Procurement Anxiety, Help!

General Houzz Pro Software
1

I’m new to procurement. I’m about to start purchasing a house full of furniture in behalf of a client for the first time. I have a lot of questions on best practices for doing this from a bookkeeping standpoint in Houzz Pro.

Here are some of the questions swirling around in my head:

My client has paid for all furniture, sales tax, and warehousing services up front. The funds are now in my account, so I need to start ordering asap. But Having that $24k that isn’t mine in my account is stressful. (Only $3200 of it will be income for me, in the end.)

I’m thinking, from a bookkeeping standpoint, maybe creating a $24k “credit” for my client in Houzz Pro is the way to go? Then I can (somehow) deduct from that credit as I’m making her purchases which will allow me to track where I’m at. It will also allow me to reconcile any differences at project end that I may need to bill her for. I’m sure Houzz Pro has all those tracking features, I’ve just never used them.

To bill her for the advance $24k, I created an “invoice” in Houzz Pro. But I’m concerned that quickbooks will record that as 24k as “income,” which I do NOT want. Right? Should I convert the invoice to something else?

Should I create a separate bank account for ‘purchasing’ and move the 24k over to keep it separate? But would I need a new debit card for that account? I don’t have time to wait on that. So I need to start ordering her stuff asap. Should I put it on a credit card that I pay off later?

How do I categorize those purchases when I comes time to do my banking in quickbooks? As expenses?

I have tax exempt status on the 3 sources I’m using to obtain all the furniture. (Amazon, Houzz, and my wholesaler Daniel House Club.) The client paid me for 9.75% sales tax on everything (included in the $24k). So I also need to set aside that money to remit to the state later. Right? I’ve asked my CPA for advice.

Wow. Procurement is a different can of worms from just billing for services/time!

Any help you could provide would be so very much appreciated. :weary_face::weary_face:

1 Like
3

Hi Gwen,Great questions—and you’re not alone! Procurement is definitely a different beast from billing for services. Here’s some guidance to help you get started:If you created an invoice to collect the $24k upfront, QuickBooks Online will treat that as income. Instead, we recommend creating a proposal in Houzz Pro with all the items and services you’re procuring. Then, record the client payment against the proposal. This holds the funds as a liability (instead of income) until you invoice individual line items.
Regarding the $24k in your account: Some Pros open a separate bank account to hold client funds or sales tax and transfer money to their main checking as needed for vendor payments. Not required, but it can give peace of mind.To record the purchases - If you’re using Purchase Orders in Houzz Pro, just:

  • Create a PO for each vendor

  • Record payments as you go

  • Make sure your bank/credit card accounts are correctly mapped in Houzz Pro’s QBO settings: QuickBooks Settings

For sales tax: If you’re required to file in your state, make sure you:

  • Mark items taxable in Houzz Pro

  • Apply the correct tax rate

  • Don’t include tax inside the item price

This ensures the tax is correctly tracked in both Houzz Pro and QBO and will show up on your sales tax reports when items are invoiced.Lastly, keep working closely with your CPA—they’ll help you navigate how to track and report all of this correctly. Hope this helps clarify things, and if any other Pros have tips, feel free to share!

1 Like
4

Excellent advice, thank you so much Andie!!

5

You are welcome! Please let us know if you have any other questions :grinning_face_with_smiling_eyes: