Create Inventory Items in QuickBooks Online – Instructions

How to Create Inventory Items in QuickBooks Online: Video

            This video lesson, titled “How to Create Inventory Items in QuickBooks Online,” shows you how to create inventory items in QuickBooks Online. This video lesson is from our complete QuickBooks Online tutorial, titled “Mastering QuickBooks Online Made Easy.”

Instructions on How to Create Inventory Items in QuickBooks Online:

            To create inventory items in QuickBooks Online Plus, click the “Settings” button in the QuickBooks Online toolbar. Then click the “Products and services” link under the “Lists” heading to open the “Products & services” page.

            To add your first new product or service, click the “Add an item” button in the “Products & services” page to open the product/service information pane at the right side of the window. Alternatively, after creating your first product or service, instead click the “New” button shown in the upper-right corner of the page and select the item type to create from the drop-down menu that appears to open the same product/service information pane.

Enter Basic Info:

            First, type the name of the item into the “Name” field in the “Basic info” section of the pane. If needed, then select the type of item to create from the “Item type” drop-down. The choices are “Inventory item,” “Non-inventory item,” “Service,” or “Bundle.” An “Inventory item” is a product you buy and/or sell directly and for which you track quantities. A “Non-inventory item” is used for items you buy and/or sell, but for which you don’t need to track quantities. A “Service” item is used for services your company provides to customers. A “Bundle” item is used for items you sell together as a set. To create an inventory item, select the “Inventory item” choice. Doing this changes the fields that appear in this pane.

            Optionally, if you use SKU numbers, enter the item’s SKU into the “SKU” field. Optionally, to upload a picture of the item, click the “Add an image” button to open a system dialog box, which you use to navigate to the picture of the item and click it to select it. Then click the “Open” button in the dialog box to upload it. To delete the picture of the item, if needed, hover over the picture in the pane and then click the “Delete” button that appears.

            If you use product and service categories to organize your items, select the desired item category from the “Category” drop-down. To create a new product or service category, select the “Add new” choice from the drop-down menu, type the new category name into the “Create category” pane that opens, and then click the “Save” button.

Enter Inventory Info:

            The “Inventory info” section of this pane only appears for inventory items. To track the quantity on hand, enter the initial quantity on hand into the “Initial quantity on hand” field as of the date you then select from the adjacent “As of date” calendar drop-down. For new items not yet purchased, this value is often zero. If entering inventory on hand when creating a new QuickBooks company file, enter the amount of the inventory item you had on hand as of the “start date” of your company file for accurate accounting.

            Enter the quantity at which to reorder more of this item into the “Reorder point” field. This is the minimum item quantity to have on hand. Then use the “Inventory asset account” drop-down to select the inventory asset account you use to track the value of these items when held in inventory. A basic “Inventory Asset” account is automatically created when you create your company file. You can also create an account in your chart of accounts to use a specific “Inventory” asset account. However, if you create a new inventory asset account, it must be of the “Inventory” account “Detail type.”

Enter Sales Information:

            In the “Sales” section of the pane, type the description to show on sales forms into the “Description” field. You can enter the item’s default sales price into the “Price/rate” field. Select the income account you use to track sales of this item from the “Income account” drop-down. This income account must be a “Sales of Product Income” account “Detail type” for inventory tracking to work.

            If needed, to change the item’s sales tax setting, select a choice from the “Sales tax category” drop-down. If needed, to select a specific sales tax category, click the “View all sales tax categories” link in this drop-down menu to open a “Select a sales tax category” pane, expand the desired category to view its options, select the desired option, and then click the “Select” button at the bottom of the pane to return to the main “Add a new product” pane.

Enter Purchasing Information:

            In the “Purchasing” section of the pane, type the description to show on purchasing forms into the “Purchase description” field. You can enter the item’s default purchase price into the “Purchase cost” field. This lets QuickBooks Online Plus enter this amount as the default price when buying this item. You can leave it blank if the cost of the item varies greatly and just enter the cost at the time you buy it within purchase forms, if desired. Use the “Expense account” drop-down to select the account to which you attribute purchases of this inventory item. This account must be a “Supplies & Materials – COGS” account “Detail type” for inventory tracking to function properly. If you have a preferred vendor from whom you buy the item, you can select them from the “Preferred vendor” drop-down.

Save the Inventory Item:

            To save the inventory item and close the pane, click the “Save and close” button in the lower-right corner of the pane. To instead save the inventory item and open another new pane to continue creating items, click the “Save and new” button, instead. Alternatively, to cancel creating the inventory item, click the “Cancel” button and then click “Yes” in the confirmation prompt.

            Once you enable inventory tracking for an item, you cannot turn it off for that item. If you want to disable inventory tracking for an item, you must inactivate the item and create a new one. Inactivating an item will not affect previous transactions. Additionally, you cannot change historical account usage of inventory items if quantity on hand tracking is enabled.