customer, you can visit the Customer Center for more detail. From any customer record, you can view all invoices, including billable expense charges, and further filter your reports by date.
Recommended Standard Reports Available 1) Income by Client Summary 2) Sales by Client Summary (Detail)
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We provide a free consultation that includes a free financial statement review. For help setting your QuickBooks account up in a way that makes these reports useful and gives you maximum information while simultaneously keeping your P&L short and clean, read our QuickBooks articles and reach out to the team today at (216) 509-1561.