QuickBooks for Car Dealerships: What to Post and When
Yes, a used-car dealership can run on QuickBooks with a dealer chart of accounts. Here are the entries for purchases, recon, sales, floor plan and BHPH.
Yes, a used-car dealership can run its books on QuickBooks. What makes it work isn't the software, it's the setup: a chart of accounts built for a dealership (inventory, sales tax and title fees payable, floor plan, F&I, BHPH notes) and a habit of posting each car's purchase, recon, sale and cost of goods sold as it happens. Get those two right and QuickBooks gives you a real Profit & Loss and Balance Sheet.
Below: the entries to post and when, Online versus Desktop, and typing entries versus letting a dealer management system (DMS) post them. This is general information; have your CPA review your setup.
Can a car dealership use QuickBooks?
QuickBooks is general-purpose accounting software, so it doesn't arrive knowing what a floor plan or a trade-in over-allowance is. You teach it by creating the right accounts. At minimum a used-car store needs:
- An inventory asset account that holds each car at full cost until it sells.
- Liability accounts for sales tax and for title, tag and registration fees you collect for the state.
- A floor plan payable account if you buy on a floor plan line.
- Separate income accounts for vehicle sales, doc and dealer fees, and F&I products.
- Cost of goods sold accounts for the car, its reconditioning and F&I product cost.
- A notes receivable account and an interest income account if you finance in-house.
Our free dealership chart of accounts template lays these out if you're starting from scratch.
The account names in the examples below are the defaults AutoDealer.io uses. Your own names can differ; what matters is that each line lands in the right type of account.
What should a dealer post, and when?
Post each event on the day it happens. The totals only mean something if every car goes in when you buy it and comes out when you sell it.
When you buy a car
Debit inventory for the purchase price plus auction fees and transport. The IRS says inventory cost includes the invoice price less discounts plus transportation or other charges to acquire the goods (Publication 538).
| Account | Debit | Credit |
|---|---|---|
Vehicle Inventory | $10,000 | |
Cash - Operating | $10,000 |
If the floor plan lender paid the auction directly, the credit goes to your floor plan payable instead of cash, because you now owe the lender for that car.
When you pay for reconditioning
Recon is part of the car's cost, not a repair expense. The IRS audit guide for independent used-car dealers says a car's base cost is increased by the reconditioning costs spent preparing it for sale (IRS MSSP Independent Used Car Dealers guide, chapter 4). Debit Vehicle Inventory for the bill and credit cash, or accounts payable if you'll pay the shop later.
When you sell the car
A sale is the busiest entry. Here's a hypothetical deal: the car sells for $15,000 with a $499 doc fee, $900 sales tax, $250 title and registration, and a $1,500 service contract. The customer trades in a car worth $3,500 at auction (its actual cash value, or ACV), but you allow $4,000 for it, and it has a $2,000 loan you'll pay off.
| Account | Debit | Credit |
|---|---|---|
Accounts Receivable - Deals (what the buyer or lender still owes) | $16,149 | |
Vehicle Inventory (trade at ACV) | $3,500 | |
Sales Discounts (allowance over ACV) | $500 | |
Vehicle Sales Income | $15,000 | |
Doc & Dealer Fee Income | $499 | |
F&I Product Income | $1,500 | |
Sales Tax Payable | $900 | |
License & Registration Fees Payable | $250 | |
Trade-In Lien Payoff Payable | $2,000 |
Three things to notice:
- Sales tax and title fees are liabilities. The IRS dealer guide says they're collected by the dealer and paid to the state. You clear them when you remit.
- The trade goes in at ACV, not the allowance. The IRS guide calls the excess of the allowance over ACV an over-allowance and books it as a discount on the sale, with the trade in inventory at ACV.
- The trade's loan payoff is a liability until you pay the lender.
When the down payment or the lender's funding arrives, debit cash and credit Accounts Receivable - Deals.
Cost of goods sold, the same day
In the same entry date as the sale, move the car's full cost out of inventory:
| Account | Debit | Credit |
|---|---|---|
COGS - Vehicle | $10,000 | |
COGS - Reconditioning | $1,200 | |
Vehicle Inventory | $11,200 | |
COGS - F&I Products | $600 | |
Accounts Payable - F&I/Vendor | $600 |
That gives you a front-end gross of $3,800 on the car ($15,000 less $11,200) and $900 on the service contract, both visible on the Profit & Loss.
Floor plan draws and payoffs
When the lender advances money on a car, the floor plan payable goes up. When you pay a car off, split the payment:
| Account | Debit | Credit |
|---|---|---|
Floor Plan Payable (principal) | $10,000 | |
Floor Plan Interest Expense | $85 | |
Cash - Operating | $10,085 |
Reconcile Floor Plan Payable to the lender's statement every month, car by car. A difference almost always means a payoff or a draw wasn't posted.
BHPH payments
On an in-house deal, the amount financed goes to Notes Receivable - BHPH at the sale instead of accounts receivable. Each payment then splits into principal, interest and any late fee:
| Account | Debit | Credit |
|---|---|---|
Cash - Operating | $400 | |
Notes Receivable - BHPH (principal) | $310 | |
BHPH Interest Income | $90 |
Principal isn't income; it just turns the note back into cash. A late fee goes to Late Fee Income. Your loan servicing system should tell you the split for each payment.
QuickBooks Online or QuickBooks Desktop?
Both can hold a dealer's books. The practical differences, from Intuit's own pages:
| QuickBooks Online | QuickBooks Desktop | |
|---|---|---|
| Where the data lives | Online, per Intuit's cloud accounting page | On your computer, which Intuit says is usually limited to one machine |
| Updates | Automatic, rolled out monthly | Often manual |
| Buying it new (US) | Available | Intuit stopped selling Pro Plus, Premier Plus and Mac Plus to new US subscribers after September 30, 2024; existing subscribers can renew, and Enterprise isn't affected |
| Importing journal entries | From a CSV file (Settings, Import Data, Journal Entries) | Through IIF files; Intuit says to back up your company file first |
Starting fresh, Online is the simpler path and the one still sold new at that level in the US. If you already run Desktop and your bookkeeper is happy, nothing forces a move.
Should you type journal entries or let your DMS post them?
You can run everything above by hand: the bookkeeper takes the deal jackets, recon invoices and floor plan statement at month end and types the entries. It works, with two weak spots.
- It happens late. Until month end, QuickBooks doesn't know what you sold, so your inventory and payables are wrong for most of the month.
- It depends on the paperwork. A recon bill that never makes it to the bookkeeper never reaches the car, and the car looks more profitable than it was.
The alternative is a DMS that already knows every car, cost, deal and payment and writes the entries for you. Your bookkeeper then reviews instead of typing, and the numbers are current any day you look. Whatever you choose, make sure the entries are balanced, use your account names, and never silently change a month you've already closed.
How AutoDealer.io works with QuickBooks
With AutoDealer.io, every sale, payment, vehicle purchase, recon cost and floor plan event books a balanced journal entry within minutes, using the account names shown above (you can rename them under Settings, Accounting to match your QuickBooks company).
QuickBooks Online: on every plan, the owner connects the QuickBooks Online company once under Settings, Accounting. AutoDealer.io matches each account name to a QuickBooks account, creating any that don't exist, and from then on every new entry posts to QuickBooks Online automatically. Each entry carries an AD- reference number. Entries are only ever added: a void or an unwound deal posts its own dated reversing entry, so nothing in QuickBooks is edited or deleted. Posting starts on the connect date; earlier months go over with the journal entry file. See QuickBooks Online in the docs.
QuickBooks Desktop: there's no connection to Desktop. You can download a period's balanced journal entries as a CSV and hand it to your bookkeeper, but Intuit documents IIF files, not CSV, as Desktop's route for importing journal entries, so the file needs converting first. Ask your bookkeeper how they handle that. See the QuickBooks file.
Either way, sales tax remittance isn't part of what's posted; record it in QuickBooks with your accountant.
Frequently asked questions
Is QuickBooks good enough for a used car dealership?
For the books, yes, as long as the chart of accounts is set up for a dealership and entries are posted when cars are bought and sold. QuickBooks is accounting software, not a dealer management system, so deal paperwork and recon tracking usually live in a separate DMS.
Where does a trade-in go in QuickBooks?
Into your inventory account at its actual cash value, the day the deal closes. If you allowed the customer more than ACV, the extra is a sales discount, following the IRS used-car dealer guide. Any loan on the trade becomes a liability until you pay it off.
Should sales tax be income in QuickBooks?
No. Sales tax, and title and registration fees, are money you collect for the state, so they belong in liability accounts. Recording them as income inflates your sales and turns the remittance into a fake expense.
How do I record a floor plan payoff?
Debit the floor plan payable for the principal, debit floor plan interest expense for the interest, and credit cash for the total. Then check that the payable matches the lender's statement.
Can I import journal entries into QuickBooks Online?
Yes. Intuit's help page describes importing journal entries from a CSV file under Settings, Import Data, Journal Entries, with columns for journal number, date, account name, description, debits and credits. Sub-accounts are written as the parent and sub-account names separated by a colon.
Sources
- IRS Publication 538, Accounting Periods and Methods (what inventory cost includes)
- IRS Market Segment Specialization Program: Independent Used Car Dealers, Training 3147-106 (Rev. 08-2002) (copy of the IRS guide: reconditioning in cost, sales tax and fees collected for the state, trade-in over-allowance)
- Intuit: Cloud accounting software
- Intuit: Can't buy QuickBooks Desktop as a new US subscriber
- Intuit: Import journal entries into QuickBooks Online
- Intuit: Export, import, and edit IIF files